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Engaging the paratransit sector in Cape Town on public transport reform: Progress, process and risks
Research in Transportation Economics 39 (2013) 185e190
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Research in Transportation Economics journal homepage: www.elsevier.com/locate/retrec
Engaging the paratransit sector in Cape Town on public transport reform: Progress, process and risks Herrie Schalekamp*, Roger Behrens Centre for Transport Studies, Department of Civil Engineering, University of Cape Town, Private Bag X3, Rondebosch 7701, South Africa
a r t i c l e i n f o
a b s t r a c t
Article history: Available online 19 June 2012
The South African government in 2006 initiated an urban public transport reform programme reliant on the introduction of new bus rapid transit (BRT) systems. Affected paratransit operators can opt to be incorporated in these systems by forming new operating companies, but must withdraw their existing services from proposed routes. Cape Town’s first phase of BRT operations came online in 2011, and operator engagement has focussed on this phase. The attitudes within this city’s paratransit sector in relation to future phases, and to the broader reform policy, remain largely untested. In view of this sector’s past resistance to government-led proposals, and the current phase avoiding areas with the highest concentrations of operators, the current engagement process’s outcomes may not be adequate indicators of future prospects. In this paper the authors discuss the details of the offer that has been made to paratransit operators, progress towards finalising negotiations around that offer, risk factors inherent in the current approach to engagement, and issues that have emerged around the reform programme e insofar as it affects and involves paratransit e which may impact upon future phases of the reform programme. These emerging issues include: the feasibility of continued financial compensation for withdrawing existing operating permissions in view of broader fiscal concerns around BRT implementation; a lack of insight into the fundamental factors driving the responses of paratransit operators and associations to the reform programme; and concerns around a national public transport reform policy that may not be sufficiently grounded in the local contexts within which municipalities and operators function. Ó 2012 Elsevier Ltd. All rights reserved.
Keywords: Paratransit Public transport reform Bus rapid transit South Africa
1. Introduction and policy background Since the mid-2000s there have been significant developments in government-led investment in public transport systems and reforms in ownership and competition regulation of road-based operations in South Africa. Most notable has been progress in Johannesburg and Cape Town with the construction of infrastructure specifically for bus rapid transit (BRT) services. The starter phases of these services were inaugurated in 2009 and 2011 respectively, and construction continues in order to expand the services into new areas. The scope of reform is, however, not limited to these two cities. The national Integrated Rapid Public Transport Network (IRPTN) policy programme (NDoT, 2007a,b) guides all large urban municipalities across the country in planning and constructing new road-based public transport networks based on the BRT operational model. In addition, the IRPTN programme is linked to a Public Transport Infrastructure and Systems Grant * Corresponding author. Tel.: þ27 (0)21 650 3168. E-mail address: [email protected] (H. Schalekamp). 0739-8859/$ e see front matter Ó 2012 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.retrec.2012.06.012
(PTISG) from the National Treasury out of which municipalities can apply for financial assistance on a year-to-year basis. Besides the phased roll-out of new BRT services, which in the long run would replace all existing road-based services, the IRPTN programme established principles to guide the restructuring of ownership and competition regulation. Road-based operators active on routes affected by the IRPTNs were to be given the opportunity to become the operators of the new services, and would be contracted to operate these services over a number of years. In return they would have to withdraw their existing services, the operating permissions for these services would be cancelled, and the paratransit vehicle would be surrendered to the municipality. The first round of operating contracts would be negotiated with operators, while in the later phases of the programme operations would be put out to tender. In addition, it was envisaged that existing paratransit e a diverse collection of unscheduled midi- and minibuses known locally as minibus-taxis e and formal bus operators would merge to hold joint ownership of the vehicle operating companies. Until the eventual completion of the reform programme paratransit, formal buses and BRT would
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operate side-by-side, but the policy did not go into the details of how this interim hybrid system should be managed or integrated. The process of engaging operators has been more timeconsuming than initially anticipated, and has shown the sociopolitical aspects of the transition to be central to the reform programme. A number of these factors are already emerging as key to current, and likely also to future, interaction between government and operators in the formation of IRPTN operating companies and the design of the related operating contracts. Strong inter-modal competition between a government-subsidised formal bus sector and a poorly regulated paratransit sector has not built a platform for mutual trust between these two road-based industries. Intra-modal competition for passengers, and the resultant territoriality, aggression and, at times, human casualties, have furthermore characterised much of the recent history of paratransit in this country (see, for instance, Dugard, 2001; Khosa, 1995; and Barrett, 2003). Further violence may well still lie just below the surface, and while this should not dictate the pace and substance of reform it seems prudent to be conscious of possible factors contributing to this volatility. Since there is political commitment to expand the reach of Cape Town’s MyCiTi services (Cape Times 2, September 2011), as the IRPTN system in this city is known, and since paratransit permeates nearly all parts of the city, engagement around ownership and competition restructuring between the municipality and paratransit is likely to continue for a number of years to come. Now that some progress has been made and the first BRT-based services are operational there is scope to examine interaction around paratransit ownership and competition reform with a view to improving understanding of the future direction of reform. However, despite these BRT lines being operational resolving shareholding in the new operating companies, the long-term operating contracts and the cancellation of existing operating permissions are lagging and yet to be settled. As a result the outcomes of the present engagement process are still uncertain. Equally important to anticipating hurdles to the reform programme in coming years is a better understanding of the motivations driving, and the business needs of, paratransit operators. This paper examines these two themes e paratransit reform and paratransit engagement e as follows: Section 1 has presented the policy background; section 2 presents the unfolding of the reform process in Cape Town insofar as it has involved government and paratransit; the strategy that the local municipality has followed in engaging paratransit, as well as some of the challenges inherent in this engagement strategy, are considered in section 3; section 4 reflects critically on progress with reform and operator engagement, highlighting issues that are relevant to the reform programme going into the future; and the last section offers some concluding remarks. 2. Progress on paratransit reform The MyCiTi system has arguably had an impact on all aspects of paratransit businesses in the starter phase region in Cape Town, which encompasses the central city and a number of suburbs to the north of the city centre. Changes to the status quo that have already been, or which in the near future are envisaged to be, effected include: new buses and infrastructure, and the manner in which these vehicles are operated; the way in which businesses are owned, run and derive income; the mechanism of competition regulation; and the relationship between individual paratransit operators as well as their relation to the associations to which they belong and the formal bus operators active in the same area. The City of Cape Town, as the municipality is formally known, developed a framework document (CCT, 2007a) to put into practice the principles that were laid out in the IRPTN policy. The then mayor tasked a team of local and international consultants and specialists to
