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International Conference Results of the CREW Project Passenger Transport Sub-Sector - Zambia 18 th November 2014 Made by: Robert Mtonga, Strategy Foresight.

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Presentation on theme: "International Conference Results of the CREW Project Passenger Transport Sub-Sector - Zambia 18 th November 2014 Made by: Robert Mtonga, Strategy Foresight."— Presentation transcript:

1 International Conference Results of the CREW Project Passenger Transport Sub-Sector - Zambia 18 th November 2014 Made by: Robert Mtonga, Strategy Foresight Consult Presented by: Faith Mwamba, CUTS Lusaka

2 Passenger Transport Services

3 . Focus of Study 1. Identify scope of competition reforms in each of the identified sectors and institutions which are responsible in managing different elements of competition reforms namely policies, regulations and sector programmes; 2. Evaluate ability of these institutions in carrying out the competition reform processes effectively and highlighting successes and failures; 3. Identify problems that exist for consumers and producers in the two sectors especially from a welfare perspective and highlighting possible causes through stakeholder perception or feedback; 4. Highlight factors that have direct influence on such problems pertaining to consumer and producer benefits and welfare; and 5. Assess how addressing these factors can help enhance benefits for consumers and producers and estimating how much benefits are achieved.

4 . Focus of Study 1. Transport Liberalisation Policy; 2. Road Traffic Regulations; 3. Transport Infrastructure; 4. Producer Perceptions; 5. Consumer Perceptions; and 6. Structure of Competition.

5 . Methods of Data Collection Used 1. Literature Review; 2. Secondary Data Collection; 3. Focus Group Discussions; and 4. Perception Survey.

6 . Transport Liberalisation Policy 1. Liberalised the Transport Market; 2. Provided for an effective regulatory and enforcement system; 3. Provided for appropriate passenger transport infrastructure; 4. Provided for safe use of vehicles on public roads; 5. Emphasised quality consumer service delivery by producers; 6. Pr omoted quality licencing (and issuance of permits), roadworthiness of vehicles and avoid overloading; and 7. E mphasised competitiveness of indigenous producers on the market.

7 . Notable Areas of the Transport Policy 1. Mechanism of Procuring Buses is Open (However, Bus must meet Pre-Shipment Inspection Criteria set by ZABS); 2. The new Government Guaranteed the purchase of 2,000 Buses by Public and Private Drivers Association of Zambia (PPDAZ) under the Development Bank of Zambia (DBZ) Scheme to run for 5 years at 2% interest per annum (However, not all buses have been delivered); 3. Zambia does not operate a specific route allocation system. Operators are free to operate on any route even though restriction is based on type and quality of bus at intra-city and inter-city level; 4. The Policy pronounces fares being determined by ‘market forces’. However, the MTWSC – in practice – controls fare settings.

8 . Process of Setting Fares

9 . 1. Though the fare setting process in Zambia is expected to be determined by market forces, in practice, it is regulated by the GRZ. There is however no criteria that the GRZ uses to determine justification of bus fare revision other than the perceived barometer of the consumers anticipated reaction; 2. Previous requests by producers to revise bus fares have been necessitated by change in fuel prices and deteriorating exchange rate of the Zambian Kwacha (ZMW) against major foreign currencies; 3. Producers rarely apply the pricing model which includes all production costs plus a profit margin. As a result, most producers do not know the real profit margins of the market but are aware of turn-over because they have set ‘cashing fee’ for the driver; 4. Producers are likely to propose a hire increment and a lower reduction than they are aiming to achieve in order to hedge against pressure on proposed revision by negotiating consumer pressure groups and the GRZ; 5. CCPC relents that it has not participated in the stakeholders meeting to revise bus fares since 2009. RTSA acknowledged the oversight that CCPC has not been involved and has since assured that CCPC will be involved in the process henceforth; 6. It is therefore recommended that CCPC must be involved in the bus fare setting or revision process. It is further recommended that CUTS must proactively request to participate in the bus fare setting or revision process;

10 . Weaknesses of the Transport Policy 1. Even though the Policy is currently undergoing review, its lifespan has not been defined and has thus existed in perpetuity; 2. The Policy has lacked Key Performance Indicators (KPIs) to measure performance and achievement of its Objectives; 3. Even though it may be taken as an administrative strategy, the Policy has not provided for a Principle – Agency Service Level Agreement (SLA) with implementing agencies like RTSA. Therefore, no-one is expressly accountable for failure to achieve stated Policy Objectives; and 4. The Policy does not have an existing M&E System.

11 . Road Traffic Regulations The Regulatory Scope or Framework has been focused on the following: - 1. Industry Entry (and Exit); 2. Promoting Competition and Discouraging Monopoly; and 3. Setting Standards for Road Safety.

12 . Promoting Competition The dual fare setting process begs the question ‘is the market liberalised or controlled?’ It was observed that collaboration between RTSA and CCPC in promoting competition is disjointed. There is need for the two regulatory bodies to collaborate. CUTS must also develop interest in participating in public sittings during which RSLs are issued to producers and speed against producers who contravene.

13 . Setting Standards of Road Safety The terms and conditions for issuance of Road Service Licences (RSLs) require producers to meet certain minimum safety requirements. For example, the qualification to be issued with an operators’ licence include: - 1. Possession of atleast third party insurance certificate; and 2. Installation of a speed control gadget that can limit speed for passenger services to 100km/h on inter-city routes and 60km/h for intra-city routes.

14 . Transport Infrastructure (Inter-City) RDA has done a commendable job with respect to the following road projects: - 1. Link Zambia 8000 Project; and 2. Urban Roads Development like L400. Bus Stations (and Bus Stops) are the responsibility of Local Authorities (LAs).

15 . Transport Infrastructure (Intra-City) Due to financial constraints, LAs have had challenges developing Bus Stations (and Bus Stops) and related infrastructure. They have not made use of the PPP Initiative to build necessary infrastructure for passenger transport services.

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