Queries over public transport policy

The Rwanda Utilities Regulatory Authority (Rura) is mandated by law to regulate, among others, the public transport sector and make it competitive but to Jean-Baptiste Ngabo, proprietor of Yahoo Car Express, the regulator is frustrating free market enterprise. Ngabo claims he’s a victim of this frustration, a claim Rura rebuffs but The New Times has independently found substantial evidence that seems to back the businessman’s allegation. For the last five months, Ngabo’s case has made rounds in several top offices in both private and government agencies, including RDB, PSF, the Ministry of Infrastructure and Rura, among others. However, after weeks of back and forth movements, no amicable solution had been reached by press time in what will appear to be a failed attempt at ‘Private-Public-Dialogue.’ Yahoo Car Express vs. Rura Ngabo has been in the transport industry for over three decades and currently owns a Rura license to operate on the Kigali-Nyagatare route. In 1994, Ngabo fled and temporarily shifted his business to Burundi to escape the Genocide against the Tutsi. He would return later, along with his business, after the country’s liberation. This year, Ngabo decided he needed a second route to expand his business. He has found the going harder than he expected. Even for licensed companies like Yahoo Car Express, one has to apply through Rura’s transport regulation department which, among other requirements, demands that applicants must show evidence that they have enough cars to run an extra route. “So I applied to my bank for a loan of Rwf600 million to acquire ten new buses, which arrived in August 2014,” Ngabo said. After clearing taxes for the ten buses with Rwanda Revenue Authority, Ngabo went to Rura to seek an extra route. In a letter obtained by The New Times dated Monday, August 25, Ngabo asked Rura to be granted either the Kigali-Musanze or Kigali-Rubavu route. Rura responded to Ngabo’s application 21 days later in a letter dated September 15, signed by Eng. Emmanuel Asaba Katabarwa, the head of transport regulation department at Rura. This letter would become the harbinger of the confusion to come. Asaba writes to Ngabo stating that, “following your application letter dated September 4.....” The problem is that Ngabo’s letter to Rura was on August 25, not September 4, as quoted by Asaba. Why? Ngabo believes this variation in dates was not a mistake but rather an intended move by Rura. Under its own regulations, Rura should have responded to Ngabo’s application for an extra route within seven days but it took them 21 days to write back. By dating Ngabo’s application to September 4, (instead of August 25) the regulator pretended that it responded promptly, within the required number of days. That was untrue. Also in Rura’s letter of September 15, Ngabo was asked to show evidence that his company had the capacity (cars) to service an extra route he was applying for before it could be granted to him. According to Ruras regulations, an operator should have a minimum of six buses to be granted a license to ply a particular route. In a letter dated September 24, Ngabo responded to Rura explaining that his company, Yahoo Car Express, had acquired ten coasters to service the new route that was being applied for, a number that was comfortably above the minimum requirement. License denied In a letter dated 10/10/2014, Rura’s Director General Patrick Nyirishema responded to Ngabo rejecting his application for an extra route on either Kigali-Musanze or Kigali-Rubavu. According to the letter, which The New Times has seen, Rura told Ngabo that the routes he applied for were full and, therefore, would not be profitable to his business. “Turasanga byabahombya ndetse bigahombya n’abasanzwe bahakorera,” writes Rura (translated to mean, ‘we find that you would incur losses and also affect negatively those already on the route you want’). Rwanda’s economy is an open one where service providers’ profits are determined by market forces of demand and supply, a healthy competition, innovation and good customer care. While Rura is mandated to license public service providers, it’s not clear whether its mandate also includes advising seasoned businesses on profitability. In a letter rejecting Ngabo’s application, Rura says the two routes he’s interested in already have eight licensed companies with many cars. The New Times visited Nyabugogo Taxi Park and found that the Rubavu and Musanze bound passengers pay between Rwf1,500 and 3,000 for a ticket which some of the passengers interviewed found very high. Some travellers suggested more competition would push these fares down. The New Times also found that there are only five companies running these routes, not eight as indicated by Rura. Rwandans at Goma