produce this document. Informed by its interpretation of international best practice the team motivated that the introduction of BRT e in its view a relatively low-cost option e and the upgrading of heavy rail would best address the contemporary challenges of urban population densities at the lower end of the scale, low-income passengers living on the urban periphery, and financial constraints. As heavy rail planning and operations were, and remain, beyond the City’s mandate, the framework focussed on the BRT concept and outlined a multi-phase implementation of a network of trunk and feeder routes across the municipal area. A fleet of modern buses would replace existing scheduled buses and unscheduled minibuses, and on trunk routes buses would run in dedicated lanes. This separation would in large part resolve conflicts with general traffic for road space, and the replacement of all road-based services with a unified, contracted and uniformly liveried bus fleet would neutralise interand intra-modal competition for passengers on the street. The City initially proposed that two vehicle operating companies be established to provide all services in the starter phase (CCT, 2010a). In the more southerly part of this area one company would operate feeder routes in the central city and an airport shuttle service, while the other entity would operate feeder routes in the phase area’s northern sector. Both companies would bear the responsibility for operating the trunk route linking the northern and southern clusters of feeder routes. In 2010 the City undertook a survey to establish which routes were affected, the number of passengers being transported along those routes, and who the licence holders were of the vehicles carrying those passengers. By identifying paratransit routes, the associations to which the operators belonged could be identified. The City made the pragmatic decision to engage paratransit at association level, numbering in the dozens, rather than at that of the individual operator level, of which there are thousands, on the understanding that the associations would represent their own interests as well as that of the multitude of member operators. The fare revenue along each route and for each individual operator and association was then calculated and a market share by income for each existing operator identified. The survey results thus served two purposes: firstly, it established who should be engaged in the negotiations towards forming the two new operating companies; and secondly, it provided a financial basis for distributing the shareholding in the new operating companies. In order to ensure a degree of stability amongst operators who qualified as being affected the issuance of new paratransit operating licences in the first phase area was terminated, and the City has indicated that it will do the same in coming project phases. Any paratransit services which enter the market in future in an area where MyCiTi services are in operation would therefore be illegal. Under the MyCiTi banner the new trunk and feeder lines opened in May 2011, and joined the airport shuttle that started just short of a year earlier. However, rather than the initially proposed two operating companies, there are now three operating entities involved in this phase. The first company, TransPeninsula, was formally established at the beginning of 2010 and comprises of three paratransit associations and their member operators whose routes were overlain by the MyCiTi routes. The second, Kidrogen, came into being in May 2011 and is jointly owned by five paratransit associations and their affected members, and one of the two formal bus companies active in the City. The last contract was with the pre-existing formal bus company, Golden Arrow Bus Services (Cape Times, 10 May 2011; CCT, 2010b; City of Cape Town News, 10 May 2010, 6 May 2011). Despite engagement with existing operators stretching back to the latter part of 2008 (Cape Times, 28 November 2008) contract and corporatisation negotiations are still ongoing. In addition, the contracts between the municipality and the three respective companies operating current trunk and feeder BRT services are still on an interim basis and are subject to periodic renewals.
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In terms of competition regulation long term operating contracts are being negotiated with representatives of each of the operating companies; by law contracts in latter phases would have to be put out to tender. Once the long-term contracts are in place affected paratransit e and bus e operating licences would be withdrawn and cancelled, and operators’ income would be derived from a combination of payments per kilometre of services rendered as dictated by the negotiated contracts, and profit sharing and dividends governed by the shareholding agreement of the new companies. This model of transformation and corporatisation of operations was based on similar reform processes in a number of South American cities, amongst others. Informed by the prevalent opinion around these international experiences the national government made commitments to existing operators that they would not be worse off in terms of legitimate income after the reform process and that there would be at least the same number of employment opportunities in the new systems (CCT, 2010a; NDoT, 2006; Viva, 2007). The national commitment to match or improve income levels compelled the local municipality to attach a value to each paratransit business’s income and expenditure. However, the lack of consistent and accurate available data on paratransit passenger numbers, disagreements around the survey to outline affected operators’ market share, as well as the reality that paratransit businesses’ revenue flows are difficult to penetrate, have made establishing values for each affected paratransit business a contentious task. In particular, other sources of income generated by the paratransit vehicles outside normal operating hours e including employee transport contracts and long-distance (e.g. inter-city and interprovincial) services e are poorly understood. As the paratransit vehicle would be surrendered to the municipality in the transition to the new regime these additional revenue streams would cease, the value of the paratransit business would be underestimated, and the range of services offered to passengers curtailed. In view of the consensus that the paratransit market is over-supplied, these ‘sideline’ services likely play a key role in keeping especially smaller operators afloat. The engagement process has further been complicated by the stipulations of the National Land Transport Act of 2009, which governs public transport services amongst other matters. The Act does not make provision for the cancellation of paratransit operating permissions prior to their expiration, except in the case of operator misconduct. In line with the provisions of the Act the period of validity for active licences could be anywhere up to a maximum of seven years after the commencement of the Act, i.e. until 2016. Until that time paratransit operators have a strong position in terms of transitional negotiations affecting the withdrawal of their existing operating licences, a position which has been bolstered even further by the City making it its policy to offer compensation across all MyCiTi phases (CCT, 2010a). The relatively straightforward part of compensation is valuing the tangible asset, i.e. the paratransit vehicle. For each existing vehicle surrendered to the municipality the owner is offered compensation to the value of around ZAR 55,000 (USD 7000), equivalent to what that owner could get for scrapping a vehicle under a pre-existing national paratransit recapitalisation scheme. The owner then exchanges this sum for an equity stake in the operating company, or has the option of leaving the paratransit sector entirely and taking this amount as a cash pay-out. In contrast, the much more controversial and costly process is assessing the value of the going concern. The detailed survey in 2010 took stock of vehicle trips and passenger numbers and established fares along routes on which the fleet of around 700 affected paratransit vehicles operated. The collected data was used to calculate each operator’s income and market share and operating expenses were factored in to arrive at profit figures. The monthly profit sum was multiplied by each licence’s validity period and resulted in each
