Organisational and financial models of the informal transport sector
While to the observer, the on-road bustle of Informal Public Transport vehicles may appear chaotic, underlying these operations are complex hierarchical structures of self-organisation and varying business models. Understanding these structures and models, and the interests of different actors, will be essential to any attempt to work with and modify operations in this sector.
The collective organisation of informal public transport in Sub-Saharan African cities takes a variety of forms. The most widespread form is that of route associations, formed by operators to protect and self-regulate their markets. In most associations, membership is composed exclusively of vehicle owners, although some include vehicle drivers as well. As identified here regulatory authorities sometimes require membership of a collective organisation in licensing regimes. Informal transport businesses can organise collectively at varying geographical scales and with differing levels of public authority sanction and support.
In some countries there are national or regional supra-associations established to represent collective owner interests. Examples include the National Union of Road Transport Workers (NURTW) in Nigeria (Agbiboa 2020), which has developed to become a large organisation (circa 100,000 membership) formed through the merger of a number of existing unions/associations. NURTW dominates the urban and small vehicles sector, while the owner-centric Road Transport Employers Association of Nigeria (RTEAN) dominates the inter-urban and large bus sectors (Mobereaola 2009).
It is important to note that IPT business models are typically based around the commercial relationship between a vehicle owner and the driver, except in the smaller proportion of cases of vehicle owner-drivers. This has a profound effect on employment conditions, as well as IPT operations on the road (as explored further here). The Savings and Credit Cooperatives (SACCOs) and Transport Management Companies (TMCs) found in Kenya represent an alternative organisational and financial model and have therefore been a particular focus of study, in part due to the improvements in service quality that have been achieved through improved access to finance and driver remuneration and welfare.
Comparison of situations and perspectives from the TRANSITIONS cities
Industry organisation - In all the case cities there are large informal IPT vehicle fleets in operation, with varying degrees of hierarchical self-organisation. In Accra there are over 11,000 trotro vehicles operating from over 300 trotro terminals, and which are organised into at least 25 unions and associations. In Kumasi there are around 9,000 trotro vehicles operating (4,000 legally and 5,000 illegally), organised into 24 registered unions in the Kumasi Metropolitan Assembly, and into eight and three unions in Ejisu and Tafo respectively. In Freetown there are around 5 500 poda-poda vehicles operating. In Cape Town there are between 10,400 and 14,200 minibus-taxi vehicles operating (over 7,700 legally and between 2,600 and 6,500 illegally), organised into 102 route associations.
In Accra and Kumasi, trotros are organised into ‘branches’, with each branch operating a specific route or set of routes. Structures within branches, called ‘locals’, sometimes separate and become branches in their own right. As outlined in Section 4.1, it is mandatory for all trotro (and taxicab) operators to be a member of a registered union, the largest of which is the Ghana Private Road Transport Union (GPRTU), which represents around 70% of operators. Its membership includes both vehicle owners and drivers. Founded in 1967, GPRTU historically enjoyed a monopoly in controling and representing Ghana’s trotro industry. However, in 2005 the Progressive Transport Owners Association (PROTOA) was allowed to compete in the same environment. The Ghana Co-operative Transport Association (GCTA) (known as the ‘Co-op’) is a further, more recent national organization which respresents trotro (and taxicab) owners and drivers. In Kumasi, in addition to GPRTU, PROTOA and GCTA there are 21 smaller unions, some of which are organised under an umbrella body called the Ghana Road Transport Coordinating Council (GRTCC).
In contrast to Accra and Kumasi, in Freetown the informal transport industry organisation members are drivers, not vehicle owners and drivers. Poda-poda (and okada three-wheeler vehicle) drivers are organised into operator associations that establish district branches in the city. District branches are divided further into ‘park committees’, which directly manage the daily affairs of the ‘parks’. The overarching operator associations are the Sierra Leone Drivers’ Union and the General Motor Transport Workers Association.
In Cape Town, unlike in the West African cities, the informal transport industry is organised only around minibus services, and only vehicle owners are represented. Minibus-taxi vehicle owners are organised into multiple route associations, the majority of which are in turn affiliated to six regional supra-associations (known as ‘motherbodies’). Funded by route association member contributions, the ‘motherbodies’ make decisions to better serve passenger demand (e.g., to expand services and ranking sites to limit the need for transfers) and maintain discipline amongst route association members. There are two national supra-associations: the South African National Taxi Council (SANTACO); and the National Taxi Alliance (NTA). SANTACO has a provincial sub-body in the Western Cape.
