The Chronicles

Serving Your Right to Know the Truth

Month: November 2015

  • 3billion calls made, Rwf72.6billion earned in 2011

    A report published by Rwanda’s telecom regulator says that Rwandans made over 3 billion telephone calls last year. According to the report, about 20 percent of the calls were international hile the rest were within Rwanda.

    The report that illustrates telecom tariff statistics from January to September 2011 also reveals that despite earning a staggering Rwf72.6 billion during that period, telecom players including MTN Rwanda, Tigo Rwanda and Rwandatel only invested about 23 percent of that money.

    With BhartiAirtel set to start operations this year, investments in the industry are set to double by the end of 2012 as incumbent players are introduced to new competition. Airtel announced that it would invest US$100 million (Rwf60 billion) over the next three years, making it the largest ever investment by an Indian company in the country.

    Airtel is already operating in 19 countries across Asia and Africa. However the argument is whether by coming to Rwanda, it is only interested in expanding its footprint across the African continent or to engage in actual competitive business.

    With the defunct Rwandatel assets up for grabs and a new player joining the industry, RURA might consider revising interconnection fees and new figures could destabilise the already existing tariff structure of the industry.

    The report says that despite the tariffs for mobile telephone calls remaining stable from January to September 2011, Tigo was the cheapest in terms of both regional and international calls.

    “Though Tigo-to-Tigo (on-net) call tariff is twice higher than that applied by MTN, Tigo’s continuous promotional tariff for Tigo-to-Tigo calls makes it appear as the cheapest. If the normal tariff was to be applied by both operators, MTN could be twice cheaper in terms of on-net calls,” the report says.

    Currently Tigo-to-Tigo promotional tariff is Rwf18 per minute while the normal Tigo tariff to any number out of Tigo network is Rwf90 per minute. In November, MTN cut local off-net rates by 30 percent from Rwf90 to Rwf60 and calls to regional partners (including Safaricom of Kenya, MTN Uganda, Vodacom of Tanzania and Leo of Burundi) by 50 percent from Rwf128 to Rwf60.

    On-net calls are the ones made within the same network while off-net cross over to another network.

    The difference between on-net and off-net tariffs is an issue that is hotly debated between operators and regulators. Small operators contend that their competitors’ high off-net prices are anticompetitive forcing them to face aggressive on-net strategies to drive market penetration at a cost of significantly increasing on-net versus off-net price differentials.

    However, experts believe that Airtel as a new entrant in Rwanda’s mobile market might face challenges due to the structure of prices charged by incumbent networks like MTN. In particular, on-net versus off-net price differentials create tariff-mediated network externalities which make larger networks more attractive to consumers than smaller networks.

    While the report is published by Rwanda Utilities Regulatory Agency (RURA)’s website, efforts to get RURA’s boss Regis Gatarayihato comment on these issues were fruitless as he never picked his phone and never answered emails.

    MTN and Tigo officials contacted to comment on the same issues also did not respond to the queries posed by The Chronicles.

    RURA also added that despite slow growth, active mobile subscribers as of November 2011 had risen to 4.4 million. While MTN still has the geographical coverage of over 90 percent, it is also still the leading in mobile subscribers with over 60 percent of the market share with 2.9 million subscribers.

    “By September 2011 Tigo had already acquired 55 percent market share in terms of on-net calls due to the continuous on-net promotional tariff. The company had also acquired over 50 percent of the off-net traffic market by the same period,” the report says.

    “Tigo is the cheapest in terms of international calls, but figures indicate that MTN is still dominant in terms of international calls volumes with 86 percent traffic market share. This is definitely due to the bigger number of MTN subscribers,” it adds.

    Rwanda targets at least six million subscribers by the end of 2012. RURA said that the target for mobile telephony by the end of 2011 was 3.7 million subscribers. That figure was already exceeded by 15 percent as of September 2011.