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business’s total deemed lost profit in the future. An affected operator could then choose to convert the total sum into additional equity in the new operating company, or again receive it along with the aforementioned scrapping amount as a cash payoff to exit the industry (CCT, 2010a, 2011). These sums are quite considerable, especially on higher-demand routes, and form the bulk of the owner equity in the new operator entities. Compensation has unsurprisingly been an on-going bone of contention between the City, providing the funds, and operators, reaping the financial rewards. Moreover, compensation is the financial incentive for operators to join the MyCiTi programme, and, since the City has embraced the principle of compensation across all project phases, it may well lie at the very core of the local reform programme. 3. Paratransit engagement strategy The motivation for the national and local public transport reform programmes is clearly reflected in the results of the 2003 National Household Transport Survey (NHTS) (NDoT, 2003). The NHTS found high levels of passenger dissatisfaction with public transport, and indeed identified a number of specific unsatisfactory attributes such as the frequency and extent of services, the poor quality of interchange facilities, personal safety and the roadworthiness of vehicles. In response to these problems the IRPTN policy proposed particular mode-by-mode interventions to improve the services that operators provide and the infrastructure that they require (NDoT, 2006). These interventions would have considerable impacts on passengers and operators alike. However, unlike the structured process of appraising passengers’ views by way of the NHTS process, there is little evidence of either national or local investigations into operators’ attitudes towards the regulatory frameworks and physical circumstances within which they render services or towards the comprehensive restructuring of their businesses and the competition management mechanism proposed by the reform programme. The City has furthermore expressed its intention of replicating the current model of reform e i.e. BRT-based infrastructure, operator corporatisation, long-term gross-cost contracts, and compensation in exchange for operator buy-in e in upcoming project phases. Without having extensively engaged operators beyond those affected by current negotiations the reliability of drawing parallels across the different phases would be questionable. Penetrating paratransit attitudes around regulatory reform and restructuring is, however, not a straightforward task. While paratransit operators are collectively viewed as a market ‘sector’, which may create an impression of uniformity across their ranks, there are in fact considerable variances in business structure and size, and the degree of legalisation. There are around 6400 owners with an estimated 7500 licensed vehicles operating on 565 routes in Cape Town, but it has been suggested that the total paratransit fleet encompasses 12,500 vehicles if unlicensed operations are factored in (CCT, 2007a, 2008, 2009). Many, if not most, of these paratransit operators do not have published contact details or verifiable business addresses, making communication difficult, in addition to which operators may have as a mother tongue one of at least three languages. While the variety of ownership structures in the paratransit sector makes it difficult to establish a common basis around which to engage operators, paratransit representative organisations are equally fragmented. Within the city boundaries there are more than 100 operator associations, which in turn are aligned to a handful of larger political structures, or ‘mother-bodies’ (CCT, 2007b). Besides the difficulties of engaging operators across these significant divides, the MyCiTi project has added a further layer to the fragmentation of business structures by adding the option of shareholding in contracted vehicle operating companies, but only to those who ply their trade in a particular part of the city. There are already signs of friction
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between the group of ‘haves’ who will be sheltered financially by the security of long-term BRT operating contracts, and the ‘have-nots’ who continue to vie amongst themselves for passengers on the streets under the far less restrictive terms of the pre-existing operating licence system (Cape Times, 15 June 2011). In the formation of the MyCiTi operating companies the municipality has chosen to engage paratransit associations rather than individual operators. The reasoning behind this decision is evidently pragmatic: the representatives of an association may be a considerably smaller number of individuals than the operators belonging to that association. Although this strategy reduces the number of discussants, a risk inherent in such a move is that especially small operators’ views, i.e. those of single vehicle and owner-driver operators, may be suppressed as they may in practice hold little sway over decisions made at association level. It is therefore especially these small operators, who may in the first place have been forced into belonging to the association by the requirement for association support during the operating licence application process, who may have views contrary to that of the association or of operators owning larger fleets. Whereas the engagement process between the municipality and the initial handful of associations has provided some insight into attitudes towards regulatory change and government intervention, such views cannot be assumed to reflect the diversity of attitudes across all operators belonging to these associations e whether large or small, registered or unregistered e let alone of other associations and operators not engaged at present. In the absence of an investigation into the views of operators alongside that of associations it is not possible to gauge to which extent individual operators’ needs and aspirations coincide with those at association level, and indeed whether the existing public transport regulatory system and proposed longer-term reform process responds to business aspirations at operator level. Clearly, applying survey methods commonly used in the transport field to paratransit would be nearly impossible. In addition to the hierarchical complexity of the paratransit sector, the number of unlicensed paratransit operators is not known and, as a consequence, nor is the total number of operators. A well-defined sampling frame from which to randomly select operators is therefore absent. Methods such as mail or telephonic surveys would furthermore not be feasible, underscored by a study by Jakoet (2001) to establish the readiness of bus and paratransit operators to tender for public service contracts in which the response rate to mailed questionnaires was only 20%. Moreover, the depth of insight required to satisfy an inquiry into the complex interrelationships between policy, vested interests and government-led reform does not lend itself readily to conventional survey approaches based on indirect engagement or quantitative methods (Arce, 2003; Morris & Adler, 2003). Responses may be varied, circuitous and unexpected, literacy levels may be wide-ranging, and policy concepts may require relatively detailed explanation. Despite the hard-to-reach nature of paratransit, in the authors’ view the imperative of engaging operators at all levels remains, whether in advance of future phases of the City-led reform process through attitudinal surveys or further down the line around the negotiating table. The continuing official support for the MyCiTi project, and the political imperatives for doing so, indicate that the BRT-based programme is likely to remain a driving force behind reform for the foreseeable future.
appears to be ample capacity within the corps of locally available engineering expertise to timeously resolve, amongst other matters, the complex traffic control measures, roadway alterations and electronic management that is essential to the success of BRT. The same appears to be the case from reports of progress on Johannesburg’s related Rea Vaya system (see CoJ, 2011; McCaul & Ntuli, 2011). The IRPTN policy envisioned a rapid roll-out of public transport services based on BRT, and progress in these two cities appear to confirm that the BRT-based infrastructure can be completed in line with policy expectations. It seems, rather, that the expectations around progress have not been met in the process of engaging existing operators on establishing new operator companies and on transferring the multitude of paratransit operating licence holders to consolidated long-term, multi-year, distance-based service contracts.
