Recap+or+redesign,+SA+and+Bogota,+Colombia,+Jeremy+Cronin,+B+Day

Business Day, Johannesburg, 20 October 2006
=Finding the right route to change=


 * Jeremy Cronin**

THE National Household Travel survey confirms high levels of dissatisfaction among the 10-million South Africans using public transport daily. Two-thirds of these rely on minibuses, and transforming the minibus sector is the key to getting public transport working safely, efficiently and affordably. But how? Since 1999, government has been seeking to roll out the taxi recapitalisation programme. The objective is to renew the taxi fleet (anything between 90000 and 125000 vehicles) within a time span of five (it has now become seven) years.

Old taxis will be scrapped in exchange for an allowance that is seen as a down-payment on new, safer vehicles.

Since 1999, the programme has been in stop-start mode. Some progress has been made in ancillary matters. A degree of democratisation has been implemented, with elected provincial and national taxi councils. This is an important achievement, but in a sector with tough local bosses and tens of thousands of robustly independent entrepreneurs, effective representation is a tenuous matter.

Levels of taxi-related violence have come down, although the problem remains endemic. Ninety-eight percent of taxi operators (those on the books) have now applied for permits to be converted to operating licences. And, in recent months, some 6000 have applied to have old vehicles scrapped in exchange for the R50000 scrapping allowance.

So what’s the problem?

There are several interrelated problems. The 6000 scrapping applications are from those who wish to leave the industry. The last reliable figure I have is that fewer than 100 of them are from Gauteng, yet more than half of all registered minibuses are located in Gauteng. Those who wish to leave the industry are probably overwhelmingly from areas in which there is little viable business, and where a once-off R50000 seems a good alternative.

In other words, the test of viability — and relevance — is still to come.

Roland Lomme of the World Bank estimates an emerging upper stratum within the industry has already been recapitalising under its own steam at the rate of some 15000-20000 new vehicles a year. Does this upper stratum of operators need a R7,7bn publicly funded recapitalisation programme?

On the other hand, tens of thousands of operators are in survivalist mode. Will they be able to scrap their present vehicles and sustain monthly payments on new ones?

As we know, there is considerable resistance from many quarters.

Some resistance is opportunistic. There are taxi bosses who see any transformation as a threat to their own coercive control over their turf. There are those who wish to remain tax evaders in an industry estimated to be making some R4bn a year. There is also an attempt to leverage the proposed scrapping allowance up from R50000 to R100000. There are, however, some legitimate reasons for operator uncertainty.

From the beginning, the programme has been premised on the assumption that the key to transforming the sector lies in redesigning the vehicles. Undoubtedly there is room for improvement in vehicle design and we should support moves in this direction. However, despite urban legend, there is little statistical evidence to suggest minibuses are markedly less safe than private cars. Fatality figures for minibuses are marginally higher, but if you factor in the hours the average minibus spends on the road then minibuses may actually be statistically safer.

I am not saying that minibus travel is safe. It is not. But the substantive reasons for this are related more to the operating environment than to vehicle design. Much time has been spent on designing new mini- and midi-buses, down to specifying colour (any colour will do, as long as it is white).

Less time has been devoted to serious research on operating systems, business models, increasing stratification, local and regional variations, and economic sustainability.

What we do know about these presents a generally depressing picture. Strong-arm, warlord structures prevail in many parts, particularly on lucrative routes. While provincial licensing boards and the occasional traffic police exert nominal regulation, in practice powerful taxi associations control routes and ranks. To access a route a small operator may have to pay R70000 to an association, along with ongoing levies. Taxi bosses derive revenue as much from operating their own taxis as from these semifeudal rents. This fosters overtrading, setting up small operators for an internecine scramble for passengers as they struggle to stay afloat financially. Despite a government minimum-wage determination, drivers are seldom paid a wage. They are expected to bring in a fixed daily amount, anything above this can be taken home. This encourages overloading and speeding.

Forty years ago many of our cities operated relatively profitable and efficient bus companies. Like Metrorail, these bus operations now have to be propped up with subsidies running into more than R2bn a year. The need for bus and train operating subsidies is, at least partly, caused by minibuses on the same routes eroding financial sustainability. Yet many of the minibuses running these routes are themselves operating hand to mouth.

It makes little economic sense to be using minibuses on the high-density and longer-distance routes. It is not a fuel-efficient, and a still less safe, way of transporting large volumes of passengers.

In Latin America, public-transport lawlessness and violence have also been endemic in many cities. But there are inspiring examples of a turnaround in cities such as Bogota.

To be sustainable, public-transport recapitalisation has to be anchored within local-level planning. In our towns and cities, public transport needs to operate as an integrated system in which, operationally, different modes do what each does best; in which an operator derives benefit not from another’s discomfort, but from the system as a whole working well.

None of this can be simply rolled out by national government. It requires considerable devolution of resources, capacity and implementation to the municipal sphere. Above all, it requires local-level consultation and public participation.


