Business development
Understanding informal transport as a commercial business, as well as how different business and operational models influence driver behaviour, provides insights on how supporting actions for IPT may bring about positive change. These may take the form of promoting certain organisational structures, provision of financing schemes and direct incentives for drivers.
Overview of types of actions
TRANSITIONS Route Marker 4 highlights the importance of capacity building within IPT organisations, relating primarily to the unions and associations. A key point raised was that the unions and associations were founded to represent and help organise and manage IPT operations, but not to function as standalone business themselves. The unions and associations are, however, in a position to help coordinate provision of training to the principal business partners, typically the vehicle owner and the driver.
The table below identifies the main types of actions that could be undertaken.
Experience and perspectives from the TRANSITIONS cities
Perspectives have been gained in all 5 cities through a combination of the local knowledge of the City Research Leaders and feedback received in the stakeholder interviews and passenger opinions surveys. There are is also a very interesting pilot scheme that took place in Cape Town, the Blue Dot taxi service, which packages several of the business development actions referred to with advanced digital tools (further details here)
BLUE DOT Taxi Service
This pilot scheme, initiated by the Western Cape Government, involved partnering with the provincial minibus-taxi industry to achieve the following aims:
- improve the quality and safety of the service provided to the passenger;
- achieve empowerment in, and transformation of the industry; and
- address two of the industry’s most challenging issues, namely illegal operations and violent conflict.
Eight new companies were established by the Western Cape’s regional taxi councils to participate in the pilot along with Umanyo Travel Services (UTS), the company established by the South Africa National Taxi Council’s (SANTACO) provincial branch.
800+ minibus-taxis that participated in the scheme were easily identified by their large Blue Dot sticker and drivers were required to undertake training. Customer feedback was a central element of the scheme, with passengers encouraged to rate the service anonymously. When customers submit their ratings, they were asked whether the taxi is:
- Speeding
- Driving safely and following the rules of the road
- Too full
Complementing the passenger feedback approach, participating minibus-taxis were installed with vehicle trackers. This monitoring allowed the Blue Dot operators to offer a monthly financial reward based on driver behaviour and performance. Positive impacts achieved by the scheme have included a significant increase in tax compliance by operators and a 50% reduction in speeding events.
Subsidisation – In Cape Town, it was commented that "the minibus-taxi industry is keeping the South Africa economy moving"15 and was recognised by government for doing so in two ways: transporting people to work, and in itself providing substantial employment. However, aside from capital contribution provided to replace old vehicles as part of the fleet renewal scheme, there was no contribution universally available to the Minibus-taxi sector that could be called a subsidy.
From CODETA’s point of view (an umbrella organization gathering 48 individual route associations), it was raised that an operating subsidy would allow drivers not to have to wait for a full complement of passenger nor to only operate in peak passenger demand periods. The provincial government recognised these calls for a subsidy, but countered that the bus contracts that the Western Cape Department for Transport and Public Works (DTPW) issued were not an operator, but a passenger subsidy, as it was paid per ticket sold rather than being a direct contribution to the operator’s finances. Pursuing this approach to subsidisation would require greater transparency in relation to Minibus-taxi operator finances for a case to be made for subsidisation, but there remains a wider problem. It was raised during stakeholder interviews that the state of the economy and government finances meant that “we [the provincial government] don’t have money for anything at the moment; how are we going to fund this bigger vision around [equitably funded] public transport?”
Financing schemes - The dominant union in Ghana (GPRTU), which owns and operates the majority of the trotro fleet, conducts regular renewal programs on hire purchase, in partnership with banks or financial institutions. MASLOC has been a key partner in that process and is supported by the government who wishes to boost transportation business in Ghana. Other banks also specialize in fleet renewal programs and offer affordable and flexible monthly repayments with minimal documentation required. Hence, there is a high upscaling potential if such programs are led at the Metropolitan or National level. However, apart from GPRTU and PROTOA, there is very little scope for operators to renew their vehicles or fleet of vehicles. Recapitalization requires discipline and significant margins, which operators fail to achieve. The lack of an affordable financial mechanism also acts as a disincentive for operators to renew their vehicles and invest in the business. MASLOC seems to be the only institution to provide loans at reasonable rates.
Remuneration – Interviews in Cape Town highlighted the undesirable incentives created by the “target” driver remuneration system. For owners, they viewed the business primarily as a revenue stream, with little benefit to them to invest in vehicle upkeep. CODETA has introduced measures to counter both these outcomes: drivers were paid a commission – an agreed portion of total revenue – and thus were not solely reliant on the target system, while owners were reprimanded if their vehicles were old or in poor condition.
In Accra and Kumasi, both at Co-op and GPRTU, the Union imposes the payment of basic salaries to drivers, which corresponds to double the amount of their daily sales. Any surplus on daily sales is an additional source of revenue for the drivers and mates, but they are struggling to receive these surplus payments.
Safe driver training – Interviews conducted in Accra and Kumasi seem to indicate that drivers or riders do not receive any kind of formal training and learn to drive ‘on the job’, which contributes to poor driving standards and higher numbers of accidents. It also suggests that licences are granted to public transport operators without testing driving skills.
Driver tracking to improve productivity and road safety – case studies: In addition to the Blue Dot scheme introduced above, two further case studies that provide further inspiration are as follows. One research project in Nairobi involved cooperation with fleet owners and the introduction of monitoring devices to 255 minibuses. The devices provide real time information to the owner of the minibus about the productivity and safety of the driver. It was found that the monitoring technology eases labour contracting frictions by improving the contract that owners offer their drivers. The drivers were found to respond by driving in ways that are less damaging to the vehicle, reducing their under-reporting of revenue and meeting their targets more often, resulting in higher profits for the firm.[39]
A second study reports on the Safe Travel To School (STTS) programme that aims to provide safer travel for child passengers in Cape Town by monitoring driver performance through a tracking device installed in each vehicle and rewarding good driver performance. The programme started with 78 drivers recruited in 2015 and expanded to 800 drivers from 16 districts of Cape Town. Financial incentives are paid out across four quarters each year, rewarding drivers with the best performances and those who have improved their driving during the 3-month period.
Endnotes
37. Further information on the Blue Dot taxi service pilot scheme can be found at: https://www.westerncape.gov.za/tpw/blue-dot-taxi-service
38. Kelly, E., Lane, G., and Schoenholzer, D. 2018. The impact of monitoring technologies on contracts and employee behaviour: Experimental evidence from Kenya’s transit industry.
39. Janmohammed, A., Niekerk, A.V., Samuels, R., Naidoo, M., As, S.V., 2019. Engaging minibus taxi drivers in the quest for child safer roads. Global Health Innovation 2. Available at: https://doi.org/10.15641/ghi.v2i1.728