4. Emerging issues around the local and national reform agenda
City authorities and affected paratransit operators and associations have built a cooperative relationship by working towards a process where both sides draw benefit from the proposed outcomes. In the case of the City, positive outcomes have amongst others been significant improvements in the public transport services offered to passengers and the reduction of potentially
The experience in Cape Town suggests that the infrastructural aspects of the MyCiTi programme are not where the major challenges lie in realising the aims of the reform policy. Indeed, there
4.1. Replicability of the current reform model in the future Should the company shareholding and compensation agreements be signed in the latter half of 2012 as is currently the projection, it would have taken around four years to establish three operating companies out of eight paratransit associations and two bus operating companies. Since the City has admitted that the first MyCiTi phase operations will run at a deficit (CCT, 2010a), the municipality hopes to embark on the second phase as soon as possible to draw on areas where public transport ridership levels are higher so that income from fares can be increased and the need for operational subsidisation reduced. To date engagement has focused on the aforementioned eight paratransit associations and their affected member operators, but in the targeted forthcoming ‘phase two’ area there are 67 associations (CCT, 2007b). The effect that this could have on expanding the complexity and timeframes of future engagement is substantial. However, since in-depth engagement has been limited to the presently affected operators, little is known about the profile of the paratransit businesses that operate beyond the current phase and their revenue flows, diversity of needs and possible responses to the reform proposal. The magnitude of paratransit operating revenues and profits, and the compensation that would be required to cover future ‘losses’ due to replacement of current operations by BRT, is equally obscure. As reform has been inextricably linked to compensation, it is likely that expectations of financial compensation have been created not only on the part of associations and owners affected by the starter phase of the MyCiTi system, but also in other parts of the city. Compensation for the cancellation of existing operating permissions is an enticement to participate in the reform programme, but in addition to the costs of operating subsidies, the price of compensation will be a further burden on the City’s revenues. The scale of this burden in relation to current engagement is becoming clearer as the work towards finalising the first phase agreements progresses, but the financial impacts of the compensation principle in future phases is as yet unknown. If pressures on the City’s overall budget increase in future years, the appetite to continue to provide compensatory pay-outs to affected operators e which in the public eye may be difficult to link to improved public transport service on the ground e may well be limited. 4.2. Reform relies on human capital
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destructive inter-modal competition on a portion of the city’s roads. Operators and associations may arguably benefit even more through gaining the long-term security of income streams guaranteed by the operating contracts, and being compensated financially over and above such income by way of the agreements around the withdrawal of existing operating licences. The benefits to operators would, however, only accrue once the contracts are finalised. A continued reliance on interim arrangements may undermine the relationship that has been built so far between the City and affected paratransit operators and associations, and work against operator buy-in in future phases. Despite the beneficial outcomes achieved so far, engagement between the municipality and paratransit has been a timeconsuming, intensive and at times volatile process, and the effort and commitment required to engage paratransit around reform in future should not be underestimated (section 3 illustrated some of the complexities of this challenge). It is likely to remain difficult to gain access to paratransit operators and associations, which in essence constitute a closed community that has managed to develop a sector of the public transport marketplace largely on its own initiative and often in spite of government initiatives to prevent its expansion (see Schalekamp & Behrens (2010) for an analysis of the historic interplay between government and paratransit in South Africa). Government and private sector players may well be seen as outsiders attempting to ‘meddle’ in paratransit’s affairs, and gaining the trust of operators would require sustained effort to overcome such perceptions. One of the key ways in which more trusting relationships have been established around the negotiating table has been to employ intermediaries between the municipality and paratransit who have a track record with actors within the paratransit hierarchy, but who also have credibility in the City’s eyes. In the authors’ view there are few people who can play such an intermediary role, in itself not unsurprising: reform on the scale of the MyCiTi and IRPTN programmes has been unprecedented, and was initiated relatively recently. There has not been a long history of training and development in, and exposure of existing professionals and officials to, this particular field, and consequently there is little expertise with sufficiently grounded knowledge of local conditions to fulfil such roles. This may potentially be an area where increased investment in human capital may be critical as the scope of engagement in the upcoming MyCiTi phase grows to involve a larger number of stakeholders. 4.3. Disjuncture between national policy and local circumstances The national IRPTN policy targeted 12 cities and six districts for the initial round of investment in BRT-based networks. Of these only a handful has made progress in planning new services, and such planned services have only become operational in two cities. The slow progress is perhaps illustrative of the path dependencies related to the specific contexts of each of these locales. Existing infrastructure, public sector capacity to manage the transition, available professional expertise, and the pre-existing relationships e if any e between municipalities and operators all influence the likelihood of initiating and sustaining the successive phases of BRT operations. Operators’ business needs and expectations may vary widely between each city, but also within the different parts of the same city and even within the same association, and play a decisive role in their readiness to be engaged on, and included in, the reform process. The immediate pressures on upgrading public transport services may also be dependent on the circumstances of prospective and existing passengers: traffic congestion levels and travel costs, travel times and distances exacerbated by urban sprawl, the quality and size of existing public transport networks, and perceptions of safety and convenience are some of the many considerations.
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The translation of the policy into local roll-out may hold unintended consequences impacting not only on operators but also on passengers. Some of these considerations, by no means a comprehensive list, are highlighted here. Firstly, the hybrid public transport system that results almost accidentally from the introduction of a new mode while existing modes are still in operation leads to greater modal and fare level choice, and thus to an improved offering to passengers. Secondly, the current official view is that IRPTNs such as Cape Town’s MyCiTi will eventually replace all existing paratransit and formal bus services, and that consequently the hybrid scenario and its benefits would be temporary at best. However, formal public transport provision is unlikely to keep up with the rapid and unplanned urban growth which is characteristic in Cape Town and around the country. Paratransit typically addresses this continuously developing segment of the public transport market. The insistence on formalisation e if it proves at all feasible e would render such emerging paratransit operations illegal, again impacting negatively on passengers through, for instance, reduced public control over vehicle safety standards. Lastly, the policy focuses on the urban public transport role of paratransit without addressing the after-hours and long distances services for which paratransit vehicles are also used. By gradually removing paratransit vehicles the full array of services that paratransit presently offers to passengers would be eroded. Beyond context-specific issues, the appropriateness of a national policy and funding framework that directs, and to a certain extent dictates, local action is increasingly being questioned by professionals and officials at the coalface of the reform process. The subjects of debate and concerns expressed at a recent BRT workshop session at the Southern African Transport Conference (SATC, 2011) are indicative of a possible shift in focus from ‘BRT at all costs’ to ‘at what cost BRT?’