The Sunday News
Michael Mhlanga
In May 2019, the Government committed to subsidising public transport to ease the impact of inflation on the most underprivileged citizens.
By then, the then Permanent Secretary of Finance and Economic Development mentioned that this will cost at least $8 million a month, emphasising that a “quantified, budgeted and targeted subsidy is a good subsidy”.
Since then, the public transport industry is fast awakening from a decades’ slumber which over the years has exposed commuters both in the cities and rural areas vulnerable to transport economic shocks. Transport plays a crucial role in connecting people to goods and services and fostering sustainable development.
The rural and urban poor rely heavily on public transportation for commuting. Without fast, secure, and affordable mass transportation, the rural and urban poor are typically forced to walk to work, which is time consuming and limits their daily income targets.
On Friday, President Mnangagwa commissioned 76 Zimbabwe United Passengers Company (Zupco) buses in Bulawayo.
The buses are set to ply rural Matabeleland and Bulawayo urban to service, at a reasonably and subsidised cost, citizens of Zimbabwe.
With that said, the question of subsidising public transport has arisen even in the middle of a visible remedy of buses in countering the monopoly that had been entrenched by the taxi/ kombi industry on commuters.
I vividly remember how in January 2019, kombis would randomly decide the price of a trip from the CBD and there was nothing we could do because the only option other than them, was them. I usually argue that had buses not been present, commuters would be paying five times more than they are today.
So, subsidies by the Government have proven their necessity and confirmed the urgency of this policy responsiveness. It then becomes important to explore the logic of subsidies in public transport, which by the way we all contribute to as long as we transact and are taxed in Zimbabwe.
Subsidising users’ fares for public transport may sound like a great idea, and often there are good economic reasons for doing so. In all industrialised and many developing countries, urban transport systems are subsidised with public funds in order to continue operating. It sounds even better if subsidies target certain populations, such as students, older adults, or low-income communities.
For example, in 2015, the City of Bogota, Colombia was giving subsidies to low-income individuals, people with disabilities, and seniors, and even expanded support to students, according to a draft ordinance that was approved by City Council.
Therefore, the logic of subsiding public transport by capacitating Zupco arguably contributes to an enhanced economic activity in the country. Subsidy policies on public urban transport have been adopted ubiquitously. In both developed and developing countries, subsidies are implemented to make transport more affordable. There are two important points to keep in mind about transit subsidies: 1) subsidising users’ fares, particularly with targeted subsidies, is effective; and 2) discounted fares for particular populations should not be funded by charging other passengers more. By focusing on both sides of the equation, the Zimbabwean Government can ensure an efficient and sustainable transport system.
However, problems can arise when subsidies are not properly applied. If subsidies do not improve the quality of service or fail to help those in need, they lose their impact. Implementing targeted subsides should be a redistributive measure, as they are an effective solution for increasing access to public transport among disadvantaged communities.
Subsidies need an external and sustainable funding source. The average user should not be required to pay a higher fare to cover the cost of other users, as this type of measures only discourages the average person from using public transport. It is like charging parents more to pay for the fare of their children. This decreases overall demand and burdens everyone financially. Unfortunately, this does not seem to be the case in Zimbabwe’s circumstances aimed at reducing the average person’s transport fares.
Initiatives to subsidise public transport fares should be sensible and balanced. The intention to subsidise the transit fares of marginalised populations is good, but without the proper financing mechanisms, transport sector deficits will only grow. Ensuring an efficient and sustainable public transport system requires not only supporting particular communities, but doing so in a financially viable way.
Having a good public transportation system in place in urban areas is especially important as Zimbabwe’s urban is rapidly growing. Without reliable transportation, low-income urban households are at a disadvantage in accessing a wider range of opportunities, which could potentially hinder them from moving up the socio-economic ladder.
It is widely believed that mobility is a key driver of development, with positive economic and social benefits from investment in transport. It can be argued that a very significant part of the poverty reduction achievements of the MDGs (eliminating hunger, improving education, reducing child mortality, improving maternal health, etc) was due to the improved mobility of the target populations, supporting services and goods, however, the relationships between transport and poverty are complex.
Bearing in mind that a part of the 76 commissioned buses will be operating in rural areas, it is important to understand that this is not only economically responsive, but it is the right thing to do. Many of the Zimbabwe’s poor people live in rural areas isolated by distance, terrain and poverty from employment and economic opportunities, markets, healthcare and education. Lack of basic infrastructure (paths, trails, bridges and roads) and access to transport services makes it difficult for poor people to access markets and services.