 * From: http://www.businessday.co.za/articles/opinion.aspx?ID=BD4A294119**

=Winning the war of the centavos=


 * Jeremy Cronin**

TAXI violence and general public-transport lawlessness is not a uniquely South African scourge. This was the sad but, in its way, emancipating discovery I made belatedly a few years ago. “The war of the centavos” it is called in much of Latin America — referring to the bitter struggle of public transport operators on routes and at ranks to capture the cents of paying passengers. In a recent study tour to Colombia, the parliamentary transport portfolio committee wanted to find out how authorities in the capital city, Bogota, had addressed the challenge. Buses have long been the dominant public transport mode in Bogota. Until recently, operations were effectively controlled by five family cabals.

The families, apparently, never owned a single bus, but had leverage over the licensing department and effectively controlled, among them, the major routes. They made their money from renting out operational space on these routes to small operators, and providing strong-arm protection against external competitors (“pirates”) — for a fee, of course.

The families were inclined to over-trade on the routes they controlled, since they were making their money from rent rather than from actually transporting passengers.

Internecine competition among small operators within the same “family”, and turf disputes between “families”, often spilled over into violence. The operating and business environment encouraged all of the other related syndromes with which we are familiar in SA — underpaid and ill-trained drivers, speeding and overloading, congestion, pollution, inappropriate use of small vehicles for mass commuting, and a bus fleet that was seriously undercapitalised.

The turnaround in this situation was driven by a visionary mayor, Enrique Penalosa, who has since become something of an international celebrity in public transport, urban planning and environmental circles.

Penalosa’s team planned, constructed and operationalised the first phase of Bogota’s Transmilenio bus rapid transit (BRT) system in the space of three years.

At its launch in 2003, the bus system, based on dedicated closed lanes and subway-like stations, was already transporting half a million passengers daily. The figure has now risen to 1,5-million. The Transmilenio BRT has inspired some 80 similar projects in other Colombian cities, as well as in Ecuador, Chile, Brazil, Australia, South Korea, China and several US cities.

The innovative technical features of Bogota’s BRT, its relatively low cost (some 70-80 times less than a comparable rail system) and the related 350km of dedicated bikeways that span the city, including its poorest neighbourhoods, have received a wide and well-deserved press. What is perhaps less well known is the story behind the integration of small bus operators into the project.

The construction costs of the Transmilenio infrastructure, which includes dedicated bus lanes, stations, pedestrian and bike bridges, and urban expropriation, were carried by the national and metropolitan governments. Operations are run by private-sector bus consortiums, at least two per major trunk route.

Operating tenders required the formation of such consortiums and stipulated a mixture of international (for technology transfers) and local transport operators.

Interestingly, from a South African taxi recapitalisation perspective, the process also involved the scrapping of old vehicles.

Bidding consortiums were required to specify the number of old buses (usually about 80) that they would scrap if their respective tenders were successful. This scrapping requirement was deliberately added to ensure small operators would be included in the consortiums — typically exchanging old buses for shares in the new companies. The actual scrapping was carried out by a public agency, and was carefully regulated, but the cost of scrapping was borne by the successful private bidders.

There was considerable initial resistance to the project from vested interests, not least from the five family cabals. But the Bogota city authorities handled the preparatory phases of the project imaginatively.

They arranged for a series of meetings between local bus operators, including small bus-owners, and their counterparts in Curitiba, Brazil, where the first BRT system was pioneered in the 1970s. The Curitiba BRT private operators were able to assure their Colombian counterparts that they were doing extremely well, much better, thank you very much, now that they had become part of a sustainable and integrated system.

The Transmilenio project also hired small bus operators as consultants in the preparatory phase, to learn from their own detailed local knowledge and to build participation and a sense of ownership.

The formalisation of a previously anarchic bus sector into the Transmilenio BRT has several interesting institutional and business-model features. Bus operations are run by the private consortiums, each with allocated routes and contractually agreed passenger-kilometres to be run. An integrated ticketing system with booths at entry points to stations is used and there is no on-board fare collection. A private agency, separate from the bus operators, runs the ticketing. Apart from owning the infrastructure, the municipality manages and regulates the overall system.

In SA, public transport regulation typically amounts to bureaucratic paperwork in a licensing board, and the occasional intervention of traffic police on the road. In the case of Transmilenio, regulation is focused on continuous operational oversight; 180 inspectors employed by the public component of Transmilenio are out riding buses around the clock.

All bus movements are tracked on a real-time basis via satellite. This allows for immediate interventions if there are breakdowns, and provides a subsequent record of scheduled kilometres travelled, the basis upon which revenue is distributed weekly to operators in terms of contractually agreed criteria. Operational infringements — early or late departures, a bus stop made too far from the platform, etc — result in deductions.

Bogota is a third-world megacity — it has a population of 7-million — with significant levels of poverty. Despite many challenges, the city has rolled out an impressive public transport system proudly used daily by 1,5-million Bogotans, rich and poor. You can travel anywhere you like throughout the system for a flat-rate ticket priced at R2,70.

Amazingly, the system requires no operational subsidy whatsoever. Surely there are many lessons we can draw from this experience?


 * Cronin is chairman of the parliamentary transport portfolio committee and deputy general-secretary of the South African Communist Party.


 * From: http://www.businessday.co.za/articles/opinion.aspx?ID=BD4A294120**

1991 words