. On the infrastructural and operational side these views included: that there was an insufficient assessment of the costs to run BRT services at the standards specified by the National Department of Transport; that funding out of the national infrastructure and systems grant is highly discretional, which may be appropriate at the outset, but works against long-term commitments; and the disconcerting admission by a local consultant working closely with the Department on the reform programme that “[South Africa] jumped straight into this BRT story without understanding the financial implications”. Besides concerns around the overall affordability of highspecification BRT infrastructure and operations, the reliability of funding streams from the national government are particularly relevant to the paratransit engagement process. Should funding levels be curtailed to the extent that compensation to operators for surrendering current operating permissions becomes unaffordable, little incentive would remain to entice paratransit operators to be incorporated in the BRT systems, and the hoped-for efficiency gains and positive impacts on ownership and competition regulation would be unlikely to be realised. 5. Concluding remarks Efforts to improve public transport services should be lauded, not least because many impoverished people in South African cities rely on public transport services to access economic opportunities. However, bringing about such improvements comes at a cost, and in the constrained fiscal state in which South African cities find themselves, investments should be made cautiously and with a keen eye on the benefits that can be extracted from such investments. As a case in point, the City of Cape Town has invested heavily in the first phase of a BRT system with a number of positive outcomes in mind. With the launch of the first services associated with this phase of the project successfully completed, now is the
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time to take stock of the costs of the outcomes achieved to date, the risk factors that have been associated with these costs, and the steps that can be taken in future to ameliorate such risks. In this paper the authors have focussed on what is, in their view, one of the critical risks to the present and continued success of the City’s public transport reform programme: that is, the process by which the pervasive paratransit sector is engaged around the impacts of the reform programme on its present structure and mode of operations. While there certainly has been progress on corporatising paratransit operators and associations, the first round of long-term operating contracts and compensatory agreements remain to be concluded, and the number of operators and associations engaged to date is small in relation to the overall paratransit sector in Cape Town. The strategy that has been employed to engage paratransit e targeting associations rather than individual operators e may also work against gaining a better understanding of the diverse needs of operators, thereby allowing opportunities to understand the incentives driving individual operators and to empower the numerous small and micro enterprises which constitute much of the paratransit sector, to be passed over. It remains to be seen if the current reform model, based on BRT operations, operator consolidation, and competition regulation restructuring, can be replicated in future. Certainly, the disjuncture between national policy and local circumstances and the financial uncertainties that may impact upon continued national funding for the reform programme may well compel a revision of the scope of the reform programme. However, operators lie at the core of public transport services, and engaging them successfully is key to the success of reforming public transport. It would therefore be judicious to invest in the social capital of paratransit well before committing the significant financial capital that will be required to construct a full-specification BRT system in the remainder of Cape Town and indeed elsewhere in the country. Acknowledgements The research presented in this paper was funded by the Volvo Research and Educational Foundations, and forms part of a broader research programme conducted by the African Centre of Excellence for Studies in Public and Non-motorised Transport (ACET, www. acet.uct.ac.za). References Arce, C. (2003). Multi-cultural and multi-lingual conditions. In P. Stopher, & P. Jones (Eds.), Transport survey quality and innovation (pp. 209e213). London, UK: Pergamon.
Barrett, J. (2003). Organizing in the informal economy: A case study of the minibus taxi industry in South Africa. SEED Working Paper No. 39. Geneva: International Labour Office. Cape Times. (10 May 2011). Change to driving on new system means better work conditions. Cape Town, South Africa. Cape Times. (15 June 2011). Taxi bosses say deal with city has gone west. Cape Town, South Africa. Cape Times. (2 September 2011). City urged to go slow on IRT expansion. Cape Town, South Africa. Cape Times. (28 November 2008). Angry drivers barge in on taxi summit. Cape Town, South Africa. CCT. (2007b). Operating licences strategy. Cape Town, South Africa. CCT. (2008). Cape Town integrated rapid transit system annexure B: Project summary. Cape Town, South Africa. CCT. (2009). Integrated transport plan for the city of Cape Town 2006 to 2011, draft. Cape Town, South Africa. CCT. (2010a). Business plan: Phase 1A of Cape Town’s MyCiTi integrated rapid transit system. Cape Town, South Africa. CCT. (2010b). Integrated rapid transit: Project status and progress report no. 2, January 2010. Cape Town, South Africa. CCT. (31 March 2011). Cape Town integrated rapid transit project overview. Lecture presented in intermodal public transport planning and economics course. Cape Town, South Africa: Centre for Transport Studies, University of Cape Town. CCT (City of Cape Town). (2007a). Public transport implementation framework: Integrated public transport network. Cape Town, South Africa. City of Cape Town News. (10 May 2010). Cape Town transport gets a new name and look e MyCiTi. Cape Town, South Africa. City of Cape Town News. (6 May 2011). MyCiTi West Coast bus service to begin rolling from Monday 09 May 2011. Cape Town, South Africa. CoJ (City of Johannesburg). (2011). Rea Vaya/BRT e Transforming the face of public transport: End of term report 2006e2011. Johannesburg, South Africa. Dugard, J. (2001 May). From low intensity war to mafia war: Taxi violence in South Africa (1987e2000)In Violence and transition series, Vol. 4. Johannesburg, South Africa: Centre for the Study of Violence and Reconciliation. Jakoet, J. (2001). Preparing bus and taxi operators for tendering in the Western Cape. Master in Engineering (Civil) thesis. University of Stellenbosch, Stellenbosch, South Africa. Khosa, M. (1995). Transport and popular struggles in South Africa. Antipode, 27(2), 167e188. McCaul, P., & Ntuli, S. (2011). Negotiating the deal to enable the first Rea Vaya bus operating company: agreements, experiences and lessons. In Proceedings of the 30th Southern African Transport Conference, 11e14 July 2011. Pretoria, South Africa. Morris, J., & Adler, T. (2003). Mixed mode surveys. In P. Stopher, & P. Jones (Eds.), Transport survey quality and innovation (pp. 239e252). London: Pergamon. NDoT. (2006). Strategy to accelerate public transport implementation via a win-winwin partnership between government, existing operators & labour, draft. Pretoria, South Africa. NDoT. (2007a). Public transport strategy. Pretoria, South Africa. NDoT. (2007b). Public transport action plan e Phase 1 (2007e2010): Catalytic integrated rapid public transport network projects. Pretoria, South Africa. NDoT (National Department of Transport). (2003). National household travel survey. Pretoria, South Africa. SATC (30th Southern African Transport Conference). (2011). Session 4A: Bus rapid transit (BRT) workshop. Pretoria, South Africa. Schalekamp, H., & Behrens, R. (2010). Engaging paratransit on public transport reform initiatives in South Africa: a critique of policy and an investigation of appropriate engagement approaches. In D. Van de Velde, et al. (Eds.). Research in Transportation Economics, 29, 371e378. Viva. (2007). Catalytic public transport initiatives in South Africa: A critical review. Report prepared for the National Department of Transport. Pretoria, South Africa.
