Central Corridor trade barriers to crumble under political will weight

If you live and shop in Rwanda, six out of every ten imported products that you buy from malls are likely to have arrived in Kigali through the Central Corridor, a trade passage linking the port of Dar es Salaam to Rwanda, Burundi, DR Congo and Uganda.
Trucks await clearance at Gatuna border. (File)
Trucks await clearance at Gatuna border. (File)

If you live and shop in Rwanda, six out of every ten imported products that you buy from malls are likely to have arrived in Kigali through the Central Corridor, a trade passage linking the port of Dar es Salaam to Rwanda, Burundi, DR Congo and Uganda. 

That’s because, according to government statistics, Tanzania’s port of Dar es Salaam accounts for over 60 per cent of Rwanda’s external trade with the balance coming through the Kenyan port of Mombasa.

You probably also wonder why your supplies are relatively expensive; that’s because as a landlocked country (LLC), the final price of an imported commodity, to a fair extent, depends on the cost of transporting goods from the port to their stores.

Recent international trade studies have found that transport related costs account for about 30 to 40 per cent of the prices of goods in landlocked countries such as Rwanda, a factor that negatively, affects such countries’ competitiveness.

As a country with a low local manufacturing base, Rwanda heavily relies on imports to keep its citizens supplied and, according to statistics from National Bank of Rwanda (BNR), total imports in 2014 rose by 6.8 per cent to US$2,399.3 million.

It currently costs over US$4000 to transport a container from the port of Dar es Saam to Kigali, according to traders and this cost impacts on the final price that the consumer pays for a commodity.

Rwanda has to continuously engage countries like Kenya and Tanzania to ensure its traders are well facilitated to clear their goods from the ports to Kigali.

Integration helps

However, the fortunes of East Africa’s landlocked countries have started taking a positive turn as the story of the region’s integration process adds more chapters; the benefits are envisaged to be felt, first by traders, and, subsequently, the consumers of their goods.

The story started in June 2013 when Uganda’s President Yoweri Museveni hosted his Kenyan and Rwandan counterparts in Kampala to brainstorm on how to facilitate trade on the Northern Corridor; the result was what’s now called the Northern Corridor Integration Projects Initiative (NCIPI).

After that initial meeting, the leaders agreed to meet every quarter on rotational basis to review their progress; they have since met nine times and their commitment has resulted into a number of groundbreaking achievements.

Early benefits include the Single Tourist Visa that enables tourists to use a single visa to visit Kenya, Rwanda and Uganda; citizens of the three countries can also cross borders using just their national identity cards, and there is harmonised telecom tariffs.

In October 2013, the leaders also launched a Single Customs Territory (SCT) on the port of Mombasa which, according to traders, has significantly eased clearance of goods.

The revenue authorities of both Uganda and Rwanda have been given space at Mombasa to enable their respective traders declare their incoming goods at the first point of entry after which goods are expected to move freely to their final destination without being stopped.

“It’s a great initiative that has reduced the cost of doing business as well as saving us a lot of time previously spent on clearing and forwarding, we’re flying on the benefits of the political will of our leaders,” says Fred Seka, head of the Freight Forwarders Association.

There are other long term projects such as the standard gauge railway, petroleum pipeline and refinery which require billions of dollars to implement and whose benefits will come later but traders are already enjoying early fruits.

Initially, critics had dismissed NCIPI as sign of disunity in the East African Community (EAC) but the story has since changed and is now being praised as the magic wand that has transformed the trade on the Northern Corridor.

“The time to clear goods from the port of Mombasa and transportation to Kigali has reduced from, I think ten, twelve days to now five days which is a big improvement,” said Jean Baptiste Gasigwa, the Private Sector Federation (PSF) resident representative at the Kenyan port of Mombasa.

And with time, officials say they want to see this reduced cost of doing business being felt by Rwandan consumers.

Political Will expands

On March 25, Tanzanian President Jakaya Kikwete hosted his counterparts from Uganda, Burundi, Rwanda and DR Congo at the first ever Central Corridor Presidential roundtable and investor forum in Dar es-Salaam. Kenya attended as an observer.

A number of resolutions were passed by the leaders, including the resolution to cooperate on funding Central Corridor Infrastructure development initiatives (CCIDI) similar to the NCIPI.

Like the Northern Corridor standard gauge railway, it was agreed that the leaders would jointly improve the current central corridor railway network and develop a Standard Gauge Railway line from Dar-es-Salaam - Isaka–Keza–Kigali/Keza-Gitega – Musongati; Uvinza- Musongati; Isaka-Mwanza South and Tabora-Kigoma.

There were other ambitious commitments pledged by the leaders but just like those of the Northern Corridor, they’re long term projects that require billions of dollars in funding and their benefits will probably be seen in five to ten years from now.

Minister for East African Affairs Amb. Valentine Rugwabiza. (File)

However, Rwanda’s Minister for East African Affairs Amb. Valentine Rugwabiza says apart from the long term benefits, there are low hanging fruits for Rwandan traders to reap if stakeholders can exploit the newly established presidential political will to improve the efficiency of the Central Corridor.

Before March 25, the ministry was already working with its counterparts in Tanzania to resolve challenges experienced by Rwandan traders on the Central Corridor but after the presidential roundtable in Dar-es-Salaam; those efforts will be boosted by the newly pledged presidential support.

Minister Rugwabiza has already started mobilising Rwandan traders to reposition themselves and exploit benefits from the leaders’ political will to address challenges such as the stubborn Non-Tariff Barriers (NTBs) and other negative elements to trade.

On April 24, the minister hosted, for the third time, Rwandan business leaders to a breakfast during which, at her encouragement, they expressed their current challenges on the Central Corridor.

She urged them to propose solutions that they want their leaders to consider.

Clearly, Rugwabiza regards the presidential political will as a vital tool to addressing most of the traders’ challenges on the corridor but also knows that without the right follow-up measures, opportunities could be missed.

To make that point, she borrowed a quote from President Kagame’s keynote address during the high level industry and investors forum in Tanzania during which he said that ‘political will needs to be translated into tangible results.’

“Momentum has value of its own. The important thing is to get started, keep moving, and build from there,” Kagame said of the new Central Corridor initiatives.

According to Rugwabiza, the commitment showed by the presidents is a challenge to officials to work hard towards deepening and accelerating regional integration.

“That is why I believe in continuous engagement with you – the captains of industry– in order to keep moving and take advantage of this new momentum. We, therefore, have to move fast together and take advantage of the opportunities presented,” said the Minister.

Regional observers are already predicting a healthy competition between the ports of Mombasa and Dar-es-Salaam, if the current momentum holds; for Rwandan traders, and consumers, that presents prospects of two good options, two smooth trade routes whose ultimate benefit should be cheaper commodity prices at the shopping mall.