PUBLISHED ON February 2nd, 2015

How Rwandan freighters have benefited from EAC integration

The cost of international road freight services and Rwanda’s own industry, in particular, has for some years been on the agenda of the Government of Rwanda at all levels of national policy formulation and implementation.

Vision 2020 refers to the “natural barrier” that transport costs form in opposition to development, while EDPRS 1 put an emphasis on the need to reduce transport costs and identified the transport and logistics industry as one of the great potential to Rwanda.

EDPRS 1 went on to put specific emphasis on the need to improve the institutional framework and strengthen the capacity of partners involved in the sector, where the National Industrial Policy (2011) noted that foreign-based operators provide the majority of trade logistics services in Rwanda and went on to argue that barriers to trade such as cabotage prohibition are part of the headwind facing the Rwandan transport industry.

It is important to note that Rwanda has made some important progress in dealing with challenges in this sector.

Currently, Rwandan vehicles are able to get an international transit license directly from Rwanda Revenue Authority (RRA), rather than having to obtain permission for loading in other countries.

The National Monitoring Committee (NMC) is actively lobbying against NTBs within the region. There are no excise duties charged on commercial vehicles and Rwanda has succeeded in obtaining remissions of duty on heavy trucks to reduce the cost of importing these vehicles. The EAC Vehicle Load Control Bill, currently under negotiations, aims to standardise allowable vehicle weights across the EAC.

The rapid expansion of trade through Rwanda’s borders over the past five years is important contextual information for understanding the performance of its road freight industry.

The total size of the market for international road freight through Rwanda (inclusive of imports, exports and transit goods) is quite difficult to estimate as the cost of internal EAC transport is not recorded by border agencies.

Based on overall tonnage, its composition of destination/origin and some industry quotations, it is estimated that the total value of road freight services that crosses Rwanda’s borders exceeds $500 million – close to 7.5 per cent of Rwanda’s nominal GDP.

Trade volumes through Rwanda have grown substantially over the past five years. Trade volume has grown from 1.6 million to 2.7 million tonnes per year, from 2007 through to 2012; an increase of 69 per cent.

Nominal value in Rwandan Francs increased at an even more striking rate, from Rwf517bn to Rwf1.8tn, an increase of 146 per cent, and this despite the removal of regional freight and insurance from CIF in mid-2009. In real terms the increase is still an impressive 119 per cent.

Studies have shown that trade flows have grown across all border points, but the lion’s share of the growth has come from Rusumo, which accounts for 52 per cent of the growth in value and 72 per cent of the growth in volume.

Gatuna, in contrast, has seen no change in tonnage at all, although it accounts for 23 per cent of the increase in value. As a consequence, Rusumo and Gatuna are now almost equal in terms of their share of road freight in/out/through Rwanda. Despite the dominance of Gatuna and Rusumo, it is also worth noting the level of growth in terms of trade across the other borders of Rwanda, which has been significant.

Rwanda Truckers’ Association benefited from the harmonisation of the road tolls within the East African Community.

Prior to this harmonisation, Rwandan truckers were charged $500 to use Tanzania’s roads, while Tanzanian truckers were only charged $152 in road tolls upon entry into Rwanda, leaving the latter’s trucking firms at a competitive disadvantage to supply the Rwandan market. Today, the two Partner States charge $152 each.

Road blocks and check points have reduced from 127 to 7 along the Central Corridor, which links Rwanda to the port of Dar es Salaam, Tanzania.

Working hours at Nyakahura, one of the important weigh bridges along the Central Corridor, has also increased its working hours from 12 hours to 24 hours.

This has had a great impact on truckers who at the end of the day save time and money while another advantage that these truckers have enjoyed come as a result of Dar es Salam port working hours increasing to 24 hours, this has significantly reduced delays.

Rwanda’s truckers associations also have testified the benefit brought about by the use of electronic cargo trucking system which replaced the transit movement forms that were formally issued by Revenue Authorities; today a device is installed and a truck is monitored along the way.

To upscale the advocacy efforts, the association of truck drivers is part of National Monitoring committees and at the same time been recognised in EAC affairs, thus making it people centered and private sector driven integration process.

Source: All Africa

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.