Functions and services - With regard to the functions of operator bodies and the services they offer to members, the operator unions at national and branch levels in Accra provide a channel of communication with government agencies. The relationship between the unions and the regulatory authorities is focussed on the periodic negotiation of fares, and the acquisition of vehicle fleets. The Ghana Ministry of Transport has assisted GPRTU in the purchase of newer vehicles, by acting as intermediary or guarantor on large transactions. To join a branch a trotro driver must hold a valid driver’s licence, and in some instances pay a joining fee. To join a branch a vehicle owner must pay a once-off fee. Union members pay monthly fees, which cover the day-to-day running of the union and contribute towards a member welfare scheme. In addition, every driver pays a daily ‘booking fee’ so that their vehicle is added to a loading board and can operate on a given route. This fee contributes to the general costs of running the terminal, including paying station workers such as porters, as well as contributing to the union’s welfare fund. Belonging to a union gives the member financial support in the event of sickness or death, an annual share of bonuses, and training on various topics.
In Kumasi a typical terminal is comprised of a number of ‘branches’, affiliated to different transport unions. The branch leadership organises passenger loading arrangements and ensures compliance with regulations.
They collect fees and represent members during stakeholder engagements. Some unions have waivered joining fees in order to attract members and thereby reduce the proportion of illegal operators (known as ‘wawaas’). They ensure that driver applicants hold a valid drivers’ license and are at least 25 years old, and they check the physical condition of vehicles. Some unions are able to provide financial support to members in good standing who need money for vehicle maintenance. Like in Accra, driver booking fees contribute to a welfare fund.
In Freetown the poda-poda driver’s union advances the working conditions of members, and represents member interests in engagements with government agencies. At the national level, the union engages around fare setting, while at local level it manages the operation of vehicles at each of the ‘parks’ within the city. The drivers’ union obtains funds from membership fees, service fees, and donations.
In Cape Town, route associations derive income from vehicle owner members, and regional ‘motherbodies’ derive income from route association members. Unlike in the West African cities, there is no organisation drivers can join dedicated to advancing their interests. Motherbodies and associations use their membership income to monitor operations and passenger demand to inform operational decisions. Administrative functions include support for operating license applications, adjustments and renewals, as well as support to members when dealing with law enforcement agencies.
Business and financial models - With regard to business operating models, in Accra both GPRTU and GCTA require the payment of basic salaries to drivers, which correspond to half the amount of their daily farebox revenue. Any additional source of revenue is allocated to vehicle crews. Expenses associated with trotro operation are the cost of fuel, daily target (i.e. the half of farebox revenue allocated to the vehicle owner), vehicle maintenance, operating licence, union membership, roadworthiness certificate, vehicle insurance, and tax. The cost of fuel is the largest expense.
In Kumasi, trotro drivers enter into agreements with owners regarding the portion of farebox revenue that needs to be paid at the end of each month. Any extra revenue above this portion is kept by the driver. Apart from the owners portion of farebox revenue, the drivers’ expenses include cost of fuel, vehicle maintenance, operating permits, payment to conductors, payment to touts for loading passengers, and booking fees (set by GPRTU at 10% of farebox revenue). As in Accra, the unions therefore sometimes apply for loans from commercial banks to purchase vehicles on behalf of members. The main challenge in qualifiying for bank loans is collateral. Typically owners pay about twice the purchase price of the vehicle, over a period of about 2-3 years. Some unions have purchased collectively-owned vehicles and plots of land out of membership and booking fees. Membership fees are also sometimes used for maintaining facilities at stations.
In Freetown, the acquisition and maintenance of poda-poda vehicles is financed by private individuals. There is no funding opportunity by either government or private banks. Vehicles are purchased from Europe or America by private individuals with the necessary financial resources. Vehicle owners then recruit drivers who operate the minibuses and pay the owners a share of farebox revenue at the end of each day. Sometimes the drivers pay the money to an intermediary who collects it on behalf of the owners. They also pay themselves from whatever they make after they have earned the ’master money’ (i.e., the daily target).
In Cape Town, drivers collect fares, out of which they pay vehicle rental to the owner (i.e., the daily target), all fuel costs, and the wages of a conductor (known as a ‘gaatjie’) (although not all drivers make use of gaatjies). Some associations have introduced a commission model, similar to that in Accra and Kumasi, to counteract the aggressive driver behaviour that the target system creates. New vehicles are acquired through bank loans and there is one finance house (SA Taxi) dedicated to this industry. Assistance from the state has taken the form of a Taxi Recapitalisation Programme, through which scrapping allowances are available to owners who surrender and replace old vehicles.
Main findings and messages
What then are the main similarities and differences found across the case cities?
A notable similarity is that all the cities have nested hierarchical structures of industry representation. Clearly different organisation structures are needed to manage issues that range from vehicle queuing at local ranks, to fare setting, to national policy negotiation.
A notable difference is that Cape Town has no dedicated body to represent drivers’ interests, while the other cities do. There may be a correlation between the inclusion of drivers in the unions in Ghana, and the slightly more secure commission-based remuneration model prevalent in Accra and Kumasi. The South African industry structures also do not include for-hire transport service operators, but the consequences of this are unclear.
A further difference is the private financial institutions supporting new vehicle acquisition in Cape Town, and state vehicle renewal subsidy support. Organisations and approaches for supporting improvements to vehicles fleets are less well developed (or non-existent) in the other cities.
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