Status of Research on Passenger Bus Transport Sector in Ghana

1. Competition Reforms in Key Markets for Enhancing Social & Economic Welfare in Developing Status of Research on Passenger Bus Transport Sector in Ghana Paulina Agyekum 1

2. Outline of Presentation • Introduction • Overview of Relevant Sectoral Reforms  • Methodology • Status of Work • Way Forward • Conclusion

3. BUS TRANSPORT IN GHANA 1

4. Characteristics of Road Transport System • T • Road transport is the major carrier ; 98% of freight and 95% of passenger traffic carriage. • About 1,300,000 Vehicle fleet • Used vehicles form 90% at an average age of 15 years • About 4.75million passengers are moved annually • Buses form 60% of vehicle fleet and carry 68% of passengers. • Passenger cars (per 1,000 people)is 18. • Percentage of Income spent on transport by an average person: 17% -25%

5. Background to Policy Action • TPublic transport companies: • Government is the majority share holder so exercises dominant influence on the companies and fares are subsidised. • Private Sector • It is made up of individual transport owners eg. 9 out of 10 drivers do not own the vehicle; • The majority of public transport vehicles are in single unit ownership only and only a few have larger fleet sizes. • They do self regulation or regulate through unions

6. Background to Policy Action • T • Regulated Regime: Omnibus Services Authority Decree of 1969 and The Omnibus Services Decree of 1972 to include Licensing Authority • Concessions and subsidies were provided and this acted as a strong barrier to competitive market entry. • Liberalized economy was introduced in early 90’s which resulted in deregulated public transport services with competition

7. Background to Policy Action • Public transport undertakings were privitesd • Lack of buyers resulted in continued decline in rolling stock and other assets. • Catalyst for change: There was public pressure for better quality PT services • Re-regulation: Re-regulation for-market competition was introduced. • Metro Mass Transit Ltd (MMT is a product of this

8. Relevant Sectoral Reforms and their Impacts on Bus Transport Market

9. Summary of Policy and Regulatory Inst • 1. Road Traffic Ordinance 1952, Repealed by Road Traffic Act 683 of 2004 and Amended with Road Traffic Act 761 of 2008. • Road Traffic Regulations LI 953 of 1974 repealed by LI 2180 of July 2012 • National Transport Policy • Medium term development plan. Issues • Road safety • Service Management • PPP

10. Selected Policy Reform Issues with Competition 1 1.Policy Statement NTP, 4.2.4.3 2008: • Government will invest in transport and subsidize transport services. 2. Sector Medium-term Development Plan (SMTDP): 2012-14, Section 4.2.12 • Establishment of Metro Mass Transit (MMT)

11. Selected Policy Reform Issues 3. Policy statement 4.2.4.1 of NTP (2008): • The private sector will be encouraged to invest in transport infrastructure and services 4. Regulation 121 of Road Traffic Act 2004: Registration of Commercial Vehicle and registration Operators along specific routes

12. Policy Statement NTP, 4.2.4.3 2008: • Government will invest in transport and subsidize transport services. Introduce Metro Mass Transit (MMT) i. Apply subsidies in a transparent manner, targeting the most vulnerable and excluded Groups. • Provide competitive fares • Ensure mass movement

13. Research Hypothesis Hypothesis Subsidized bus transport systems are not commercially viable and sustainable

14. Research Questions and Elements of Competition to study • What is the market share of MMT What is the impact of subsidy and concessionary fare regime on competition in the bus transport market What is the operational performance of MMT in terms of cost effectiveness and sustenance • How does MMT operations impact on consumer need

15. Data Collection • MMT performance assessment for cost effectiveness and competition • Revision of documents and collation of information from records on operational performance • Consultations with Management of MMT service • Interviews with private operators • Perception survey of passengers using MMT • Consultations with Government Agencies

16. Policy statement 4.2.4.1 of NTP (2008) • T • The private sector will be encouraged to invest in transport infrastructure and services Strategies • Explore PPP (Public Private Partnership) and ‘concession’ options for investment in transport • Expand private sector investment in the transport sector for increased service provision and improved efficiency

17. Policy statement 4.2.4.1 of NTP (2008): Hypothesis • Private sector investment in passenger bus service for intercity transport is commercially viable. • Research Questions • What is the threshold of private sector investment • Is private sector investment cost effective • What is the effect of private sector investment on the competitive market. • What are the competitive strategies • How does this impact on consumers

18. Data Requirements • Operator performance assessment through Private Transport Operator Survey • Consumer needs assessment through stated preference surveys • Institutional Surveys involving stakeholder and affiliated institutions

19. Regulation 121 of Road Traffic Act 2004 • Registration of commercial vehicles and registration of operators along specific routes Strategies • Private commercial bus operators to belong to identifiable transport company’s with formal management licensed by the Ministry or its accredited agents. • Bus companies to operate under precise rules set by a transport regulatory agency. • Allocation of bus routes on the basis of transport needs through route franchising whereby a franchise will be awarded through competitive tendering

20. Regulation 121 of Road Traffic Act 2004 Hypothesis • Effective and efficient management of Route registration is not feasible in Ghana. Research Questions: • How easy is it to register with a bus company • Who determines which route should be registered. • How do they secure their continued operation within the Permit system • Are they able to comply with Permit requirements • How has it impacted on competition • Is there capacity to monitor compliance across many routes and track sub-contracting of routes