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Research in Transportation Economics journal homepage: www.elsevier.com/locate/retrec
Engaging the paratransit sector in Cape Town on public transport reform: Progress, process and risks Herrie Schalekamp*, Roger Behrens Centre for Transport Studies, Department of Civil Engineering, University of Cape Town, Private Bag X3, Rondebosch 7701, South Africa
a r t i c l e i n f o
a b s t r a c t
Article history: Available online 19 June 2012
The South African government in 2006 initiated an urban public transport reform programme reliant on the introduction of new bus rapid transit (BRT) systems. Affected paratransit operators can opt to be incorporated in these systems by forming new operating companies, but must withdraw their existing services from proposed routes. Cape Town’s first phase of BRT operations came online in 2011, and operator engagement has focussed on this phase. The attitudes within this city’s paratransit sector in relation to future phases, and to the broader reform policy, remain largely untested. In view of this sector’s past resistance to government-led proposals, and the current phase avoiding areas with the highest concentrations of operators, the current engagement process’s outcomes may not be adequate indicators of future prospects. In this paper the authors discuss the details of the offer that has been made to paratransit operators, progress towards finalising negotiations around that offer, risk factors inherent in the current approach to engagement, and issues that have emerged around the reform programme e insofar as it affects and involves paratransit e which may impact upon future phases of the reform programme. These emerging issues include: the feasibility of continued financial compensation for withdrawing existing operating permissions in view of broader fiscal concerns around BRT implementation; a lack of insight into the fundamental factors driving the responses of paratransit operators and associations to the reform programme; and concerns around a national public transport reform policy that may not be sufficiently grounded in the local contexts within which municipalities and operators function. Ó 2012 Elsevier Ltd. All rights reserved.
Keywords: Paratransit Public transport reform Bus rapid transit South Africa
1. Introduction and policy background Since the mid-2000s there have been significant developments in government-led investment in public transport systems and reforms in ownership and competition regulation of road-based operations in South Africa. Most notable has been progress in Johannesburg and Cape Town with the construction of infrastructure specifically for bus rapid transit (BRT) services. The starter phases of these services were inaugurated in 2009 and 2011 respectively, and construction continues in order to expand the services into new areas. The scope of reform is, however, not limited to these two cities. The national Integrated Rapid Public Transport Network (IRPTN) policy programme (NDoT, 2007a,b) guides all large urban municipalities across the country in planning and constructing new road-based public transport networks based on the BRT operational model. In addition, the IRPTN programme is linked to a Public Transport Infrastructure and Systems Grant * Corresponding author. Tel.: þ27 (0)21 650 3168. E-mail address: [email protected] (H. Schalekamp). 0739-8859/$ e see front matter Ó 2012 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.retrec.2012.06.012
(PTISG) from the National Treasury out of which municipalities can apply for financial assistance on a year-to-year basis. Besides the phased roll-out of new BRT services, which in the long run would replace all existing road-based services, the IRPTN programme established principles to guide the restructuring of ownership and competition regulation. Road-based operators active on routes affected by the IRPTNs were to be given the opportunity to become the operators of the new services, and would be contracted to operate these services over a number of years. In return they would have to withdraw their existing services, the operating permissions for these services would be cancelled, and the paratransit vehicle would be surrendered to the municipality. The first round of operating contracts would be negotiated with operators, while in the later phases of the programme operations would be put out to tender. In addition, it was envisaged that existing paratransit e a diverse collection of unscheduled midi- and minibuses known locally as minibus-taxis e and formal bus operators would merge to hold joint ownership of the vehicle operating companies. Until the eventual completion of the reform programme paratransit, formal buses and BRT would
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operate side-by-side, but the policy did not go into the details of how this interim hybrid system should be managed or integrated. The process of engaging operators has been more timeconsuming than initially anticipated, and has shown the sociopolitical aspects of the transition to be central to the reform programme. A number of these factors are already emerging as key to current, and likely also to future, interaction between government and operators in the formation of IRPTN operating companies and the design of the related operating contracts. Strong inter-modal competition between a government-subsidised formal bus sector and a poorly regulated paratransit sector has not built a platform for mutual trust between these two road-based industries. Intra-modal competition for passengers, and the resultant territoriality, aggression and, at times, human casualties, have furthermore characterised much of the recent history of paratransit in this country (see, for instance, Dugard, 2001; Khosa, 1995; and Barrett, 2003). Further violence may well still lie just below the surface, and while this should not dictate the pace and substance of reform it seems prudent to be conscious of possible factors contributing to this volatility. Since there is political commitment to expand the reach of Cape Town’s MyCiTi services (Cape Times 2, September 2011), as the IRPTN system in this city is known, and since paratransit permeates nearly all parts of the city, engagement around ownership and competition restructuring between the municipality and paratransit is likely to continue for a number of years to come. Now that some progress has been made and the first BRT-based services are operational there is scope to examine interaction around paratransit ownership and competition reform with a view to improving understanding of the future direction of reform. However, despite these BRT lines being operational resolving shareholding in the new operating companies, the long-term operating contracts and the cancellation of existing operating permissions are lagging and yet to be settled. As a result the outcomes of the present engagement process are still uncertain. Equally important to anticipating hurdles to the reform programme in coming years is a better understanding of the motivations driving, and the business needs of, paratransit operators. This paper examines these two themes e paratransit reform and paratransit engagement e as follows: Section 1 has presented the policy background; section 2 presents the unfolding of the reform process in Cape Town insofar as it has involved government and paratransit; the strategy that the local municipality has followed in engaging paratransit, as well as some of the challenges inherent in this engagement strategy, are considered in section 3; section 4 reflects critically on progress with reform and operator engagement, highlighting issues that are relevant to the reform programme going into the future; and the last section offers some concluding remarks. 2. Progress on paratransit reform The MyCiTi system has arguably had an impact on all aspects of paratransit businesses in the starter phase region in Cape Town, which encompasses the central city and a number of suburbs to the north of the city centre. Changes to the status quo that have already been, or which in the near future are envisaged to be, effected include: new buses and infrastructure, and the manner in which these vehicles are operated; the way in which businesses are owned, run and derive income; the mechanism of competition regulation; and the relationship between individual paratransit operators as well as their relation to the associations to which they belong and the formal bus operators active in the same area. The City of Cape Town, as the municipality is formally known, developed a framework document (CCT, 2007a) to put into practice the principles that were laid out in the IRPTN policy. The then mayor tasked a team of local and international consultants and specialists to
