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Dirty Money: The bad economics of drug trade

Recently, media reports have been awash with people being arrested over drug trafficking and seizure of scores of contrabands and narcotics.

Regionally, this is considered a serious challenge facing law enforcement agencies.

Back in Rwanda, cannabis and contrabands especially crude gin commonly known as Kanyanga, and other illicit gin packed in banned plastic bags such as Chief waragi, zebra waragi and African gin, among others, continues to be a threat to community safety and social welfare.

Gicumbi District has been labeled as one of the main transit routes for traffickers of kanyanga, which this article focuses on.

These contrabands are classified among the psychotropic substances under article 24 of the law governing narcotic drugs, psychotropic substances and precursors in Rwanda, which categorize all drinks with alcoholic content exceeding 45 percent, as ‘narcotics.

According to experts, such illicit gins interfere with legal economic activity in many different ways, as do other types of crime. The consequences stem largely from the direct and indirect influences of the large amounts of money in illegal trades.

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Gicumbi District Police Commander CSP Dan Ndayambaje.

Between January and February this year, for example, Rwanda National Police (RNP) seized and destroyed Kanyanga valued at Rwf36 million from Gicumbi alone.

To the law enforcers, lives were saved and criminals apprehended and to the economists, investing Rwf36 million in drug trade is “bad and criminal business” considering the risks.

Economic analysts use multiplier effect to make a breakdown of what Rwf36 million can do if invested in clean business, saying that it can multiply ten times or even more with almost no risks, if invested in clean business.

The Chief Executive Officer of Business Development Fund (BDF) Innocent Bulindi, says: “If you leverage off Rwf36 million for a loan, you may get five times that amount, which is Rwf180million, imagine what you can do with this amount; a lot.”

According to Celestin Ntaganzwa, the President of FERWACOTAMO, a federation of motorcycle cooperatives in Rwanda, Rwf180 million comes in handy.

“This money can purchase 150 brand new commercial motorcycles with each going for Rwf1.2 million. With each motorcycle making a daily return of Rwf5000, this would mean 150 motorcycles would collect Rwf750, 000 daily which is equivalent Rwf274million annually,” said Ntaganzwa.

Multiplier Effect

Leaving all factors constant, according to Ntaganzwa, a brand new TVS motorcycle can run for three years in good mechanical condition if maintained well. This means, the 150 motorcycles can approximately fetch Rwf274 million annually or Rwf823m in three years.

For, Bulindi of BDF, “this is one way of creating jobs; assuming every motorcyclist has dependants, there are thousands of people that would be benefiting from this money.”

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Jean de Dieu Ntamitondero testifying about dangers of Kanyanga before residents of Kaniga.

He points out that, besides the motorcycle business, the Rwf36million, leveraged off for a loan of Rwf180million can still do a lot in agriculture.

Pundits say that when you cultivate maize, you can harvest 3 tons on one hectare; this means that with Rwf180 million invested on 500 hectares of land, one would make returns of Rwf300 million just in one season.

The figures imply that any mount that is invested in clean business and well managed can make tremendous profits.

According to Bulindi, those benefiting are not only the investors but also banks and the nation since the load are paid off with a minimum interest rate of 16.5% which is a 29.7million paid in interests.

Some of former kanyanga traffickers regret venturing their money into the criminal business, how they were arrested by the police, the risks involved in the business, how much they lost and how Kanyanga eventually ruined their lives and those of their families.

Nicholas Ntambara says he was into Kanyanga business for seven years.

“To me, these are seven wasted years since I can’t show anything that I achieved rather than losing millions of francs in kanyanga that would end up seized,” says Ntambara.

“My fate started hanging in balance after knowing that all security organs were out on a hurt for me. I abandoned my wife and went into hiding for four months. Later I crossed over to Uganda in an attempt to start a new life but I couldn’t cope with the situation. I had to come back and I got arrested upon arrival,” said Ntambara as he narrated the ordeals of his life as a drug trafficker.

“Through this criminal business, I lost my land and house. Had I made clean investments in the seven years, I would be a rich man. I am a victim of my poor decisions,” he notes.

Ntambara shares a closely similar story with Jean de Dieu Ntamitondero, who was convicted for trafficking of kanyanga and served a one-and-half years imprisonment.

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Nicolas Ntambara a former drug trafficker speaking about effects of Kanyanga.

The reformed Ntamitondero has since invested in tamarillo fruits locally known as Ibinyomoro, and earns over Rwf400, 000 in profits every year.

Getting rid of Kanyanga in Gicumbi

Gicumbi being one of the places prone with Kanyanga, several mechanisms have been put in place and they are paying off, according to Police.

Chief Supt. Dan Ndayambaje, the District Police Commander of Gicumbi, said: “Residents themselves have come up with mechanisms like anti-kanyanga clubs in each of the 21 sectors, and several anti-crime forums to support security organs in information sharing, fight the vice and break the chain of suppliers.”

“We managed to wipe out all distillation plants, identified porous borders used as transit routes. This collaboration justifies why we seize big quantities and increased number of arrested dealers.”

He expressed optimism that Kanyanga will eventually be wiped up but appealed for continued partnership from residents.

Kanyanga and illicit drugs are blamed for most domestic violence cases.

Police and health experts have both warned the public against Kanyanga and illicit drugs arguing they do not only cause health repercussions but also affect the victims economically.

Police also says that most other crimes like gender based violence, and child abuse, are mainly committed by people under the influence of drugs.

Fighting drug abuse as one of the high impact crimes, with focus on breaking the chain of supply through community awareness and operations, is one of the major priorities of Rwanda National Police.

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