The Chronicles

Serving Your Right to Know the Truth

  • Rwandan airspace abuzz with activity as airlines flock

    AIRLINES Operating commercial and cargo flights to and out of Kigali are set to increase sharply after South African Airways (SAA), Turkish Airlines and Emirates showed interest in adding Kigali on their growing list of destinations.

    The airlines join the existing carriers —Rwanda’s flag carrier Rwandair, Kenya Airways, Ethiopian Airlines, Brussels Airlines, KLM, and Air Uganda. This is set to increase competition mainly on commercial flights where industry analysts predict a reduction in the cost of air transport.

    The South African carrier, which has previously operated flights to the Rwandan capital, recently announced it would re-launch commercial flights to Kigali and include Burundian capital Bujumbura on the same route. Kigali city is Rwanda’s economic, political and tourist transit hub while Bujumbura is Burundi’s largest city and is close to the main port, shipping coffee as the country’s primary export.

    In a statement seen by The Chronicles, SAA, one of the largest airlines on the African continent, said effective January 17, 2012, it would commence operations from Johannesburg, South Africa’s capital to Kigali and onwards to Bujumbura, Burundi. “These flights are now available for reservations in the Global Distribution System (GDS), through your travel agent, and via flysaa.com, the airline's online website,” the carrier said in a statement to the press.

    The airline said the new Kigali and Bujumbura flights have been conveniently timed to provide global connections via its Johannesburg hub and to SAA’s international network, including Africa, Asia, Europe, South America, North America and Australia.

    “SAA is focused on strengthening its intra-Africa network in line with its Africa Expansion programme. Adding even more destinations to our already extensive Africa route network gives our customers more travel options to thriving destinations that were previously difficult to reach by air,” Theunis Potgieter, SAA General Manager Commercial was quoted as saying in the statement.

    According to SAA, the Johannesburg-Kigali route and onwards to Bujumbura will be serviced three times a week by the airline’s state-of-the-art Airbus A319 aircraft that accommodates 120 passengers in a two class (business and economy) configuration. The re-launch of SAA flights to and out of Kigali followed a similar announcement by the Turkish Airlines, one of Europe’s largest carriers.

    The announcement was made by the Turkish Airlines President and CEO Mr. Temel Kotil during his meeting with the Rwandan President Paul Kagame in Kigali on July 25. Mr. Temel told the President that the airline was hoping to open flights from Turkish Capital Istanbul to Kigali in April next year. It will also open an operations office in Kigali.

    The two airlines will join Emirates, the Dubai based airline that opened weekly cargo flights to and out of Kigali about three months ago. It is also believed that it might follow with commercial flights according to sources in the aviation Industry. Emirates is operating one of the biggest cargo planes Boeing 777 that gives it a competitive advantage over other players in the cargo business.

    According to Wikipedia, Emirates is the flag carrier of the United Arab Emirates. Based at Dubai International Airport, it is the largest airline in the Middle East, operating over 2,400 passenger flights per week to 111 cities in 62 countries across six continents. The company also operates three of the world's ten longest non-stop commercial flights from Dubai to Los Angeles, San Francisco and Houston. Emirates is a subsidiary of The Emirates Group, which has over 50,000 employees, and is wholly owned by the government of Dubai directly under the Investment Corporation of Dubai. Cargo activities are undertaken by the Emirates Group's Emirates SkyCargo division.

    Rwanda, however, is also embarking on bilateral air service agreements with many countries, which could see more airlines fly to Kigali. These agreements could also see Rwandair, which is expanding its fleet size launch flights to these countries in its expansion strategy. Some of the countries that have recently signed air service bilateral agreements with Rwanda include India and other five Asian countries which add to over ten countries that signed last year. The country also updated its air service bilateral agreement with Uganda.

    The Rwanda Civil Aviation Authority (RCAA) Director General Mr. Richard Masozera said in an interview that his office has held talks with several other airlines, which have in turn expressed an interest in flying to Kigali. He declined to mention their names but he said they consider Kigali a growing aviation centre.

    Passenger boom Rwanda is increasingly registering a passengers’ boom. Statistics from the RCAA indicate that in 2009, Rwanda registered about 300,000 passengers and in 2010, they increased by 30,000 while this year, they are expected to increase by more than 70,000. This is attributed to the country’s resolve to attract foreign investments by reforming the business environment as well as offering peace and security to the visitors. Rwanda also has natural tourist attractions such as the mountain gorillas and other wildlife, which increasingly attract foreign visitors. The country also serves as a transit route for passengers to and from Eastern DR Congo and this boosts the number of passengers using the national airports.

    Way forward The Government is in the final stages of selecting a firm to construct the first phase of the New Bugesera International Airport. The new airport is expected to cost between US$400 -600 million. Information from the Rwanda Development Board says that some international companies have already expressed an interest in investing in the new airport but the final decision to select the suitable ones will be made after all bids have been reviewed. The Kigali International Airport is also being renovated to accommodate the increasing passenger traffic.

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  • 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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