Rwanda’s small trucking industry hasn’t had much to shout about recently, unless it was to complain about interminable roadside delays due to bureaucracy, corruption and paperwork. Until now.
Some neat diplomatic footwork with neighbouring Tanzania has given Rwandan truckers some good news in an industry where time is money, costs are high, and margins small and the playing field tilted towards the regional giants and their huge trucking sectors.
“Yes, some good news for a change,” says Theodore Murenzi, head of the Rwanda Truckers Association. “Tanzania has dropped a road toll which penalized Rwandan trucks on the central corridor. It’s not 100% good news, but it’s a real start.”
A study into the competitiveness of Rwanda’s road freight industry highlighted what Rwandan truckers had long complained about – Tanzania charged Rwandan trucks a $500 transit toll yet Rwanda charged Tanzanian registered trucks only $152, putting Rwanda’s drivers at a $348 disadvantage every return trip and adding to already high costs.
Such bureaucratic hurdles to free trade are known as Non Tariff Barriers (NTBs). The EAC is committed to eliminating them altogether, but the process is laborious and the barriers cemented in protectionism.
“We registered this as an NTB at the level of the EAC, but the harmonization of the road toll at EAC level is not decided,” says Vincent Safari, head of the National Monitoring Committee on NTBs. “But the study was evidence-based, factual and detailed and we were confident it would succeed, somehow.”
After validation of the findings of Rwanda’s road freight industry competiveness study, the Government of Rwanda engaged Tanzania which subsequently dropped its road toll from $500 to $152. But for Rwandan truck owners, it meant annual savings of around $800,000 on transport costs that are already among the world’s highest.
The study, carried out by TradeMark East Africa for the Ministry of Trade and Industry, was a boon for Rwandan truckers using the central corridor to Dar es Salaam because of the Tanzanian port’s growing importance in trade with Rwanda and the region.
Since 2007, Rwandan trucking firms have steadily lost market share in the trucking industry, from 21% in 2007 when Rwandan firms were one of the largest players, to 14% in 2012. The market for road freight services to/from/across Rwanda is estimated to be worth over 500M and the value of freight across Rwanda’s borders has increased by at least 119% since 2007.
“The reduction has significantly leveled the playing field,” says Murenzi. “But we still suffer high tolls in Uganda and Kenya. Uganda charges our trucks $160 and Kenya $200 making a total of $360 to get to Mombasa – that’s still more than their truckers pay and more than through Tanzania, but it’s a huge amount for us.”
Safari and others are confident that the advocacy success with Tanzania will point the way for similarly successful outcomes with Uganda and Kenya, despite the powerful grip coastal states, in particular, have on the trucking industry.
TradeMark East Africa (TMEA) Rwanda Country Director says the study was part of a multi-pronged approach to help Rwanda become more competitive as the EAC moves towards integration and harmonization of tariffs and tolls.
“It’s one of several areas we are trying to help Rwanda with but the common link is competitiveness because Rwanda does not have much in the way of natural resources and whatever it sells, it has to be competitive to survive. Transport costs are a big part of competitiveness, and we welcome the toll reduction.”