produce this document. Informed by its interpretation of international best practice the team motivated that the introduction of BRT e in its view a relatively low-cost option e and the upgrading of heavy rail would best address the contemporary challenges of urban population densities at the lower end of the scale, low-income passengers living on the urban periphery, and financial constraints. As heavy rail planning and operations were, and remain, beyond the City’s mandate, the framework focussed on the BRT concept and outlined a multi-phase implementation of a network of trunk and feeder routes across the municipal area. A fleet of modern buses would replace existing scheduled buses and unscheduled minibuses, and on trunk routes buses would run in dedicated lanes. This separation would in large part resolve conflicts with general traffic for road space, and the replacement of all road-based services with a unified, contracted and uniformly liveried bus fleet would neutralise interand intra-modal competition for passengers on the street. The City initially proposed that two vehicle operating companies be established to provide all services in the starter phase (CCT, 2010a). In the more southerly part of this area one company would operate feeder routes in the central city and an airport shuttle service, while the other entity would operate feeder routes in the phase area’s northern sector. Both companies would bear the responsibility for operating the trunk route linking the northern and southern clusters of feeder routes. In 2010 the City undertook a survey to establish which routes were affected, the number of passengers being transported along those routes, and who the licence holders were of the vehicles carrying those passengers. By identifying paratransit routes, the associations to which the operators belonged could be identified. The City made the pragmatic decision to engage paratransit at association level, numbering in the dozens, rather than at that of the individual operator level, of which there are thousands, on the understanding that the associations would represent their own interests as well as that of the multitude of member operators. The fare revenue along each route and for each individual operator and association was then calculated and a market share by income for each existing operator identified. The survey results thus served two purposes: firstly, it established who should be engaged in the negotiations towards forming the two new operating companies; and secondly, it provided a financial basis for distributing the shareholding in the new operating companies. In order to ensure a degree of stability amongst operators who qualified as being affected the issuance of new paratransit operating licences in the first phase area was terminated, and the City has indicated that it will do the same in coming project phases. Any paratransit services which enter the market in future in an area where MyCiTi services are in operation would therefore be illegal. Under the MyCiTi banner the new trunk and feeder lines opened in May 2011, and joined the airport shuttle that started just short of a year earlier. However, rather than the initially proposed two operating companies, there are now three operating entities involved in this phase. The first company, TransPeninsula, was formally established at the beginning of 2010 and comprises of three paratransit associations and their member operators whose routes were overlain by the MyCiTi routes. The second, Kidrogen, came into being in May 2011 and is jointly owned by five paratransit associations and their affected members, and one of the two formal bus companies active in the City. The last contract was with the pre-existing formal bus company, Golden Arrow Bus Services (Cape Times, 10 May 2011; CCT, 2010b; City of Cape Town News, 10 May 2010, 6 May 2011). Despite engagement with existing operators stretching back to the latter part of 2008 (Cape Times, 28 November 2008) contract and corporatisation negotiations are still ongoing. In addition, the contracts between the municipality and the three respective companies operating current trunk and feeder BRT services are still on an interim basis and are subject to periodic renewals.
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In terms of competition regulation long term operating contracts are being negotiated with representatives of each of the operating companies; by law contracts in latter phases would have to be put out to tender. Once the long-term contracts are in place affected paratransit e and bus e operating licences would be withdrawn and cancelled, and operators’ income would be derived from a combination of payments per kilometre of services rendered as dictated by the negotiated contracts, and profit sharing and dividends governed by the shareholding agreement of the new companies. This model of transformation and corporatisation of operations was based on similar reform processes in a number of South American cities, amongst others. Informed by the prevalent opinion around these international experiences the national government made commitments to existing operators that they would not be worse off in terms of legitimate income after the reform process and that there would be at least the same number of employment opportunities in the new systems (CCT, 2010a; NDoT, 2006; Viva, 2007). The national commitment to match or improve income levels compelled the local municipality to attach a value to each paratransit business’s income and expenditure. However, the lack of consistent and accurate available data on paratransit passenger numbers, disagreements around the survey to outline affected operators’ market share, as well as the reality that paratransit businesses’ revenue flows are difficult to penetrate, have made establishing values for each affected paratransit business a contentious task. In particular, other sources of income generated by the paratransit vehicles outside normal operating hours e including employee transport contracts and long-distance (e.g. inter-city and interprovincial) services e are poorly understood. As the paratransit vehicle would be surrendered to the municipality in the transition to the new regime these additional revenue streams would cease, the value of the paratransit business would be underestimated, and the range of services offered to passengers curtailed. In view of the consensus that the paratransit market is over-supplied, these ‘sideline’ services likely play a key role in keeping especially smaller operators afloat. The engagement process has further been complicated by the stipulations of the National Land Transport Act of 2009, which governs public transport services amongst other matters. The Act does not make provision for the cancellation of paratransit operating permissions prior to their expiration, except in the case of operator misconduct. In line with the provisions of the Act the period of validity for active licences could be anywhere up to a maximum of seven years after the commencement of the Act, i.e. until 2016. Until that time paratransit operators have a strong position in terms of transitional negotiations affecting the withdrawal of their existing operating licences, a position which has been bolstered even further by the City making it its policy to offer compensation across all MyCiTi phases (CCT, 2010a). The relatively straightforward part of compensation is valuing the tangible asset, i.e. the paratransit vehicle. For each existing vehicle surrendered to the municipality the owner is offered compensation to the value of around ZAR 55,000 (USD 7000), equivalent to what that owner could get for scrapping a vehicle under a pre-existing national paratransit recapitalisation scheme. The owner then exchanges this sum for an equity stake in the operating company, or has the option of leaving the paratransit sector entirely and taking this amount as a cash pay-out. In contrast, the much more controversial and costly process is assessing the value of the going concern. The detailed survey in 2010 took stock of vehicle trips and passenger numbers and established fares along routes on which the fleet of around 700 affected paratransit vehicles operated. The collected data was used to calculate each operator’s income and market share and operating expenses were factored in to arrive at profit figures. The monthly profit sum was multiplied by each licence’s validity period and resulted in each
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business’s total deemed lost profit in the future. An affected operator could then choose to convert the total sum into additional equity in the new operating company, or again receive it along with the aforementioned scrapping amount as a cash payoff to exit the industry (CCT, 2010a, 2011). These sums are quite considerable, especially on higher-demand routes, and form the bulk of the owner equity in the new operator entities. Compensation has unsurprisingly been an on-going bone of contention between the City, providing the funds, and operators, reaping the financial rewards. Moreover, compensation is the financial incentive for operators to join the MyCiTi programme, and, since the City has embraced the principle of compensation across all project phases, it may well lie at the very core of the local reform programme. 