Monday, May 29, 2023 | 1444 ذو القعدة 08
Muslim World

Understanding The Global Rise In Hajj 2023 Cost, And The Way Out

The impact of exchange rates in the computation of payment for Hajj services in the US dollar is widening the gap in Hajj fare. 
The astronomical increase in the cost of performing Hajj this year is giving the participating countries a serious course of concern. Analysing or discussing the dynamics of the cost of Hajj or the financial implications of services rendered during the annual pilgrimage requires a competent understanding of intricate relationships between local factors and international (host country) subtleties in payment for Hajj services.
Be it Pakistan, India, Bangladesh, Malaysia, Indonesia, Egypt, Iran, Oman, Singapore, South Africa, Ghana or Morocco the story is the same – there is an astronomical and improportionate increase in the Hajj 2023 fare compared to what pilgrims from these countries paid during the 2022 Hajj. Interestingly, seven of these countries belong to the top 10 with the largest number of pilgrims.
Impact of Exchange Rate on Hajj
The impact of exchange rates in the computation of payment for Hajj services in the US dollar is widening the gap in Hajj fare – and it can only get higher. Many sitting factors favour this position. This includes exchange rates, Saudi Arabia’s vision 2030, aviation market projection, expansion of Hajj businesses by both Hajj participating countries and the Kingdom of Saudi Arabia.
For example, if an American Muslim living in California paid $7,500 for services associated with Hajj in Saudi Arabia, a Nigerian Muslim living in Lagos will have to pay N3, 453, 600 for the same service at the exchange rate of N460 to one dollar – provided they receive same services i.e. the cost of accommodation, Air ticket, feeding, Transportation within Saudi Arabia, services in Mashair and Basic Travelling allowance. Pilgrims from Ghana will pay 91,947. Ghana cedi or 28,173.85 Saudi Riyal equivalent sum.
Yes, because Nigerian pilgrims require N3,453, 600 to purchase 7,500 US dollars (at the official rate) to pay for Hajj services in Saudi Arabia.
However, a Nigerian Muslim could have paid N7,500 to perform Hajj if the exchange rate of naira to a dollar stands at one dollar to one naira. It is as simple as you read it. That is the effect of the exchange rate in the computation of Hajj fare.
Hajj cost from Singpaore, Ghana
This year, the Singapore Hajj body announced an increase of $1,500 in Hajj cost. The cheapest Hajj package in Singapore for Haj 2023 is $8,490 (N3,909,475.) per person while the average package cost stands at around $14,150 (N6,515,480:70)
Ghana Hajj fare in 2019 was $3,500. This year, Ghana Hajj Board announced $6,500 hajj fare - almost double.
A letter dated 1st of March signed by the board Chairman Hon Ben Abdallah Banda and Executive Secretary Alh Faroul Hamza said:
"The Ghana Hajj Board wishes to announce for the information of prospective Pilgrims that this year’s Hajj package fee has been pegged at $6,500 which translates to GHC 75,000."
How Pakistanis use Hajj quota
Pakistan Govt announces a 68% increase in 2023 Hajj fare and also allowed outsourcing the financing of half of the Hajj quota to save $444 million due to a severe economic crunch. 50 percent of the 2023 Hajj quota has been allocated to Pakistan living abroad allowing those who lived outside Pakistan to utilize the quota and paid for the Hajj in US dollars - meaning that Pakistanis living overseas can perform Hajj or sponsor someone living in Pakistan by utilizing the quota.
Interestingly, 50% of Pakistan Pilgrims are to pay the 2023 Hajj fares in dollars. Intending pilgrims that paid in dollars would be exempted from the balloting –meaning that those who paid in dollars will be given an automatic seat.
Hajj cost from Indonesia 2023
In Indonesia, the government subsidizes Hajj fare by 30 per cent while intending pilgrims pay the remaining 70%. Despite this, Indonesia announced a 26% increase in 2023 Hajj fare.
In 2022, the average regular Hajj cost in Indonesia increased from Rp. 75 million or US$5,357 (2,466,673) to almost Rp. 100 million or US$7,142 (N3,288:591) per pilgrim.
Hotel rates in Makkah
The story is the same in Jordan. The cost of Hajj 2023 has been increased to 3,200 Jordanian dollars per pilgrim. Reacting to the increase, the head of the Religious Tourism Committee at the Association of Travel and Tourism Agents Bilal Rubin described the prices as "insane”, according to a media report.
Rubin who attributed the high prices of hotels in Medina and Makkah added that companies will reduce the number of their stays in Makkah and will only pass through Madina during return trips as a quick measure to reduce the fare.
