Improving transport in developing cities with investment and regulation

On 15 November 2017, the Oxford Urbanists and the International Growth Centre’s (IGC) Cities that Work initiative, co-hosted a panel discussion on the ‘Future of Informal Transport in Rapidly Growing Cities’, to discuss evidence for improved policy.

Transport and development

Transport is a vital component of connectivity in developing cities, allowing them to be a platform for prosperity and economic activity. By connecting firms and individuals, and providing access to jobs and services across a city, transport systems can provide the scale and specialisation needed for cities to undergo a ‘miracle of productivity’.

However, in many rapidly developing cities, high capacity public transport systems are in limited supply. For example, less than half of Kigali’s citizens, in Rwanda’s capital, have access to a bus station within 500m of their homes (Bajpai et al., 2012). In some cities, there is no mass transport system at all.

The role of informal transport

In this context, informal or semi-formal systems of transport, such as minibuses and motorbike taxis, form the backbone of urban mobility. In Dakar, Senegal, 80% of public transport is provided in the form of informal minibuses (Kumar and Christian Diou, 2010). How governments address, regulate and complement these privately provided systems will play a decisive role in productivity and liveability in developing cities.

The event

To explore the key trade-offs faced by policymakers in improving current systems of urban mobility, the Oxford Urbanists and International Growth Centre’s Cities that Work initiative brought together researchers from a range of disciplines for their second collaborative panel event.

On the panel were Professors Paul Collier (University of Oxford), Tim Schwanen (Studies Unit, University of Oxford), and Dr. Clemence Cavoli (Centre for Transport Studies, University College London). Discussion explored how existing systems of informal or semi-formal transport fit into the picture for the future of mobility in rapidly growing cities.

Findings

A key insight from the discussion was that there is no one definition of informal transport. There is tremendous variation in the operation of extra-legal transport services. In Mexico City, for example, minibus owners can own thousands of vehicles and run multiple routes. In other cities, such as Lagos, most small-scale operators own their own vehicles. These services are in many cases best described as semi-formal, lacking some of the legal requirements of operation, such as vehicle permits or operation licenses, but not necessarily all. In Amman, Maputo and Adana, semi-formal minibuses operators do not adhere to formally agreed bus stops, but they do operate through legal licenses and have fees capped by government authorities.

Informal does not mean unorganised – in many cases there are strong, territorial and often highly hierarchical systems of collective organisation around vehicle ownership, maintenance and operation.

Limited enforcement of regulations means that these informal services operate and fill the gap left by a lack of adequate formal public transport. Motorcycle taxis in cities such as Lagos, Kampala and Douala, for example, have resulted from the collapse of public bus services and subsequent deregulation of the transport sector.

Due to their lack of full legal status, there is a clear distinction between formal and informal transport in their access to capital, and their resultant scale of organisation and range of technologies. Formal systems of transport have access to these in a way that informal systems do not.

The importance of semi-formal transport systems 

Semi-formal transport systems play a crucial role in developing cities, particularly for low income households living on the outskirts of a city with limited transport alternatives. The smaller scale of these vehicles makes them relatively cheap to invest in compared to higher capacity buses. A five- to seven-year-old second hand 14 seater matatu bus in Nairobi, costs around USD$11,800, with net daily returns to owners of approximately $21 per day. This means that capital costs of the vehicle can be recouped within the first two years of vehicle operation.

By contrast, a new 35 seater matatu costs around USD$46,000 (Kumar and Barrett, 2008). This means these semi-formal services can be provided in greater supply by the private market and allows them to charge lower fares whilst remaining financially self-sufficient.

The ability of smaller vehicles to operate wherever roads exist means that they are more fluid and adaptable to the changing needs of a city (and to low quality roads in areas where often the most disadvantaged communities live). At the same time, these services also provide a key source of employment for young, mostly male, workers in rapidly developing cities.

Challenges 

Informal and semi-formal transport services face common challenges. In cities like Maputo, semi-formal minibuses exceed speed limits, overcrowd buses, and use poorly maintained vehicles to improve profitability, compromising safety and increasing emissions. The lack of formalised schedules mean that minibus drivers often wait for vehicles to be fully loaded, making access along routes difficult.

A more fundamental problem shared by informal systems is their lack of capacity. Taxis, motorbikes and minibuses are at best medium-capacity vehicles, and as such can result in high levels of congestion. As passenger volumes in cities rise, the time wasted in traffic from these vehicles can become extremely costly.

At the same time, the operation of these services can undercut the financial viability of higher capacity bus services. What’s more, the employment benefits of these systems are quickly outweighed by the detrimental effect they have on a city’s ability to connect and generate more high productivity jobs. 

Policy implications: 

1. Investing in capacity

The pressing question of how policymakers can address existing, semi-formal transport systems is clouded by prejudiced narratives. The ‘high modernist’ narrative of many governments means that in an effort to modernise a city, they seek to imitate high capacity systems of cities like Singapore, which exceed the current needs of a city.

On the other side, a number of NGOs subscribe to the narrative that ‘small is beautiful’, implying that the individual rights of transport workers are human rights. To these NGOs, policy has no place in curtailing informal operations for collective needs.

A realistic way forward for policy falls somewhere between these two narratives: incrementally improving and expanding transport systems in line with urban density and demand. By matching transport technologies with policies to enhance urban density, mass transport systems such as bus rapid transit (BRT) and railways can sustainably provide affordable access to jobs and services across dense central areas of a city. In many developing cities, this will require correcting a massive underinvestment in public goods, such as wide roads in city centres for BRT systems to run.

At the same time, lower capacity existing transport systems such as minibuses and motorbikes can be used as feeder routes to high capacity systems from low density areas, where demand is too low to warrant investment in BRT. Curitiba, the birthplace of the BRT, is a good example of where a BRT system has been coordinated with land use planning and urban density, to allow for financially sustainable services.

Therefore, simple investments in the core infrastructure needed for mass public transport, matched with formalised lower capacity feeder routes, can offer a sensible structure for transport in a middle-income city.

2. Regulation, not replacement

In this context, formalisation of semi-formal systems is key to ensuring that these systems continue to provide affordable access for citizens in developing cities. In many cases, regulation to improve the standardisation of fares and regulation on safety and emissions can improve the quality of transport systems – but this needs to be weighed against the effect of such regulations on their financial sustainability. It is crucial to avoid being too ambitious; by introducing regulations that exceed government capacity to enforce, cities risk undermining the credibility of all regulations.

In many cases, the best way for governments to improve semi-formal services is to provide the finance, or access to private finance, that allows operators to maintain and improve their vehicles. Allowing operators to move away from predatory lending schemes makes improvements in service quality more feasible. 

Going forward 

Challenging existing prejudiced narratives on informal transport requires two things. First, it requires recognising the key role semi-formal transport systems play in for citizens in developing cities. Second, it means acknowledging the importance of public investments in higher capacity systems to complement, and not replace, existing systems. Together, these provide a roadmap for policy.