Rwanda to scrap public transport subsidies in the near future

On 14 February 2024 at 10:05

In a strategic move aimed at reallocating financial resources towards key areas of national development, the Rwandan government has opted to scrap subsidies provided to operators of both public passenger and freight transport systems in the near future.

Prime Minister Dr. Edouard Ngirente made this announcement during his address to the Rwandan Parliament on February 13, 2024, outlining a post-COVID-19 economic revitalization strategy for the country.

The transportation sector faced exacerbated challenges due to the COVID-19 pandemic, including a significant shortage of petroleum products and setbacks across commercial activities. In response, the government introduced subsidies, known as "Nkunganire," to support citizen mobility.

Since their implementation, these subsidies have amounted to over 91 billion Rwandan francs (Rwf), aimed at alleviating the economic strain during the health crisis. However, Prime Minister Ngirente clarified that these subsidies were always intended as temporary measures and not a permanent solution.

Moving forward, the government plans to redirect the funds previously allocated to transport subsidies towards other sectors in need of urgent support. Direct subsidies to passengers, particularly those covering the gap between actual and subsidized transport fares, will be phased out.

For instance, commuters currently pay Rwf220 for a journey from Remera to Nyabugogo using the Tap and Go system, while the actual fare is Rwf322. The government covers the Rwf102 difference, which will now be the responsibility of the commuters.

Additionally, a technical team will be established to explore the integration of electronic payment systems into transport fare structures, enabling passengers to pay based on the distance traveled rather than a fixed fare for the entire journey.

Despite ending transport subsidies, the government will continue to subsidize petroleum product costs to maintain price stability and safeguard the economic well-being of Rwandans. Prime Minister Ngirente emphasized the importance of these subsidies in preventing significant price increases from affecting other sectors of the economy.

Overall, the decision to end transport subsidies reflects a strategic shift towards prioritizing long-term national development goals while ensuring economic stability and resilience in the face of ongoing challenges.

Rwanda is set to scrap subsidies injected in public transport in the near future.