Rwandan consumers pay more for goods and services imported via the high seas after a new study revealed that the cost of exporting to the country sometimes triples that in other regional economies.
“Rwanda is the most expensive for exports—doubling or even tripling the costs of other EAC economies,” a report dubbed “Doing Business in the East Africa Community 2012”, released last month, states.
While a Rwandan exporter pays US$3,275 to transport a container of cargo to the port, a Kenyan pays US$2,055, Ugandan US$2,880, Burundian US$2,965 and a Tanzanian US$1,255.
According to the study, local importers pay US$4,990 to transport a container from the port compared to Burundi where it is US$4,855, Uganda US$3,015, Kenya US$2,190 and Tanzania US$1,430.
The high cost of importing and exporting is partly responsible for the country’s high trade deficit, where figures suggest that on average, between 2007 and 2010, imports grew by 23.1 per cent while exports grew by 12.9 per cent.
The report by the International Finance Corporation—the investment arm of the World Bank Group, also reveals that Rwanda and Burundi remain among the 10 most expensive economies in the world in terms of importing a container via ocean transportation.
While the report says that traders in landlocked Rwanda and Burundi are bound to face longer waiting time and higher costs for trading, primarily due to the long distance to the seaports and the need to cross inland boarder posts, Rwandan officials say that local traders incur extra hidden costs.
“Apart from Rwanda being a landlocked country, business operators that use both corridors (Mombasa and Dar-es-Salaam ports) incur hidden costs,” said Francois Kanimba, the Minister of Trade and industry.
He recalled that at some point, the Northern Corridors between Mombasa-Kigali had 40 roadblocks. These were reduced to 36 and 30 between Dar es Salaam to the Rusumo border.
A cost of US$ 0.55 per roadblock per truck is paid on the Ugandan side and US$ 1.3 on Kenyan side, the report says, adding that greater cooperation among neighbours and the streamlining of border procedures could to some extent help ease this burden.
“There is lack of commitment or inefficiency in implementing resolutions on the removal of non tariff barriers,” Kanimba said.
Rwanda wants the bloc to speed up the commissioned study that will establish more robust legally binding mechanism especially for those chronic NTBs.
Other regional countries insist on having roadblocks along the corridors to improve security. Rwanda says it removed all the roadblocks in 2008.
Kanimba said that Tanzania reduced roadblocks from Dar es Salaam to Rusumo from 30 to 15, while Uganda and Kenya each have nine roadblocks. Rwanda seeks to have the roadblocks reduced to three.
EAC has embarked on developing and nurturing new poles of growth to strengthen regional markets as one way of mitigating the effects of global uncertainty.
Research shows that on average, 20 per cent of annual shipments faced some form of NTBs that comes with direct additional cost of US$3,500 per shipment within EAC.
According to the World Bank’s Logistics Performance Index, poor performance in just one or two areas could have serious effects on overall competitiveness.