In most parts of Africa, public transport remains poorly organized. Massive rural to urban migration has exacerbated what is considered in most countries as an informal sector that operates purely on cash. Bus owners and operators are the cog that keeps the public transport wheels moving for Forty percent of the continent’s one billion people that live in urban areas with 90 percent of passengers on the continent relying on motorized transport for their daily commute.
In responding to the ongoing COVID-19 pandemic, governments have had to rethink the public transport system in a bid to enforce safety measures including directives on the use of cashless payments, social distancing among others to reduce the spread of the virus. These measures have dealt a huge blow to bus owners and operators’ bottom line due to the reduced number of passengers or no income at all for those operating where cessations meant discontinued routes.
Although the World Health Organization (WHO) has said the Covid-19 outbreak in Africa may have passed its peak, experts warn that we are not out of the woods yet as the continent is yet to pass its first wave. How can the sector use innovative approaches to its business model and how can technology help bus owners and operators have better visibility & increase efficiency in route mapping, pricing and fare collection.
Will tech alone leapfrog infrastructure and regulatory challenges?
Hopping on for the Digital Ride
For an industry that has ‘found order’ and thrived amidst the chaos, the very factors that have kept the ship afloat despite an aversion to structures have brought the public transport sector to its titanic moment. It’s iceberg- the COVID-19 pandemic. The economic impact for businesses in this sector continues to be felt, and though the next normal is still unknown, it’s highly unlikely that things will go back to what they were..
Some big changes are happening in Africa’s public transport sector. A crisis fueled by the COVID pandemic has forced governments to enforce measures to encourage cashless payments, ensure social distancing and reach out to the private sector for solutions in contact tracing.
In the past few months, governments across South, East and West Africa have begun to reign in the anarchy with initiatives to formalize and digitize public transport.
In May, Uganda’s Ministry of Kampala Capital City Authority Affairs (KCCA) and the Rwanda Utilities Regulatory Authority (RURA) proposed new regulations for commercial motorcycles (boda-boda) and taxi operations in the nation’s capitals in a move that will require operators to only accept cashless payments.
In June, Kenya’s National Transport and Safety Authority (NTSA) announced plans to introduce a cashless payment system. The regulator has also invited bids from tech companies to provide a mobile-based solution that will enable digital fare collection and allow for contact tracing.
In August, Tanzania’s Land Transport Regulatory Authority (LATRA) announced the licensing of 8 service providers (including Cellulant Tanzania) for the roll-out of an e-ticketing system for the upcountry buses.
Rwanda has been at the forefront in digitizing its public transportation and had made good steps in Kigali before the pandemic. The country’s rollout of a fully automated fleet management and rapid transport began in 2017. At the time of lockdown, intercity movement was at 60%.
Tech is no silver bullet
When Patrick Buchana and his co-founder Philip Ngarambe founded AC Group – a software development company in 2015, they were very clear on what problem they sought to solve – streamline how public transport in Rwanda operates, reduce delays, standardize prices, and phase out the old buses with a modern fleet with larger carrying capacity.
Their Tap&Go solution was put in place as part of the Smart Kigali initiative to modernize the capital by introducing a cashless payment solution for public transport in Kigali, Rwanda’s megacity of 1.2 million people.
However, as Patrick explained in a recent Transport forum they thought tech would solve everything. When they got in, they quickly realized that the politics and dynamics of the public transport sector are very different. His take, Tech is only a 30% component of the implementation of digital systems, the rest of it is the politics around it. In his words “It’s exciting to see that, only when all the non-tech barriers are out of the way does the tech come in and take its place to evolve and transform in a way that both the governments and bus companies can gain from its implementation”
Although his company was privileged to have a ministry that is innovative in their thinking rooting for them which helped in speaking to the regulator, that alone was not going to get the bus owners to play ball. Their advice to private player entrants into the space, “have a compelling reason to bus owners to adopt technology ahead of the regulator stepping in to enforce.” For their Tap & Go roll out, enforcement by gov for bus companies to comply started well into 70% of the system’s implementation.
We can’t leapfrog Regulatory Frameworks
Implementation of digital solutions however grand, disruptive or well-intentioned cannot exist in a regulatory framework vacuum. Unfortunately, tech companies have had to grapple with this reality in Kenya.
The informal public transport sector is believed to generate hundreds of billions of dollars in annual revenue. A large chunk goes unaccounted for making it a challenge for Tax authorities to monitor and collect.
Although Tax authorities are raring to go in their digitization efforts for this additional revenue, the foundation – a strong regulatory framework, is crucial.
The Tanzanian government is currently reviewing all its transport regulations and creating a framework that will guide digitization to accommodate online applications. The Land Transport Regulatory Authority (LATRA) has launched a digital system through which players can make applications, assessment, approved, payment and licensing, all online. This was confirmed by LATRA’s Director of Transport, Mr. Johansen Kahatano who was on the webinar’s panel.
Weak regulation may result in an unfair play where the legitimacy of tech based players seeking to enter the sector is constantly in question or a situation where licenses are constantly revoked.
A strong regulatory framework gives every player an equal footing and will create room for innovation-based disruption without any parties adding unnecessary roadblocks as has been seen in Kenya in the past.
Future tech in transport
The biggest pain point for this sector is the lack of data – a problem that tech can easily solve.
The lack of data continues to hamper optimization of routes for operators on patterns of commute and movement which often determines the right price to passengers. For governments, data points as seen in Rwanda have greatly helped with contact tracing, revenue monitoring and tax collection. For business owners, the lack of data is a turn off for financial institutions which are still risk averse to cash-based businesses. This impedes credit facilities, staves off private investment and stunts business growth.
For bus owners and operators, as the inevitable paradigm shift happens, the biggest question now becomes; how can they sustainably run their businesses, for such a critical service, in spite of a new economic reality.
It’s no longer business as usual and the center can no longer hold, not with a rising population, massive migration into urban areas and a young tech-savvy consumer demographic willing to experiment around mobility and new technologies.