18 February 2013

Uganda: Is This the End of Pioneer Bus?


Last week Pioneer Easy Bus, the company that has over the last year been providing bus services in Kampala, had 98 of its buses impounded by the Uganda Revenue Authority (URA). URA moved in order to recover sh8 billion in taxes it says are due to it.

Pioneer's orange buses hit the street last year just in time to detooth a strike by the taxi operator association UTODA. At the time, UTODA was protesting moves by the new incorporated city authority to collect dues owed it by the taxi operator.

The bus company came with the promise of decongesting our roads, lower fares and sparing road users the obnoxious behaviour of our taxi operators. They were such a relief that the public was willing to overlook the fact the new buses had not complied with all formalities.

The honeymoon is over:

No one doubts that Kampala's transport system is in need of an urgent overhaul and that bus transport is part of the solution. There must be money to be made and no one was surprised when the Pioneer slipped into the sector like a duck to water and started making money hand over fist. But problems began to creep in, understandably so as Pioneer's business plan did not call for such an early entrance into the sector.

At the end of last year, the bus company's management in explaining their decision to hike prices said KCCA had not lived up to its obligations of among other things provide for bus lanes. Bus lanes, the company argued, would make it possible for their buses to make more round trips and, therefore, justify the low prices.

There were reports of drivers striking over pay, changes in top management and talk of negotiations with authorities to provide concessions that would make the company's business model more viable, all of which may have been brushed off as teething pains. That being said, they say that deals are not bad.It is the people handling the deals.

Think about it, you were going to have 100 buses, the majority of which will be plying the various routes in and out of the city almost simultaneously, there would be logistical challenges - fuelling, maintenance and even meals, human resource issues - this is a startup that was going to hit the ground with easily a 100 drivers and conductors, not to mention backroom and other support staff.

Then, of course, there were financing issues to consider - how do you not only get the startup capital, but also the operating capital to tide you over the steep early learning curve. The record of startups the world over is very dismal, with nine in ten new companies not seeing their fifth birthday. And just because you start big does not mean the risk goes away. If anything, risks are magnified.

Business is about managing risk. Risk is a function of knowledge. The more knowledge you have the better you can mitigate risk. You pay no particular attention to driving to work. Through years of experience, the accumulated knowledge will allow you to cater for any risks along the way to work. So the risk of you not getting to work is minimised. But if you give your car keys to your 10-year-old son to drive the same car, at the same time, on the same route to work, the risk is suddenly life threatening.

Similarly, in the wide scope of things, a bus company with a fleet to 100 buses is nothing to write home about. Across the border in Kenya, KBS, which has been servicing Nairobi, has been doing so for decades with a fleet which dwarfs Pioneer's. Management knowhow and experience, more than money, is the key mitigator of risk.

Thankfully, the travelling public will not penalise Pioneer for this hiccup in operations if they get back on the road.

One hopes that Pioneer can bounce back, if only so we do not return to the chaos of a taxi dominated industry, but one hopes too that whether they do or they don't, that this experience will provide key lessons for anybody going into the business.

pbusharizi@newvision. co.ug

Copyright © 2013 New Vision. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.