More Rwandans driving, the treasury cashing in

There are more Rwandans driving than before. Statistics from Rwanda Revenue Authority (RRA) indicate that there were more vehicles imported last year as compared to the previous years, attracting an increase in revenue collected.

There are more Rwandans driving than before. Statistics from Rwanda Revenue Authority (RRA) indicate that there were more vehicles imported last year as compared to the previous years, attracting an increase in revenue collected.

According to the statistics, as of April 18th this year, the number of automobiles, including motorcycles and tractors was registered at 60,840. The statistics also indicate that by the same time, as many as 53,539 had paid up for road licences attracting revenue to a tune of Frw1.3 billion and surpassing the target by 27 per cent.

A provisional revenue collection report indicates that between January and April 18th, RRA had targeted to collect Frw1 billion from licences.

According to the report Kigali City registered the highest number with an estimation of 90 per cent of the total number of cars in the country.

Though as many as 80 per cent had paid for the road licenses RRA could not account for the remaining, 12 per cent.

"They are either in garages, involved in accidents or owners have deliberately refused to renew their road licences," Flavia Busingye, RRA publicist said.

The units of vehicles imported are steadily growing. Whereas 2,149 vehicles were imported in 2003, Frw5.6 billion was collected in taxes, the units increased to 4,474 last year, and the Treasury bagged Frw13 billion.

Many people interviewed said they are buying vehicles because they are no longer a luxury but a necessity. "I may need to take my son to hospital late at night, where would I get a taxi at such hours? Hence a vehicle will definitely save you in such a situation," a lady who only identified herself as Janet said.

She added that with a vehicle, one saves a lot of time especially because public means are not reliable when it comes to rush-hours. There are also Rwandans who own vehicles but still buy more. These are pushed by the desire to widen their variety. In other words, it is a luxurious way of "living life to the fullest" as they say.

When a businessman in Kigali City was asked why he is interested in purchasing expensive cars like the Hummer, he said they were purposely for business and are mainly hired for weddings. "Some people want to use such big and unique vehicles for their special days," he said. Also limousines are hired for weddings.

Car importers have also found market with the growing number of educated people getting jobs hence more incomes. Many save to buy vehicles. The increasing number of financial institutions has made it easier for a big number of Rwandans to access loans to cover different needs hence some use this advantage to acquire vehicles. Financial institutions in the country have come up with many products, among, is leasing. With leasing, literature from the International Finance Corporation (IFC), the World Bank’s private sector development arm indicates that since the leasing programme was created in Rwanda, many financing opportunities for Rwanda’s business community, especially the small and medium enterprises have been created.

Leasing has the advantage of not stretching ones collateral. If one doesn’t have the security, the vehicle itself can serve as collateral, unlike a bank loan.

The ultimatum to rid the country of right-hand vehicles has greatly contributed to the increasing number of vehicles imported.

Some three years back, the Rwandan government put a ban on the importation of right-hand drive vehicles and yet most left-hand vehicles were scarce and expensive. Most people saved money to purchase the available few, however due to the steady supply of vehicles both used and new, especially from Dubai, several Rwandan have bought vehicles.

While some people in government say the predictable economic environments, peace and increasing business activities in the country dictate people have to drive.

"The economy has been growing steadily at between 5.6 and 6 per cent. The economy has been monetized so both young and old people are buying vehicles," Charles Lwanga, Director Planning and Research, RRA said.

People buying vehicles are civil servants; directors of different companies, working middle aged Rwandans and the growing business community.

They have graduated from Corana 100—fondly called kikumi to RAV4 (new and old model), the Carina E series, the Suzuki grand Vitara, the Land Cruiser.

However German cars like Volkswagen in all its different types; like the polo, Vento, Passat and Toureg are still and have remained few in the country. The biggest number of Rwandans may not drive or even posses vehicles but the fact can not be ignored as it is also witnessed by many; the number that is driving today has increased a great deal despite the instability of fuel prices lately however it is a good sign of economic growth especially through taxation.

Ends