Furthermore, a proposal to increase the distance of Jordanian pilgrims' accommodation to Haram from about 200m to 250m to save JD700 from the cost of Hajj this year has been presented to the Ministry of Awqaf by the Jordan Society of Travel and Tourism Agents. Desperate measures.
This year Bangladesh has raised the cost of Hajj by 59,000 Taka (560.99 US dollars). According to State Minister for Religious Affairs Md Faridul Haque Khan, the “hike was linked to "costs of Hajj services from the Saudi Arabian " and the dollar exchange rate against the taka which has increased by about 22% and also the jet fuel prices by about 18% to 20%.
Air tickets, accommodation, feeding, agent fees, and payment for car syndicates services make up about 95% of Hajj service cost templates and these payments are transacted in dollars thereby making it very difficult to control the costs locally.
Hajj cost from Malaysia
Also, the cost of Hajj in Malaysia this year rose to RM31,000 - an increase of about RM2,368 compared to RM28,632 per pilgrim in 2022.
Thereafter, the Malaysian government through Pilgrim Fund Board (TH) recently held discussions with Makkah and Madinah hotel operators on room rates to control or reduce the cost of performing Hajj this year.
Minister in the Prime Minister’s Department (Religious Affairs) Datuk Dr Mohd Na’im Mokhtar quoting Haj and Umrah Minister Dr Tawfiq Fawzan Al-Rabia earlier said:
"The Saudi Arabian government is not responsible for the increase in hotel rates in Makkah and Madinah”.
"Hotels are owned by private companies whose interest most times is to break even for the shareholders. Tawfiq Fawzan said that he has no jurisdiction over the hotel rates and that we will have to deal directly with the hotel owners there,” Mokhtar said.
Lowest cost to perform Hajj
Despite the closeness of Arab countries in terms of hours of flight, the cost of performing Hajj across most Arab countries has increased in comparison to previous years.
The average cost of performing Hajj in Qatar is ($10,971), followed by the Emirates ($10,821) and Tunisia ($9,884), according to Al Jazeera report.
The lowest average prices among Arab countries to perform Hajj are in Oman ($1,797), Jordan ($2,961) and Saudi Arabia ($3,198).
The increase according to Al Jazeera was due to Global inflation, a rise in flight tickets and mandatory services needed for Hajj, as well as the increase in VAT rates in Saudi Arabia – from 5% to 15%.
Average cost of Hajj from Arab countries
The average cost of prices from Arab countries are: Qatar ($10,971), Emirates ($10,821), Tunisia ($9,884), Lebanon ($9,000), Morocco ($7,698), Kuwait ($7,578), Bahrain ($7,559), Egypt ($6,910), Palestine ($6,234), Algeria ($5,853), Sudan ($5,447), Iraq ($3,825), Syria ($3,700), Yemen ($3,416), Saudi Arabia ($3,198), Jordan ($2,961), Oman ($1,797).
Admittedly, the hikes in 2023 Hajj fare across all Hajj participating countries will harm the number of pilgrims that will be travelling to Saudi Arabia for Hajj this year. Saudi Arabia’s vision 2030 will be slowed down unless the trend is reversed. The low and middle income people who constitute over 70 percent of Hajj pilgrims will feel the heat.
In Hajj cost, the jury is in and the only way is to reduce the Dollarization of Hajj service payments. All Hajj participating countries collect Hajj fares in their national currencies. However, those currencies will have to be converted to Dollars for payment to Saudi-based Hajj service providers and there lies the first challenge.
Bangladesh is holding Biman liable for increasing its air tickets, Indonesia is blaming increased Value Added Taxes (VAT) and cost of accommodations, Pakistan is blaming exchange rates specifically the dollar, India lay the blame on exchange rates, Ghana, Egypt, Jordan, and Morocco, are crying out loud that the cost of hajj is climbing roof.
Various Hajj service-related agents in Saudi Arabia are now privately controlled. The Establishment of Mutawwif for Pilgrims from African non-Arab Countries, The General Car Syndicate, and The United Agents fix prices for their services with little or no room for negotiation from Hajj participating countries.
As we anxiously wait for the 2023 Hajj fare announcement from NAHCON, there are anxiety that Nigeria Hajj Industry may not be immune from the effect of dollars and other variables that has jerked up 2023 Hajj fare in virtually all Hajj participating countries.
Note: (The writer is National Coordinator Independent Hajj Reporters in Makkah, Saudi Arabia.)