Dar’s turn to eat Mombasa’s lunch as Rwanda looks south for trade across borders

This week Rwandan President Paul Kagame hosted Tanzania’s Samia Suhulu Hassan for two days, and their discussions largely focused on improving trade relations. Notably, Dar es Salaam port and Customs officials were part of the high-powered delegation to Kigali.

While details of the discussions between the two heads of state and the bilateral agreements signed have not been made public, well-placed sources in Kigali told The EastAfrican that improving trade logistics was a priority on the agenda.

The agreements add fresh impetus to economic diplomacy between the two East African Community partner states as they embark on key infrastructure and investment projects, particularly the 341km Mwanza-Isaka standard gauge railway line.

“With the signing of these agreements, we are committed to ensuring that this visit leads to tangible results and gives renewed momentum to our bilateral relationship,” said President Kagame. “The challenges that our region face can only be addressed through unwavering solidarity and seizing the opportunities for mutually beneficial partnerships.”

The agreements include one on information and communications technology that is likely to see both countries share submarine cable infrastructure, and immigration to ease movement of people and cargo between the two countries.

For President Samia, who has been chasing economic opportunities across the region and has visited EAC partner states with exception of South Sudan, the message to the political leadership of the region has been consistent: Tanzania under her leadership now means business and is sparing no effort in attracting trade and investment.

“In today’s world relations, nations are more focused on economic issues, just as we have to focus on that and other political issues in our East African region and beyond,” she said. “Tanzania and Rwanda are in business and investment and have good relationships. But there are still many opportunities we can use to promote trade and investment for the benefit of both countries.”

The trip to Rwanda came after signing several economic deals. One was the $3.5 billion Hoima-Tanga oil pipeline with Uganda in April and another with Kenya in May for a gas pipeline from Dar es Salaam to Mombasa. Tanzania already signed an agreement to link its new railway line to Burundi and the Democratic Republic of Congo.

Fruits of a falling-out

Tanzania is largely benefiting from the icy relations between Uganda and Rwanda, who have been at loggerheads for over three years now, and the election fever in Kenya, which evokes memories of the post-election violence in 2007/08.

Uganda has also started using the ports of Dar and Mwanza for some of its cargo, dimming the hopes of Kenya to maintain its position as the gateway to East and Central Africa.

Since February 2019, when Rwanda publicly fell out with Uganda over allegations of mistreatment of Rwandans in Uganda and alleged hosting of hostile groups leading to the closure of the Gatuna/Katuna on the Northern Corridor, Rwanda has deliberately diverted most of its cargo to the Port of Dar es Salaam.

But before that, Kigali was already frustrated with the Northern Corridor route after its key cargo, including perishable products such as dairy products, were confiscated and held by Ugandan Customs officials until they expired.

Then on August 2, in 2018, two trucks full of minerals from Rwanda belonging to a private investor, Mineral Supply Africa, were held by Ugandan authorities over two months after being impounded at the Katuna border point. The Spedag trucks were carrying a combined 40 tonnes of tantalum and tin valued at about $750,000. At the time, the two countries engaged in a trade dispute, with Uganda claiming the trucks were transporting minerals using forged certificates. Rwanda insisted that the certificates were genuine from the Rwanda Mining Board.

This was the last straw. Since then, Rwanda has diverted most of its cargo- exports via the Port of Dar es Salaam.

Uganda’s recent decision to build roads to connect directly to DRC and Burundi signals the lack of goodwill to mend fences.

A key Northern Corridor railway project, the earlier proposed 1,500km railway from Mombasa to Kigali and which was expected to be completed by 2018, has stalled with only Kenya completing a section of it from Mombasa to Naivasha.

The collapse of the so-called Coalition of the Willing or the Northern Corridor Infrastructure Projects, has given the Central Corridor the opportunity to lap in the windfall.

The rising political tensions continues between Uganda and Rwanda and now Uganda and Kenya over the relations between President Museveni and Kenyan Deputy President William Ruto.

The Northern Corridor is going to lose more cargo traffic, which does not augur well for the Port of Mombasa.

The Dar port, at the egging of President Samia, is offering benefits to the business community in Rwanda, Burundi and DR Congo.

The new deals have sent the Northern Corridor Transit and Transport Coordination Authority (NCTTCA) to the drawing board, trying to salvage the 27 per cent business share of Rwanda which is likely to shift to the Central Corridor.

“Since 2013, the Northern Corridor has been handling 60 percent of Rwanda cargo but this changed and we were handling only 16 percent since 2019 after Kigali and Tanzania improved on road infrastructure and having one border between the two countries. We had to move a delegation to Rwanda and currently we are only handling 27 percent which is still very minimal,” said NCTTCA executive secretary Omae Nyarandi.

“The new inroads by Tanzania in landlocked countries must be a wake-up call to Kenya to improve its efficiency and also conclude the Naivasha-Malaba metre gauge railway to maintain the Uganda market. What is keeping traders on the corridor is the efficiency at the port of Mombasa which is lacking at the port of Dar es Salaam and the Central Corridor.”

Mr Nyarandi said the authority is also engaging transporters who are charging the same fees to haul cargo from Naivasha to Uganda as from Mombasa to Uganda, thus discouraging importers from using the Naivasha depot.

Shippers Council of Eastern Africa (SCEA) chief executive Gilbert Lagat expressed similar fears.

“Mombasa has maintained its efficiency but we need to improve on promotional rates which are pulling shippers to the Dar es Salaam Port,” said Mr Lagat.

He said if Tanzania gets it right in its SGR and sorts out the costs incurred by traders in their last mile, the Northern Corridor is going to lose a lot.

“The developments between Tanzania and other countries are putting Kenya at a disadvantage considering it is moving towards General Election and the current careless talk by politicians is a threat to importers. Traders need to be assured of the use of Northern Corridor and this can be done by ensuring MGR connecting Naivasha and Uganda border is functional and all hotspot areas are secured,” said Mr Lagat.