Uganda Printing material prices surge by 8%

Friday June 24, 2011

The high cost of production has forced the newspaper and print industry into a corner.

This implies that advertising rates and newspaper cover prices will possibly increase as the sector tries to share the costs with customers, come July 1.

“For us to continue producing a newspaper and continue maintaining some profit, we need to increase the advertising and cover prices, effective July 1,” Mulengi pointed out.

“What is most important, though is that we continue to invest into richer and better content to enhance value for the readers and the advertisers.”

“Newsprint is the biggest raw material needed to produce a newspaper,” Godfrey Mulengi, the Vision Group head of sales, said yesterday.

“Whatever happens to the prices of the newsprint influences and affects the entire pricing structure. That is the advertising rates and the copy prices.”

According to the Uganda Bureau of Statistics (UBOS) producer price indices for the manufacturing sub-sector, paper and printing material prices rose by 7.9% in April compared with the same period last year.

Factory-gate prices for paper products jumped 19.3%, from 11.4% the same period last year.

“This means that media houses have been absorbing the costs for that long,” sector experts said.

With the proposed increases in the newspaper cover prices, publishing houses will still be shouldering much of the cost of putting a newspaper on street. This is partly because the shilling has lost nearly 6% value this year due to the rising local and global demand for dollar and insufficient forex inflows.

Newsprint and special papers are imported and bought in US dollars. This means that printing business owners have to exchange more shillings for a few dollars.

The impending newspaper price-change comes at a time when inflation, which measures the cost of living, has also risen to 16%, up from 5.2% in May 2010.

“Even when advertising rates have gone up by an average 10% for New Vision, we are still the most cost-effective newspaper. This is based on the fact that we have the biggest audience size whose commercial value and benefits is unmatched.

The newspapers and print industry is under pressure after Maria Kiwanuka, the finance minister, announced a 50% budget cut on advertising, stationary and buying newspapers by public institutions.

The UBOS report released this week also indicated that producer prices for all manufactured goods increased by 23.6% during the 12-month period leading to April.

Zubair Musoke, the Vision Group chief finance officer, observed that the biggest element in the rising costs of producing and distributing newspapers was the depreciating shilling brought about by the high international demand for the greenback as the eurozone battles a financial crisis.

“We import newsprints and pay in dollars. These high costs are not good for us. At some point, we will be forced to share the rising costs with our clients.” Musoke explained.

By Ibrahim Kasita: The New Vision Newspaper