Warning signs

The recent Southern African Transport Conference brought to light a number of interesting research papers, including how working with minibus taxi operators and delivering public transport systems could be done better. We explore how South Africa’s approach to implementing Integrated Rapid Public Transport Networks (IRPTNs) could be improved.

According to Ross Esson, economist at Pegasys Strategy and Development, there are three constraints hindering the delivery of improved public transport: trust, capacity and time.

“We have a one size fits all approach that doesn’t factor in the different requirements of the metros,” he says of South Africa’s current drive for IRPTN implementation.

“It is a detailed high-spec, high-cost system that requires a complete and radical transformation of the industry. To do that, we get into a long discussion about how it will happen and, within that, there are conversations about transformation,” he continues, adding that municipalities themselves are ultimately responsible for funding, while there is currently a massive skills shortage in public transport.

“Some of these issues represent the nature of the beast, but there are others we need to start addressing more clearly,” he notes. Esson and his colleagues advise a staged approach, but, before that can be implemented, trust and capacity (between and within government and the taxi industry), need to be addressed.

Esson again points to the fact that local governments are suffering funding from constraints and the lack of local skills. “That, in itself, is difficult for a local government that has been tasked with this responsibility,” he says.

Pointing to what is required from the minibus taxi industry, Esson notes that the first constraint is a change in the way the industry does business.

“Currently, fares come directly from customers, while, in the future, funds will come directly from government on a structured basis. The relationship between government and the industry is important because, currently, the industry exists in a regulatory environment. In the new system it will be on a contractual basis with constant feedback between the parties.”

He notes that while taxi owners are currently individual businesses, they will become shareholders within the new system. “But what happens after the 12-year contracts have expired? There is uncertainty … Thus, because of this, and the trust relationship between the two parties, this process will take time.”

During this time, Esson notes, there is no real improvement in public transport services … The process must take place before full implementation.

Esson’s staged approach suggests a way of implementing pieces of the puzzle according to the available capacity of government and the taxi industry at each point in time. “We get to the same place, but we see a constant improvement of the passenger experience over that time,” he suggests.

“We need better infrastructure, service, customer experience and subsidies of services. So what can we achieve now?” he asks.

“First, we need to look at infrastructure: bus shelters, passenger information systems, improved taxi ranks, call centres. In the second stage, we propose a business model that doesn’t completely change the industry’s current model – offer a limited amount of off-peak contracts and contracts for routes that are not currently subsidised. By creating that relationship, you provide subsidy and create an understanding in the industry about the benefits of formalisation.

“The final stage is the establishment of a vehicle operating company, managed by government, with a revised, upgraded, capitalised fleet with a limited number of contracts and drivers, who are formalised with medical aid and pension.

“This staged proposal allows us to see an incremental improvement in passenger services, allowing us to get commuters used to the quality of service, without all the upfront transactional costs,” he notes.

Cost, warns Neeth Leitner (also from Pegasys Strategy and Development), is another element that is going to make full, successful implementation of the system difficult – especially when compensation is such a big factor.

“We need to be cognisant of the fact that each project doesn’t operate in a bubble. There are countrywide implications,” he begins, describing compensation as an exchange for the owner-operators’ surrender of their current economic rights, to generate a livelihood through their licences and businesses.

“If we assume that there are 150 000 taxis in South Africa, it amounts to R170 billion if all those taxi-owner operators are compensated. That number doesn’t include compensation for private bus operators, which would also be significant.  

“With the current funding restrictions – and what needs to be spent on in terms of infrastructure, planning fees, vehicles, and so on – it will take up to 170 years to fund the compensation obligation for the whole country.

“It’s not a viable way forward. It’s unaffordable to the country. We’re effectively paying double, and setting precedents from which it will be very difficult to remove ourselves as we move forward,” he warns.

Leitner adds that the result will be an “over-capitalised inability to expand” as there will be no money left. “The rest of the country will be left unchanged because of the precedent set in the first phase of these projects.”

Leitner suggests that, in a new public transport system, accessible value should be the focal point; starting with the vehicle operating company, the shareholding of which will lead to profit share, capital value, employment and network value-chain opportunities.

“Compensation must be considered as a package and not just a cash payment from government. This moderates upfront expenditure of cash compensation, and cash flow issues are mitigated. It also taps into previously neglected areas of value and reduces the overall cost of compensation.

“It offers true long-term empowerment and gives us the ability to mix and match; one size fits all is a difficult approach to take.”

With 21-million trips per day taken on public transport, 15 million of which are by taxi, the poorer part of the population is hardest hit. These people spend up to 40 percent of their income, and 25 percent of their time, on transport. “We’ve taken a particular approach and this is an opportune time to reflect and start seeing if there are alternatives or ways to add to and improve on it,” Esson notes. His and Leitner’s papers both illustrate the importance of this.

FROM THE FLOOR

“What if subsidies were some sort of incentive, for example, for good performance or grants for the cooperative? Subsidies can be a deterrent to improvement.”

“We need to be a bit more modest in interpreting what the public transport policy says and actually allow for a more modest approach in developing these systems.”

“If we have trust between the taxi industry and municipal governments the project will build itself.”

“One needs to look at the process of an incremental approach in the space it’s implemented. In some instances there may need to be radical interventions.”

“The current solutions don’t take into account how to build government and industry capacity.”