31 January 2013

Uganda: UTODA Eyes Buses

Experts call for major reforms if effective bus services are to succeed in Kampala

It takes a very courageous businessman to invest in a bus service in Kampala city. As Pioneer Easy Bus has come to find out, it is a very risky venture. The new bus company, which has been in operation for barely a year, is virtually limping. Urban transport experts cannot agree more.

"If I had money I wouldn't invest in the bus service in Kampala," says Amin Tamale Kiggundu, an urban expert and lecturer at Makerere University.

Kiggundu told The Independent on Jan. 22 that due to several investment risks in the sector, it is very hard for any operator to run a profitable public transport service involving buses. The risk factors include heavy traffic gridlocks in the city - worsened by lack of bus lanes - a volatile economy, competition from thousands of commuter taxis and the lack of effective institutions to oversee and regulate the industry.

However, the Uganda Taxi Operators and Drivers Association (UTODA), the body in charge of the myriad of taxis that ply the city, is willing to bite the bullet and operate hundreds of buses in the city.

Backed by a 25-year experience of managing 14-seater taxis, UTODA thinks it could fare better than Pioneer Easy buses.

On Jan. 3, 2013, UTODA wrote to KCCA with a copy to the minister responsible for Kampala among others, notifying them of a new bus that started operating on Jan.10 as part of their "consultative meetings with all the stakeholders in the transport industry in the Greater Kampala Metropolitan area."

In an interview with The Independent on Jan. 23 Emmanuel Tibaijuka, UTODA's secretary for development and planning, confirmed their interest in bus operations in the city. "We have been in the transport industry for a long time and we hope that will be applied onto the new business to ensure it is profitable and successful," he said.

UTODA hopes to import hundreds of buses with a capacity of 77 passengers - slightly more than Pioneer's 61 - from India, China and Japan. The lone bus on the streets is being used as part of "a pilot study."

However, Kiggundu warned UTODA that a bus service is a completely different ball game from taxi service.

"You need to phase out commuter taxis completely if you are to operate profitably," he says, adding that would take a long time to achieve.

Kiggundu highly doubted that UTODA would succeed in a city where other investors have failed.

Tibaijuka admitted that the investment risks were real and a major "challenge" but they would continue with the plan.

Pioneer, which has been beset with management wrangles and liquidity problems in recent months, is contracted to operate on the Eastern and Western routes. UTODA hopes to take over the Northern and Southern routes.

But also on the cards is a potential merger between the two companies, which Tibaijuka confirmed, saying there had been contact. "We are sure they will [join us]," he said. "If they don't, the competition will force them to. Good enough Fred Senoga, their former director, is already with us."

However, a top Pioneer Easy Bus official dismissed this as a misrepresentation.

"We had a meeting with them in October 2012 to find a way of sharing our infrastructure especially bus shelters with their taxis. It was not about sharing the bus business," said John Masanda, the chief commercial officer. "Otherwise we welcome them in the industry so that when there is pain we feel it together, when there is joy we do the same."

On their source of funding, Tibaijuka said the business is owned and is to be financed by the over 5, 000 UTODA members who include drivers, conductors, passengers, and other individuals. These are entitled to a minimum of 48 shares, each valued at Shs 20, 000. Asked to explain how the buses and rival commuter taxis would operate on the same roads when they are owned by the same institution, Tibaijuka said: "We will give ample time to the taxis to phase out. But that does not mean that they won't work, they can go somewhere else where the buses won't be operating."

However, KCCA said they had not received any formal communication from UTODA expressing interest in running a bus service in the city.

"We will give them due guidance when they inform us," Peter Kaujju, the authority's publicist said.

While KCCA had given Pioneer the go ahead by signing formal contract, the company is still struggling with the authorities. Last year, Parliament instituted an inquiry, which the company's officials say had affected their operations and put their future at stake. The parliamentary committee's report gave the Authority up to January 13, 2013 to review the contract with Pioneer, but KCCA is still studying the report.

The outcome of this exercise will be keenly watched by UTODA and other investors who might be interested in the industry as it will have a huge impact on all prospective investors in the sector. Masanda said their future plans were being hampered as they await KCCA to make a decision. "You can't continue to invest in an industry when you are not sure of the future," he said. Going forward, Kigundu said the government should adopt public private partnership arrangement if public transport in the city is to improve for the benefit of the people.

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