Transport, Employment, Unemployment and Their Impact on the Economy

Lessons

Senior 6 · General and Religious Studies

Transport, Employment, Unemployment and Their Impact on the Economy

4 lessons

Lesson 1 of 4

Contribution of Transport to Economic Development

25 min

The cost of a long road

Rwanda has no coast. Almost everything it imports from overseas, from fuel and machinery to medicines and phones, lands at a port on the Indian Ocean, Dar es Salaam in Tanzania or Mombasa in Kenya, and then travels some 1,500 kilometres or more by road. Its coffee, tea and minerals make the same journey in the other direction. Every kilometre adds to the price that Rwandan families pay and reduces what Rwandan exporters earn.

So when the cost of that journey falls, the whole economy feels it. Between 2013 and 2020, as East African countries simplified customs and border checks, the cost of moving a container from Dar es Salaam to Kigali fell by about a third (Source A). This lesson asks how transport drives, or holds back, economic development.

Rwanda's routes to the sea

Figure 1: Rwanda's two main routes to the sea (schematic). Distances are approximate: about 1,495 km from Dar es Salaam to Kigali (TradeMark East Africa study) and roughly 1,600 to 1,700 km from Mombasa. Drawn by Ganzaa.

Important

Source A: World Bank, Rwanda Economic Update, Edition N° 18 (January 2022)

"The cost of transporting a container from Dar es Salaam port to Kigali fell from $2.81 per container per kilometer in 2013 to $1.87 per container per kilometer in 2020. [...] the decline in costs for Rwanda translates to annual transport savings of over US$35 million, or 3–4 per cent of total import costs."

The same report notes that at the Malaba border post between Kenya and Uganda, on Rwanda's northern route, clearance times fell from 24 hours to 6 hours between December 2012 and January 2013.

Definition

Transport: the movement of people and goods from one place to another.

Mode of transport: a means of transport: road, rail, air, water or pipeline.

Infrastructure: the basic physical structures an economy needs, such as roads, bridges, railways, airports, ports and power lines.

Landlocked country: a country with no coastline, which must send its sea trade through other countries.

Transit corridor: an agreed international route, with roads, borders and rules, that links a landlocked country to a port.

Economic development: a lasting rise in living standards: income, jobs, health, education and access to services.

Worked example: what Source A means for one container

Take a road distance of about 1,495 km from Dar es Salaam to Kigali (the figure used in a TradeMark East Africa study).

Cost in 2013: $1495 \times 2.81 \approx 4201$ US dollars per container.

Cost in 2020: $1495 \times 1.87 \approx 2796$ US dollars per container.

Saving: $4201 - 2796 = 1405$ dollars per container, a fall of $\frac{2.81 - 1.87}{2.81} \times 100 \approx 33.5\%$ .

Multiply that by every container that enters or leaves the country each year and you see why the World Bank estimated savings of over US$35 million a year. Cheaper transport means cheaper imported inputs for factories and farms, lower prices in shops, and more competitive exports.

A truck loaded high with sacks of charcoal on an unpaved road in Gisovu, western Rwanda, July 2019. Rural roads like this carry farm produce and fuel to towns. Photo: JEsa, CC BY-SA 4.0, via Wikimedia Commons.

Modes of transport in Rwanda

Mode	Role in Rwanda	Strengths	Limits
Road	The main mode: trucks on the corridors, buses, minibuses and motorcycle taxis	Flexible, reaches every village, door to door	Costly over long distances; accidents; feeder roads damaged by rain
Air	RwandAir and Kigali International Airport link Rwanda to Africa, Europe and Asia	Fast; suits valuable or perishable goods (flowers, vegetables) and tourists	Expensive; small loads
Water	Boats on Lake Kivu link Rubavu, Karongi and Rusizi	Cheap for heavy goods	Limited to the lake
Rail	None yet; a standard gauge railway to Tanzania has long been planned	Cheapest for bulk freight over long distances	Very high construction cost

How transport contributes to economic development

Market access and trade: farmers and firms can sell beyond their village and abroad; imports of inputs become cheaper.
Lower prices: transport costs are part of the price of every good, so cheaper transport raises real incomes.
Jobs: drivers, mechanics, motorcycle-taxi riders, road builders, airline and port workers.
Agricultural growth: feeder roads let perishable crops reach markets before they spoil, and bring fertiliser to farms.
Tourism: visitors must be able to reach parks, lakes and cities easily and safely.
Access to services: roads and buses bring pupils to schools and patients to health centres.
Regional integration: shared corridors and one-stop border posts bind the East African Community together.
Investment: investors locate factories where inputs arrive and products leave cheaply.

