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Cheaper cross-border phone charges in East Africa

Russell PadmoreBy Russell Padmore
Business reporter, BBC World Service

Nokia mobile phoneEast African governments force telecom companies to cut cross border roaming charges

Mobile phone users in Kenya, Rwanda and Uganda will soon enjoy cheaper cross border calls, after telecom operators agreed to cut roaming charges.

Charges for making or receiving calls in other countries in East Africa will be cut by more than 60%.

Kenya’s communications minister revealed mobile phone users would pay reduced tariffs for calling a different network in a neighbouring country.

Those roaming will not be charged for receiving calls.

“We have reduced the cost of calling within the region,” said the minister, Fred Matiangi.

Kenya, Rwanda and Uganda are three of the five countries that make up the East African Community (EAC), a common economic bloc, that aims to reduce barriers to trade and this move underlines the benefits of regional integration.

It is thought fellow EAC members Burundi and Tanzania will follow suit, to force telecom operators to cut the cost customers pay for making and receiving calls while they are in another country.

Cheaper calls

Nebert Rugadya, an economic commentator in Kampala, told the BBC that charges for calls away from Uganda had been expensive.

“To call from Uganda to Kenya has been costing about 2,000 shillings, that’s about $!, but when you scrub the roaming charges it will cost about 260 shillings and that is about 10 cents. It greatly reduces the cost of communications in the region and therefore the cost of trade and doing business,” he said.

Mobile phone payment system MpesaMobile payments systems like Mpesa have transformed East Africa’s telecom industry

Mr Rugadya claimed the first move was made by telecom companies in Rwanda.

“MTN Rwanda and Airtel Rwanda did it simply because Rwanda and Kenya scrubbed the taxes on incoming calls, which means companies in Rwanda are finding it cheaper to make a call to Kenya,” he told the BBC’s Business Update programme.

The telecom sector in East Africa has led the rest of the world in using mobile phones to make payments, with the Mpesa system run by Safaricom proving so popular that the company is developing it for use in Europe, notably Romania.

Kenya’s Safaricom, one of the region’s biggest mobile phone operators, played down the impact of cheaper roaming charges, insisting revenues from roaming were not a key part of its business,

New connections

For a long while the governments of the region have been slow to move the plan for a common economic zone forward. However this decision to force telecom companies to cut cross border charges is concrete proof of the success of uniting to reduce barriers to trade.

The East African Community is forging ahead with plans to build a new railway and road to connect the port of Mombasa in Kenya with Uganda and eventually South Sudan.

Port of MombasaThe East African Community will make the port of Mombasa a gateway to the region

The investment in the rail project from China will boost the region’s economic fortunes.

The transport corridor will also see the construction of an oil pipeline, a project aimed at helping develop the region’s energy industry. Oil has been discovered in both Kenya and Uganda. It is also worth noting that once the conflict in South Sudan is resolved the vast resources of oil there could also benefit from a pipeline to Mombasa, proving an alternative route for exports of crude.

Burundi, Kenya, Rwanda, Uganda and Tanzania have ambitious aims to take advantage of economic growth in the region.

This week the International Monetary Fund forecast economic growth this year to exceed 5% in Kenya and Uganda, while the lending institution predicted Tanzania will enjoy growth of more than 7% in 2014.

Kenya, Uganda and Rwanda have also launched a joint tourist visa, allowing visitors to move freely across their borders.

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