Through our work in Sub-Saharan Africa, we have identified key trends and dynamics affecting the viability and effectiveness of sustainable urban transport systems in various African cities, including in the major and emerging centres of Accra (Ghana), Addis Ababa (Ethiopia), Cape Town (South Africa), Dakar (Senegal), Dar es Salaam (Tanzania), and Lagos (Nigeria). This is the second and final post on transport in African cities. In this post, we discuss financing mechanisms for sustainable transport and the institutions required to make them successful.
Funding and institutions
As illustrated previously, there is a clear and urgent need for holistic, innovative transport solutions to improve the lives of those currently living in, or planning to move to, rapidly growing African cities. The dynamics discussed in the previous post do not stand alone, and their interrelatedness only increases their complexity. There are many efforts to improve these situations, but improvement needs to be done in a considered way, recognising contextual differences and limitations. This is particularly relevant when assessing funding mechanisms and the capacity of existing institutions to implement transport improvements.
Public transport requires funding beyond infrastructure
The financial sustainability of urban transport systems is key. International experience indicates that it is rare for formal, high quality public transport services to be operationally self-sufficient and affordable. According to one study, while some Asian and Latin American cities have profitable public transport systems or corridors (often due to high densities and/or high fares), and some Latin American cities maintain operationally self-sufficient public transport corridors, European and North American cities manage an operating cost recovery of less than 60 and 40% respectively.
Operational subsidies for public transport are justified, in part, by its significant socio-economic and environmental benefits. For example, not only does increased access to opportunities and services increase levels of employment, health and education, but the less time individuals spend travelling or stuck in traffic, the more time they can spend being productive, both socially and economically.
In Sub-Saharan Africa, many urban, formal public transport corridor initiatives, including BRT and rail, are funded by Development Finance Institutions (DFIs), usually in the form of concessional loans and grants, with the assumption that, once infrastructure is in place, the systems will sustain themselves through fare (or system) revenues.
Thus, the considerable capital costs of public transport infrastructure are accounted for, but the risk of any operational shortfall is the responsibility of the beneficiary state. The fiscal capacity of authorities in Sub-Saharan African cities to provide ongoing operational subsidies for public transport is, however, often insufficient. Decision-makers are often of the opinion that, because the existing paratransit services operate without subsidy, the same can be expected of formal public transport services.
This assumption, however, ignores the fact that many of the existing services are of relatively poor quality, are often sub-economic (even taking for granted that they currently operate outside the formal fiscal and tax frameworks), practice poor labour and vehicle safety practices, and primarily serve the peak commuter routes only. It also ignores the fact that high quality systems in Africa are inaccessible to the poor if anything approaching full-cost pricing is used in tariff determination.
There are instances in which public transport systems are self-sustaining, as in the case of the Lagos BRT-Lite. This system takes advantage of the combination of dense corridors and high travel demand, the latter of which allows relatively high ticket prices. It also maintains low operational costs by forgoing a control centre, station lighting and electronic turn-styles, among other things. Decision-makers should be aware that systems like this are exceptions and are usually driven by high population densities along specific corridors with relatively short travel distances and high seat renewal. As such, transport authorities should be prepared to provide a certain level of ongoing operational subsidy, especially if aiming to create systems which are more inclusive of low-income groups.
In short, the financial sustainability of public transport operations is determined by a range of factors, including urban form and densities, income levels and affordability, and efficient management and operations. While full cost-recovery is possible in some instances, it should not be taken as given, especially if existing formal bus and rail services rely on operational subsidies from government.
Institutional capacity is the foundation for successful urban transformation
Improving urban transport systems requires effective and well-capacitated institutions to plan, implement and manage a complex transformation process. In these cities, institutional capacity to manage urban transport is generally constrained by a severe lack of skills and resources. Despite this, there is a range of differing circumstances across these cities.
There are several general institutional requirements which are key to improving public transport systems.
Firstly, appropriate institutional arrangements within the relevant authority are critical. This ensures clear mandates within the city, thus empowering it to perform the wide range of functions that public transport requires (e.g. safety and security, regulation and planning).
Secondly, the institutions should be structured in such that they can operate effectively and efficiently.
Thirdly, it is paramount that there are sufficient technical skills to implement and manage public transport. These are often scarce skills and accessing them may require that, in addition to those permanently situated within the institution, some may need to be outsourced as required.
Fourthly, there is a need for adequate resources, especially financial resources, to employ the required staff, to build the necessary institution and to plan and implement public transport investments. Finally, the data and systems which enable effective planning, monitoring and review of public transport systems are important.
In the cities mentioned here, some have in place several elements that make up an effective urban transport institution, including dedicated agencies, clear spheres of responsibility, strong leadership, a competent and engaged staff complement and dedicated funding streams. Other cities, however, struggle to achieve basic institutional pre-requisites, such as consensus on which department is responsible for public transport and the associated responsibility to pay the salaries of officials. The impact of these differences is very real, such that cities in the former category are able to successfully deliver projects which improve public transport, while those in the latter category fail to do so. Experience shows that effective institutions are a fundamental prerequisite to progress and, therefore, must be a key consideration in transforming urban public transport in Sub-Saharan Africa.
The diversity and specificity of contexts, and the rate of change creates a difficult development challenge. There are a few key themes which emerge as an important starting point in considering effective solutions: the importance of land-use management, effective integration of the paratransit industry, financial sustainability, the need for strong institutions, and the imperative for sustainable transport systems strongly informed by context.
Dr. Constantin von der Heyden leads the Transport practice, and Matthew Moody and Helen Morrissey are consultants in the Transport practice.