Transport also has costs: road accidents, air pollution, congestion in Kigali and the large public debt that big projects can create. Good transport policy weighs these against the benefits.

Warning

Distance is not the only cost. Students often explain transport costs by kilometres alone. Source A shows that delays at borders, paperwork and checkpoints cost as much: cutting clearance time at Malaba from 24 to 6 hours saved money without building a single kilometre of road.

Tip

Link, mechanism, evidence. For "explain the contribution of transport to economic development", link a transport improvement to an economic result, explain the mechanism (lower cost, faster delivery, wider market), and give evidence such as Source A.

Important

Discuss. A standard gauge railway to the coast would cost billions of dollars. Using Source A, argue whether Rwanda gains more from building new infrastructure or from making existing routes faster and cheaper.

✦

Practice

Define transport, infrastructure and landlocked country.
Name Rwanda's two main transit corridors and the port at the end of each.
Using Source A, by how many dollars per container per kilometre did the cost fall between 2013 and 2020?
A firm imports 40 containers a year from Dar es Salaam to Kigali (about 1,495 km). Using Source A, estimate its annual saving in 2020 compared with 2013.
Give one strength and one limit of each of road, air and water transport in Rwanda.
Explain three ways in which better feeder roads raise the incomes of rural households.
"For a landlocked country, transport is the most important factor in development." Evaluate this statement.

Show answersHide answers

Transport: the movement of people and goods. Infrastructure: the basic physical structures an economy needs, such as roads, railways, airports and power lines. Landlocked country: a country with no coastline, whose sea trade passes through other countries.
The Northern Corridor, to Mombasa in Kenya, and the Central Corridor, to Dar es Salaam in Tanzania.
$2.81 - 1.87 = 0.94$ dollars per container per kilometre.
Saving per container $\approx 1495 \times 0.94 \approx 1405$ dollars; for 40 containers, $40 \times 1405 = 56200$ dollars a year (an estimate).
Road: flexible and reaches every village; costly over long distances and accident-prone. Air: fast for perishable and valuable goods; expensive. Water: cheap for heavy goods on Lake Kivu; limited to the lake.
Examples: crops reach markets before they spoil, so less is wasted; farmers sell in bigger markets at better prices; inputs such as fertiliser arrive cheaper; transport costs paid to traders fall; access to services and off-farm jobs improves.
For: transport costs raise the price of every import and lower the earnings of every export, and Source A shows large savings when they fall. Against: development also needs education, health, good governance, energy and investment; cheap transport cannot help a country with nothing to sell. Conclusion: transport is a necessary condition, especially for a landlocked country, but not sufficient on its own.

Sources and credits

Rwanda Economic Update, Edition N° 18, World Bank, January 2022, for transport costs on the Central Corridor and clearance times at Malaba.
TMEA Regional Trade and Transport Study, TradeMark East Africa, via the International Growth Centre, for the Dar es Salaam to Kigali distance.
Photo: Charcoal transport, JEsa, CC BY-SA 4.0, via Wikimedia Commons.
Photo: RwandAir flight at Kamembe Airport, Jon Harald Søby, CC0, via Wikimedia Commons.

Written by Ganzaa: Figure 1, the tables, the worked example and the exercises.

This lesson adapts CC BY-SA material and is shared under CC BY-SA 4.0.

1The cost of a long road

2Rwanda's routes to the sea

Worked example: what Source A means for one container

3Modes of transport in Rwanda

4How transport contributes to economic development

The cost of a long road

Rwanda's routes to the sea

Modes of transport in Rwanda

How transport contributes to economic development