21. Methodology • Literature Review: • Bus operation characteristics • Competition in bus transport markets • International practices • Methodologies for competition assessment • Secondary Data Collection: • Documentations on bus operation characteristics • Primary Data • Field Surveys through interviews • Key Informant Consultations • Focus Group and Participatory Discussions • Field Observations

22. Secondary Data Type and Source Data Source • Policy and regulatory instruments • Mid Term Development Programme Data Type • Legal framework • Sectoral policy • Planning • Privatization design • Taxes and subsidies • Procurement • Concessioning • Franchising • Pricing • Control and penalties • Technical regulation • Quality standards

23. Primary Data Source: Government Institutions • Representative Government Agencies eg. MOT, MRH, DVLA, Metropolitan, Municipal and District Assemblies • Enterprise eg. Insurance Companies, • Driver Unions eg GPRTU, • Civil Society Groups eg. Ghana Pass.

24. Primary Data – Government Institutions/Enterprises • Policy regulation, priorities monitoring and evaluation • Institutional systems for transport management • Provision of infrastructure eg, roads, bus terminals, traffic management and calming • Taxation and pricing systems • Level of government control over services and fares • Easy service and fare integration • Sensitivity to social objectives • Level of Political interference in day-to-day operations • Level of government planning and oversight of services and fares • Needed • Vehicle design standards • Enforce safety and operating rules • licensing policies (e.g., number, renewal period, ceilings on ownership) • Public information and marketing • Governance and institutional capacity • Competent regulatory institutions • Able to plan route networks, administer regulations, • guide industry development, and monitor outcomes • Capital availability and Investment

25. Primary Data: Transport unions/ civil society Groups Rules of conduct and operation Enforcement of rules Regulation cover on : Fares, Service levels: frequency, hours, accessibility, Service quality and reliability, crowding Vehicles: access, comfort, safety, emissions Effectiveness of regulations Legal basis to impose the appropriate obligations and incentives Competent regulatory institutions Able to plan route networks, administer regulations, guide industry development, and monitor outcomes A responsive operating industry Amenable to control, willing to enter into competition and to invest (e.g., buses, garages)

26. Primary Data – Operator Surveys • Number of companies and buses • Source of funding for vehicle acquisition • State or quality of buses • Age of buses • Type of ownership • Market entry requirements • Operational arrangements • Operational factors affecting • Routing • Scheduling • Trip frequency • Transport fares • Turn over • Remuneration • Taxes and subsides • quality or market factor differentiations • Vehicle Operation Costs • Cost recovery • Availability of facilities • Management incentives • Level of efficiency and service quality • Financial sustainability problems • Amount of service operated to insure profitability and quality • Government grants operating rights to private companies • Assistance in vehicle procurement • differentiation of product - quality, image, services • Constraints

27. Primary Data – Operator Surveys • Entry and exit requirements • Capital availability • Specialisation • Nature of competition • Patents • activities • - investment • - business culture • Access to finance for vehicle replacement, when required • risk taking culture • - employment concentration • Value-added

28. Primary Data – Operator Surveys Route Registration • Route Registration • Secure their continued operation within the Permit system • Comply with Permit requirements • Optimise the number of trips operated per day, and minimise idle time at terminals • Optimise revenue, either through direct collection or the daily rate agreed with operating crews • Manage cost items, including fuel, parts and maintenance • Ability to monitor compliance across many routes and thousands of vehicles • Ability to track sub-contracting of routes • Ability to verify permit on-the-spot • Better control of floaters • Ability to monitor violations of bus priority facilities

29. Data Type by Source – Passenger Surveys • Transport Availability • Trip purpose • Ability to make Choices • Affordability • Frequency of travel • Comfortability • Service Reliability • Observed Changes • Concerns • Suggested interventions • Budget/income of the transport user • Travel Time • Waiting Time • Information • Scheduling • Cleanliness of buses and terminals • Safety • Security

30. Scope • One (1) Intercity and One (1) intracity service route. • The MMT as a service provider and Two (2) intercity and two (2) intra city private bus operators • Intracity Service: Potential routes for the study include major routes from the City Centre to any of the four (4) cardinal points of the city • Intercity Service: Major routes providing outlets from Ghana and also linking different regional capitals

31. Methodological Framework Vertical and Horizontal Comparison’s of operation types by reform impacts • Comparison between incumbent and by those affected reform • Comparison between operational types – intra and intercity service

32. Analytical Framework • Assess degree of competition and outcomes based on • Passenger preference • Operational Efficiency (based on tangibles and products) • Cost Efficiency (based on cost benefit analysis) • Quality Control (qualitative based on weighting and scoring analysis) • Competitive environment in relation to Political Interference (qualitative assessment), Government Skills Required • .

33. Analytical Framework • A gap analysis of consumer needs, operator performance and the role and performance of relevant institutions and agencies • Innovations • Sustainability • Development of an Effective Competitive Framework • Institutional capacity assessment • Development of capacity development framework

34. Data Availability • Comprehensive study on MMT (2010) • Passenger Demand Study for Intracity service (2013) • Pockets of operational studies

35. Conclusion and Way Forward • Complete desk studies on required analytical framework and fine tune analytical framework • Complete Secondary Data Collection • Proceed with primary data collection • Conduct data analysis and reporting

36. THANK YOU