Why it is in everyone’s interest to privatize ONATRACOM

Anyone who has been to Nyagatare town may have seen rows and rows of buses belonging to the National Transport Company (ONATRACOM) parked and rusting away. Many of these buses would be running, had they belonged to a frugal private operator.

Anyone who has been to Nyagatare town may have seen rows and rows of buses belonging to the National Transport Company (ONATRACOM) parked and rusting away. Many of these buses would be running, had they belonged to a frugal private operator.

If there was rationale for the existence of a national bus company it belongs in the past and the continued existence of the government company is hindering the growth and expansion of competitive private bus transporters.

The fact that the national operator has advantages over private operators by virtue of tax exemptions and from other operating costs is a disservice to the nation.

ONATRACOM draws money from public coffers through its parent ministry, Ministry of Infrastructure (MININFRA) implying that even before they have earned a Franc they can spend money they did not earn.

This may explain the wanton waste exhibited by rows of buses packed and allowed to rust away while on the other hand, hardworking private operators can only spend what they have earned from their operations.

It is reported that ONATRACOM does not pay taxes on fuel, spare parts and lubricants it imports because it is a ‘government company’.

This certainly gives the company an unfair advantage over other transport companies and lowers the national tax base. If there are subsidies and tax exemptions accorded to the national transport company, they should cease so that the company contributes to national development instead of being a parasite that draws from a nascent and growing tax base.

Private bus and taxi operators pay various taxes, fees and other operating charges like taxi-park charges which eat into their revenue, the national bus operator does not; allowing the latter to undercharge, for example 150 FRw below the fare of 180 Rwf agreed on between the operators and the Rwanda Utility Regulatory Authority (RURA).

This gives the national operator an advantage over private operators who pay taxes which is again used to run the former.

The national bus company is bedeviled by poor management considering the fact that after years of its existence, it still draws money from the national coffers.

One would expect the company to bring in profits and pay taxes that would develop other sectors of the nation. The management seem contented to managing the company the way they please, knowing that there is government budgetary support in form of taxes levied from their ‘competitors’, the private operators.  

Whatever its original mission, after years of operating in a privileged near monopoly, ONATRACOM should have diversified into other means of transport like introduction of efficient and reliable transportation on Rwanda’s lakes particularly lakes Burera and Kivu which should have made water transportation safer for many people who ply and transport goods across the lakes.

A ferry service and motorized-boat cargo and passenger services would be a welcome addition to the hazardous lake transport in Rwanda, but the management of ONATRACOM seems  contented staying in their “comfort zone, spoon fed” by the government.

There is an argument that the public operator serves communities that have no access to regular and accessible transport services. The argument does not hold water because the company’s buses have been plying city routes choking private operators with its ‘lower fares’.

One wonders why so many buses of national bus company are plying ‘city routes’ if it serves ‘underserved communities’. It is natural that as the private sector grows, operators will reach even the most underserved areas as long as there is business.

The benefits that accrue from a vibrant private-led transport sub-sector outweigh the continued existence of ONATRACOM and the earlier it is sold the better for Rwanda. Many of the buses ‘left to rot’ by ONATRACOM will be running if sold to private operators. Part of the national budget set aside to fund ONATRACOM should be allocated to other areas that need funding.

The number of job opportunities, the amount of money into government coffers in form of taxes levied from spare parts and inputs, vehicle units, income tax, synergies with other sectors and increased competition that will result from the sale of ONATRACOM will outweigh its contribution to the country.

The sale of the national bus company is long overdue.       



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