A new draft regulation proposed by the Rwanda Utilities Regulatory Authority (RURA) to e-commerce service providers in the country has triggered mixed reactions in the market.
This follows an announcement from the regulatory body last week on Friday, February 19, that it was in advanced stages of making adjustments to the law governing postal, courier and delivery services in Rwanda.
RURA says that the regulation will among others establish a legal framework for undertaking postal, courier and delivery of small packages services and promote e-commerce trust of end-users.
“This regulation applies to postal, courier operators and E-commerce platforms operators registered in Rwanda intending to provide services related to the delivery of postal, courier or package weighing up to one hundred kilograms (100 kg),” reads part of the emailed response.
To acquire the license, RURA noted, players will be subject to apply for a $3000 five-year license, which e-commerce players described as an ‘exorbitant’ amount of money especially given their business size.
Other requirements needed to acquire the license include logistics facilities such as motorcycles, cars or vans with safety boxes mentioning company identification and logo.
The service providers will also have to provide a tracking system to the customers among others.
Upon approval, no company will be allowed to provide delivery services of small packages without a license, RURA added.
With only two weeks given to respond back to the regulator players who spoke to The New Times said that if maintained, the decision will most likely leave them uncertain of whether to or not to remain in the business.
The development comes at a time the country was experiencing an e-commerce boom, partly due to the Covid-19 pandemic that has led many people and businesses to shift to digital.
“The faith in which it comes is unfair. Most of them are just growing start-ups and we don’t have the capacity to afford all these requirements,” said Remy Lubega, the owner of Kimironko Market, a web platform opened during pandemic to allow people shop for groceries online.
According to Lubega, one of the reasons most companies will have to opt-out is the hefty fees that have been proposed.
“We are struggling. On my part, I pay Google, I pay App Store, there are other maintenance costs that have to be paid. And now this, how will we survive really?” he added, “This is the time when most people are subject to relief. Honestly, we need measures which can help us survive other than constrain us more.”
Lubega shares similar sentiments with Albert Munyabugingo, the Managing Director of Vuba Vuba, a food delivery service, who claimed that some of requirements to acquire a license were ‘unfair’.
“Particularly, I don’t think it is fair to charge people 0.5 per cent on the turn over. If you look at the majority of people in this business, that capacity is not there and it will be hard to afford. Maybe that figure can be gotten from the net profit.”
Data from RURA indicates that currently 28 postal and courier services providers are licensed, and yet more than 100 players are active.
“It is good for people to understand the rationale behind the licensing. I think for a lot of players who ventured into this business during this Covid-19 time, there might not be aware of some of the existing regulations, but there are lot of consumer protection issues that we need to understand,” Clarisse Iribagiza, the chief executive of DMM.Hehe.
DMM.HeHe, is one of the largest players in the e-commerce industry. The company runs Shypt, an inventory of e-commerce businesses in Rwanda.
“People have access to a lot of data, there needs to be regulation, there needs to be consumer protection, this is geo-location information about where people live, and all those things. So you really want to track the delivery agent that is delivering this and you are giving them your personal information,” she added.
Iribagiza argues that the move will most likely mean for companies to be more efficient because they are now going to be accountable in order to gain consumer trust.
“One of the things that is pulling e-commerce back is consumer trust. People are taking this lightly but if something was to happen, it could really be catastrophic. If we allow people to come in without having to acquire a license, you can only imagine what would happen on the market.”
It will stifle innovation, others say
According to Alex Ntare, the head of the ICT Chamber in Rwanda, if the proposed requirements are maintained, the move will stifle innovation among Rwandan youth who have been at the forefront of venturing into the business.
“But if they make adjustments, it will not.” He added.
Ntare argued that RURA’s decision is not backed up data to show why some requirements were proposed as they are.
“Of course all of them are scared of the money. So the question is that is there any analysis that makes case for the money required. Why is it $3000 why not 4000 or why not 1000?”
Ntare pointed out that during the two weeks players have been given to respond, a survey will be conducted in order to ensure fairness at the same time standardizing the process.
“The other thing is that they are not lying, you will notice that every week, there is a new delivery business. And you find that this is chaotic. So we are going to do a survey, with them, to collect real feedback then we will share with RURA. This will be data-backed up,” he reiterated.
According to an emailed response from RURA, licensing players in the industry will among others protect licensed postal and courier operators from unfair competition from on e-commerce delivery services providers.
“It will also protect consumers and increase professionalism while preventing and fighting scams, fraud, theft and other unprofessional behaviour.”
The regulator highlighted that customers will be subject to fair compensation, while it will also handle complaints.
“Tackle the real issues with regards to delivery, like not respecting the time of delivery, delivering poor quality of product or a different product compared to the one ordered, Getting paid and not deliver, Not deliver and not compensate or compensate unfairly… .”
This will ensure good quality of services, at the same time boosting trust in E-commerce services by the public, the regulator added.