border transacting business. (Timothy Kisambira) This finding is also backed by the transport agency-list obtained from the transporters’ association and these five licensed companies are Camel Express, Kigali Coach, Virunga Express, Kigali Safari, and Fidelite Express. Phony license holders Rura’s Asaba confirmed to this newspaper that, indeed, Ngabo’s application for an extra route was rejected in his own interest because the routes are clogged. However, when asked how many cars there are on these routes, Asaba said he wasn’t sure and requested for more time to research. “You should have told me you were going to ask for those details before coming. Leave your email, I will send you numbers later,” he said. Those details never came. However, an independent investigation by The New Times unearthed evidence that almost all the current license holders on the contentious routes actually don’t independently own enough cars to qualify of any of the routes they currently ply. Based on the letters of registration for all the five companies running Kigali-Musanze and Kigali-Rubavu routes, for example, one of the license holders, registered as a ‘Coach Tours and Travel Ltd’ company, doesn’t have a single vehicle registered in its name. However, the company’s director has vehicles registered in his name including two (2014) coasters, a Mercedes Benz truck (1999), Toyota Carina (1987) and a Bajaj Motorcyle (2008). This company, which was established less than three years ago with Rwf35 million shares, has six shareholders (including the director) but their combined equity can’t buy the minimum of six buses required for a single route…but they have two routes. Another license holder registered as a ‘Safaris’ company has seven cars under the company name, six coasters and one bus but these too are not enough to qualify for Rura’s two-route license it currently has. Another license holder, who registered in 2012 with total shares of Rwf32 million, has no car registered in the company name but the firm’s managing director, a lady. She has two vehicles, a TVS motorcycle and a Toyota coaster and she has previously owned a Toyota Hiace and three Fuso pick-ups. The fourth license holder owns four coasters, has five shareholders and a total of Rwf30 million shares, not enough to own two routes. And the final company, one of the longest serving on the route and owned by a sole investor, owns just nine vehicles, seven coasters and two buses with a registered share value of Rwf50 million. When asked how the five license holders obtained their routes without meeting Rura’s requirements, Asaba, insisted that they had. “But if what you are telling me is true, Rura will investigate the issue independently,” he said. Beating system Evidence gathered while investigating this story reveals that most license holders actually do not qualify for the routes they have; in fact, the issues in the Kigali-Musanze-Rubavu route are just a tip of the iceberg. Rura is beaten at RDB. One fellow eyeing a Rura license gets six other car owners enough to meet the minimum, they then register and somehow get the much fancied license; once done, the ‘partners’ exit and one person remains as a ‘license lord.’ Most license holders, we found, hire other people’s buses, whom they pay Rwf15,000 daily. When the Kigali-Musanze-Rubavu-route lords heard of a new competitor coming, Ngabo suspects they ran to Rura to block the move resulting in the drama. Interestingly, Ngabo himself, to avoid further losses, has been forced to give away five of his ten new buses to one such company that has several routes but lacks buses. The other five coasters, he has added on his fleet of 20 buses plying the Kigali-Nyagatare route. “I have a loan to pay and this is the only way to manage,” he says. His bank has given him three months grace period in which he can only pay interest off his principle of Rwf600 million. Meanwhile, following Ngabo’s case, Rura issued a decree about over a week ago telling all transport investors that whoever wants to buy new cars or expand their business must inform Rura first to avoid Ngabo’s circumstances. The document, however, was issued without a date. “That was a small mistake,” said Asaba when asked to explain. An official at PSF, however, regrets that Ngabo has taken his case to the media expressing his concern that this might only invite harassment. In response to Ngabo’s petition, State Minister for Transport Alexis Nzahabwanimana, advised him to go to court. Ngabo also allegedly contacted Francis Gatare, CEO of RDB, for help. Efforts for a comment from RDB were futile. It appears now that Rwanda’s transport sector is a closed industry and new investors should look elsewhere.

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Queries over public transport policy