Zupco monopoly unhealthy for public transport sector

The directive by the government to ban private transport operators and force them to register under the Zimbabwe United Passenger Company (Zupco) creates an unhealthy state monopoly in the once thriving transport sector. The government justifies the policy as being critical in bringing sanity in the transport sector (safe and reliable transport) and ensuring Covid-19 social distance regulations are adhered to.

Victor Bhoroma
analyst

However, the policy is yielding the opposite effect as urban commuters are facing transport blues during this winter period and scrambling for the few pirate taxis that risk it all to ply urban routes. During morning or evening rush hours, commuters are walking on foot for long distances while hundreds have to resort to packed truckers and lorries who charge less.

Unlicensed bus operators, commuters and pirate taxis are finding innovative ways to evade arrest and continue operating despite the ban. The shortage of transport has created overcrowded pick-up points at various exit points in Harare and other cities which defeats the social distance ideals.

Zupco  history

Zupco was renamed to its current name from Rhodesian Omnibus Company in 1980 soon after independence. By 1993, the company was operating over 1 200 buses and plying more than 426 local and regional routes to Blantyre (Malawi), Lusaka (Zambia), Gaborone (Botswana) and Johannesburg (South Africa). The company provided a vital link for urban-rural communication and remittances before the advent of mobile money transfers.

Between 1990 and 2000, Zupco went on to build a solid name for provision of affordable transport services to some of the remotest parts in the country, while competing for business with other renowned transport operators such as Shu Shine, Mhunga, Power Coaches, Chawasarira, Musanhi, Chikozho, Kukura Kurerwa, Tenda, Tauya, Tombs, Magwizi, Mazarura, and Munenzva, among others.

In 2003, Zupco  awarded a tender for the supply of 150 conventional buses to Dahmer, Scania SA, Pioneer Motor Corporation and Gift Investments to replenish its fleet. In 2004, Zupco  bought 140 conventional buses from Kenya’s General Motors (GM) at a total cost of around US$57 million.

Zupco collapse and revival

In 2012, the company entered a long-term deal for the supply and delivery of custom-made buses with First Automotive Works (FAW) of China which would see the company getting 100 buses from China in the same year and 51 more in the following year.

However, a series of breakdowns and successive fatal accidents between 2010 and 2015 led to the loss of over 65 lives on the country’s highways. Between 2012 and 2017, the company went through financial stress as years of maladministration, corruption, political interference, mounting debt and losses took their toll on company operations. Revenues plummeted to less than US$200 000 per year as the company was left with a fleet of less than 50 buses.

In the 2018 Auditor-General’s Report, Zupco  was pointed out as one of the parastatals where there had been material breakdown in the financial control systems, corporate governance flaws and failure to release audited results periodically.

In 2019, the government announced that it would acquire 1 500 new buses from Belarus and China, with 300 of them being imported as knocked down kits for assembly in Zimbabwe. So far, 212 buses have been commissioned under the scheme.

The government has vowed to reform public transport through funding Zupco and eliminating commuter omnibus operators from the transport system. The move appears sincere on paper as it’s meant to benefit the commuting public. However, there are economic implications underneath.

Cost to the economy

Public transport service providers play a critical role in the economy through providing daily mobility for labour-force, consumption of fuel and auto parts, transportation of merchandise, diversification of markets and facilitating demand for consumer goods and services in various business centers.

Before Covid-19, transport service providers provided jobs for thousands of skilled and unskilled labour (especially the youth). The ban on private players has all but created an unhealthy monopoly for the state which has no scope for profit, thus stifling economic development and employment creation.

Zupco has no capacity to cater for the whole Zimbabwean population and offer a sustainable solution to the passenger transport sector as a single player. It is inevitable that Zupco’s relationship with private operators will face strains sooner or later due to payment delays. This will leave passengers stranded, private operators nursing losses and the transport sector in a mess deeper than before Zupco  intervention.

Possible looting

So far, there is no clarity on how much the government is currently paying private transport operators fortnightly and the exact number of contracted buses or buses on the road. There has not been an audit since the scheme started in January 2020.

In May 2019 and June 2020, the company fired over 100 conductors for allegedly siphoning funds from the system through fake ticket books and declaration of low returns. It is unclear how deep or coordinated these pilferage cases were. However, in the bigger scheme there are free diesel allocations that cost the country millions in each month and the subsequent disbursement of budgeted funds from Treasury.

Justifiably, the government has set aside a budget for the second year running for provision of public transport services as a social service and part of income redistribution.

Going forward, it will be critical for the whole public transport subsidy to be audited to ensure transparency since there is involvement of hundreds of independent private operators under centralised management and allocation of free fuel to the licensed service providers.

Cost of failure

On paper, the government was trying to bring sanity in major towns through providing centralised, safe and reliable transport services, but the prevailing situation has created more chaos and inconvenience to the public than the intended benefits.

The government is no longer licensing new commuter omnibus operators or intercity bus operators which means that the sector is no longer growing but being morphed into state monopoly. The key question is, what will become of the sector when the current Zupco  scheme fails??

Zimbabwe desperately needs free market policies and an environment that ushers in competition for various sectors of the economy which have experienced collapse due to state inadequacies and inefficiencies. The government appreciated these failures in sectors such as telecommunications, petroleum, aviation, agriculture and partially in energy generation and public broadcasting. It went on to license private players to create a competitive environment which currently makes the economy thrive and create jobs.

However, the entrenchment of state monopolistic practices through Zupco  are taking the country backwards. What the government needs is the formalisation of private transport operators under associations so that unlicensed operators find it difficult to do business. The formalisation will entail payment of various taxes to government and levies to urban councils by the operators.

Similarly, acts of bad driving behaviour and malpractices can be managed through a centralised traffic register. In trying to bring sanity to passenger transport services, the government has burnt a thriving transport sector and replaced it with a fragile state monopoly. Time will tell on the sustainability and transparency of the current model.

Nevertheless, unruly behaviour by touts, pirate taxis, commuter omnibuses and other unlicensed operators continues unabated while commuters have been left worse off.

Bhoroma is an economic analyst. He holds an MBA from the University of Zimbabwe. — vbhoroma@gmail.com or Twitter: @VictorBhoroma1.