    The report also says that despite the growth in mobile subscriptions, fixed lines remained stagnant at 43,095 subscribers. Rwandatel is the most active fixed line telecom operator while MTN remains with a few. Tigo Rwanda could not confirm whether the company has any subscribers on fixed lines on not. However, Rwandatel is 33 percent cheaper than MTN in terms of fixed on-net calls.

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  • Cross Border Trade Facing Continuous Barriers

    RWANDA’S Trade with other countries continues to face unnecessary barriers placed on the two major routes in East Africa that most of the country’s goods pass through. The so-called Non Tariff Barriers (NTBs) are placed on the roads to Mombasa, Kenya from Kigali and Dar es Salaam in Tanzania from Kigali. These are the two major routes Rwanda’s exports and imports pass through.

    Studies show that the Tanzanian corridor has the most NTBs while the route to Mombasa via Uganda has the least barriers. In the Tanzanian route, traders as well as transporters decry the numerous police roadblocks, bribery, weighbridges, and insecurity along the way especially during the night and lengthy customs procedures.

    On the Kenyan side via Uganda, barriers that exist include cargo theft, weighbridges and stringent limits of heavy loads that trucks should not exceed while on the Kenyan roads. All of these contribute negatively to Rwanda’s trade where the cost of doing business becomes extremely high thus reducing the nation’s competitiveness.

    Vincent Safari, the former Director of Trade and Advocacy at the Rwanda Private Sector Federation(PSF) who is currently the Coordinator of National Monitoring Committee(NMC) on elimination of NTBs under the Ministry of Trade and Industry recently showed that NTBs in the East African Community(EAC) include lack of implementation of EAC harmonised documents which delays trade, lack of harmonised procedures manual which impedes on clearing of imports and delays in transit bonds cancellation which increases the cost of transit.

    He also said that there are numerous institutions involved in testing goods and this increases time on the road, which delays delivery of goods.
    He said that on the Tanzanian route or the so-called Central Corridor, a survey conducted by the Private Sector Federation and the Ministry found that weighbridges on the road had increased from five in 2008 to eight in 2010 while on the Kenya-Uganda side which is known as the Northern Corridor, there were seven weighbridges on the Kenyan roads and three on the Ugandan side.

    Safari said that there were an estimated 30 police roadblocks between Kigali and Dar es Salaam and 36 between Mombasa and Kigali. These cause delays in transport and result into cases of bribery. Kenya and Uganda also have seven procedures for issuing work permits and this affects businesses. A business takes between one to five months to acquire work permits for workers sourced from other EAC countries. Lack of interface within the customs systems in the revenue authorities of the partner states is also seen as a challenge as it delays clearance of goods under customs control and it increases the cost of doing business and loss of market opportunities.

    Traders also decry of port charges and customs working hours that are not harmonised across the EAC states. They say there is n inadequate police escort mechanism and this results into loss of business/cargo. The infrastructure such as roads and accommodation facilities are also still a challenge especially to frequent travellers like truck drivers.

    All of the above threats increase the cost of doing business in the region. Trade Mark East Africa, a not-for-profit organisation that supports regional integration says that exporting a container of goods from Rwanda costs US$3,275 while importing it costs US$4,990. It says if all the potential threats are put aside, Rwanda could be saving US$42.1 million a year based on 2010 calculations. If the cost of imports and exports goes down by 20 percent, the country could save US$51 million every year.

    The increased cost of doing business in Rwanda has prompted the Government and the PSF to move faster and establish the National Monitoring Committee (NMC) on the elimination of NTBs. The committee, which has been in place for quite some time, however, has not been performing as expected because of lack of strategy, resources and organisation.

    The NMC is being revived but it could have less impact again. This is because most of the NTBs are not in Rwanda but in the neighbouring countries. The committee does not have legal powers to hold these countriesb that do not eliminate barriers accountable. What the committee will be doing is to list and monitor the NTBs but it does not have the powers to order their removal.

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