The cost of cargo transport and other logistical support services could reduce following the signing of a deal between government and DHL Express to construct a world-class logistics facility at Kigali International Airport.

Under the deal, DHL, a subsidiary company of Deustche Post DHL and one of the leading global logistics firms, will invest €3 million (about Rwf2.5 billion) in the modern logistics facility.

Charles Brewer, the DHL Express managing director for sub-Saharan Africa, said the facility will operate as an airside transit gateway, adding that the company wants to use Rwanda as a hub for its operations in East African region.

Brewer told Business Times that construction of the facility will begin in August and is expected to take nine months.

"Besides the obvious opportunities that this represents, along with the planned investments and subsequent services, it will play a critical role in safeguarding product quality and help boost export trade in the country,” Brewer said.

The facility will have an air and land access, accommodating the firm’s country office, courier operations gateway, warehouse, transport vehicles and other operational equipment.

Once operational, according to Julie Mutoni, DHL Express Rwanda chief, the logistics centre will make it possible for small-and-medium entrepreneurs to access services at affordable prices.

"This is an important development that will significantly improve the logistics sector, and will also support government’s efforts geared at enhancing the industry,” Mutoni said.

The government has signed deals with sector investors to construction of logistics hubs at the Mombasa and Dar es Salaam ports, and a dry service port in Kigali.

Some investors from Singapore are also in discussions with the government to establish a logistics fund to finance local businesses in the sector.

Boosting exports

Exporters have for long been complaining about lack of good facilities, like cold rooms, at the airport which they say affects the value of horticulture exports.

This challenge and high freight charges have made it hard to export horticulture products or make profits.

Freight fees range from $1.6 to $2.06 per kilogramme for products destined for Europe.

Vainney Kabera, the managing director of Freshpak Limited, said accessing better logistical facilities will improve the competitiveness of the horticulture sector and spur growth.

Many business experts say that constructing such a facility gives confidence to investors, besides propelling the country’s growth.

Francis Gatare, the Rwanda Development Board (RDB) chief executive officer, believes the facility is an important milestone that will, not only reduce the cost of doing business, but also attract more investors into the industry.

"We have been advocating for the growth of a logistics hub to serve exporters and help promote trade in the country.

"It is, therefore, critical that the private sector, especially SMEs, take full advantage of this facility when it is completed to grow their enterprises,” Gatare explained.

Government has so far signed deals with close to 40 producers and exporters from different sectors of the economy with the aim of supporting them to increase productivity and the country’s export volumes and value.

Under the second Economic Development and Poverty Reduction Strategy (EDPRS II), the government targets to grow exports by 28 per cent annually.

Mary Gasana, the managing director of JEM Freight Forwarding and Clearing, said to achieve such an ambitious target, the country needs better facilities to handle increased volumes of exports.

And according to Geoffrey Kamanzi, the Private Sector Federation head of trade negotiation and facilitation, the sense of urgency to establish such facilities cannot be underestimated, especially in regard to attracting investments into the country.

"Logistical facilities are usually used as part of the bench mark to negotiate trade with investors. We therefore believe that establishing some of these facilities in the country will make Rwanda more competitive,” Kamanzi.

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