3. Paratransit engagement strategy The motivation for the national and local public transport reform programmes is clearly reflected in the results of the 2003 National Household Transport Survey (NHTS) (NDoT, 2003). The NHTS found high levels of passenger dissatisfaction with public transport, and indeed identified a number of specific unsatisfactory attributes such as the frequency and extent of services, the poor quality of interchange facilities, personal safety and the roadworthiness of vehicles. In response to these problems the IRPTN policy proposed particular mode-by-mode interventions to improve the services that operators provide and the infrastructure that they require (NDoT, 2006). These interventions would have considerable impacts on passengers and operators alike. However, unlike the structured process of appraising passengers’ views by way of the NHTS process, there is little evidence of either national or local investigations into operators’ attitudes towards the regulatory frameworks and physical circumstances within which they render services or towards the comprehensive restructuring of their businesses and the competition management mechanism proposed by the reform programme. The City has furthermore expressed its intention of replicating the current model of reform e i.e. BRT-based infrastructure, operator corporatisation, long-term gross-cost contracts, and compensation in exchange for operator buy-in e in upcoming project phases. Without having extensively engaged operators beyond those affected by current negotiations the reliability of drawing parallels across the different phases would be questionable. Penetrating paratransit attitudes around regulatory reform and restructuring is, however, not a straightforward task. While paratransit operators are collectively viewed as a market ‘sector’, which may create an impression of uniformity across their ranks, there are in fact considerable variances in business structure and size, and the degree of legalisation. There are around 6400 owners with an estimated 7500 licensed vehicles operating on 565 routes in Cape Town, but it has been suggested that the total paratransit fleet encompasses 12,500 vehicles if unlicensed operations are factored in (CCT, 2007a, 2008, 2009). Many, if not most, of these paratransit operators do not have published contact details or verifiable business addresses, making communication difficult, in addition to which operators may have as a mother tongue one of at least three languages. While the variety of ownership structures in the paratransit sector makes it difficult to establish a common basis around which to engage operators, paratransit representative organisations are equally fragmented. Within the city boundaries there are more than 100 operator associations, which in turn are aligned to a handful of larger political structures, or ‘mother-bodies’ (CCT, 2007b). Besides the difficulties of engaging operators across these significant divides, the MyCiTi project has added a further layer to the fragmentation of business structures by adding the option of shareholding in contracted vehicle operating companies, but only to those who ply their trade in a particular part of the city. There are already signs of friction
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between the group of ‘haves’ who will be sheltered financially by the security of long-term BRT operating contracts, and the ‘have-nots’ who continue to vie amongst themselves for passengers on the streets under the far less restrictive terms of the pre-existing operating licence system (Cape Times, 15 June 2011). In the formation of the MyCiTi operating companies the municipality has chosen to engage paratransit associations rather than individual operators. The reasoning behind this decision is evidently pragmatic: the representatives of an association may be a considerably smaller number of individuals than the operators belonging to that association. Although this strategy reduces the number of discussants, a risk inherent in such a move is that especially small operators’ views, i.e. those of single vehicle and owner-driver operators, may be suppressed as they may in practice hold little sway over decisions made at association level. It is therefore especially these small operators, who may in the first place have been forced into belonging to the association by the requirement for association support during the operating licence application process, who may have views contrary to that of the association or of operators owning larger fleets. Whereas the engagement process between the municipality and the initial handful of associations has provided some insight into attitudes towards regulatory change and government intervention, such views cannot be assumed to reflect the diversity of attitudes across all operators belonging to these associations e whether large or small, registered or unregistered e let alone of other associations and operators not engaged at present. In the absence of an investigation into the views of operators alongside that of associations it is not possible to gauge to which extent individual operators’ needs and aspirations coincide with those at association level, and indeed whether the existing public transport regulatory system and proposed longer-term reform process responds to business aspirations at operator level. Clearly, applying survey methods commonly used in the transport field to paratransit would be nearly impossible. In addition to the hierarchical complexity of the paratransit sector, the number of unlicensed paratransit operators is not known and, as a consequence, nor is the total number of operators. A well-defined sampling frame from which to randomly select operators is therefore absent. Methods such as mail or telephonic surveys would furthermore not be feasible, underscored by a study by Jakoet (2001) to establish the readiness of bus and paratransit operators to tender for public service contracts in which the response rate to mailed questionnaires was only 20%. Moreover, the depth of insight required to satisfy an inquiry into the complex interrelationships between policy, vested interests and government-led reform does not lend itself readily to conventional survey approaches based on indirect engagement or quantitative methods (Arce, 2003; Morris & Adler, 2003). Responses may be varied, circuitous and unexpected, literacy levels may be wide-ranging, and policy concepts may require relatively detailed explanation. Despite the hard-to-reach nature of paratransit, in the authors’ view the imperative of engaging operators at all levels remains, whether in advance of future phases of the City-led reform process through attitudinal surveys or further down the line around the negotiating table. The continuing official support for the MyCiTi project, and the political imperatives for doing so, indicate that the BRT-based programme is likely to remain a driving force behind reform for the foreseeable future.
appears to be ample capacity within the corps of locally available engineering expertise to timeously resolve, amongst other matters, the complex traffic control measures, roadway alterations and electronic management that is essential to the success of BRT. The same appears to be the case from reports of progress on Johannesburg’s related Rea Vaya system (see CoJ, 2011; McCaul & Ntuli, 2011). The IRPTN policy envisioned a rapid roll-out of public transport services based on BRT, and progress in these two cities appear to confirm that the BRT-based infrastructure can be completed in line with policy expectations. It seems, rather, that the expectations around progress have not been met in the process of engaging existing operators on establishing new operator companies and on transferring the multitude of paratransit operating licence holders to consolidated long-term, multi-year, distance-based service contracts.
4. Emerging issues around the local and national reform agenda
City authorities and affected paratransit operators and associations have built a cooperative relationship by working towards a process where both sides draw benefit from the proposed outcomes. In the case of the City, positive outcomes have amongst others been significant improvements in the public transport services offered to passengers and the reduction of potentially
The experience in Cape Town suggests that the infrastructural aspects of the MyCiTi programme are not where the major challenges lie in realising the aims of the reform policy. Indeed, there
4.1. Replicability of the current reform model in the future Should the company shareholding and compensation agreements be signed in the latter half of 2012 as is currently the projection, it would have taken around four years to establish three operating companies out of eight paratransit associations and two bus operating companies. Since the City has admitted that the first MyCiTi phase operations will run at a deficit (CCT, 2010a), the municipality hopes to embark on the second phase as soon as possible to draw on areas where public transport ridership levels are higher so that income from fares can be increased and the need for operational subsidisation reduced. To date engagement has focused on the aforementioned eight paratransit associations and their affected member operators, but in the targeted forthcoming ‘phase two’ area there are 67 associations (CCT, 2007b). The effect that this could have on expanding the complexity and timeframes of future engagement is substantial. However, since in-depth engagement has been limited to the presently affected operators, little is known about the profile of the paratransit businesses that operate beyond the current phase and their revenue flows, diversity of needs and possible responses to the reform proposal. The magnitude of paratransit operating revenues and profits, and the compensation that would be required to cover future ‘losses’ due to replacement of current operations by BRT, is equally obscure. As reform has been inextricably linked to compensation, it is likely that expectations of financial compensation have been created not only on the part of associations and owners affected by the starter phase of the MyCiTi system, but also in other parts of the city. Compensation for the cancellation of existing operating permissions is an enticement to participate in the reform programme, but in addition to the costs of operating subsidies, the price of compensation will be a further burden on the City’s revenues. The scale of this burden in relation to current engagement is becoming clearer as the work towards finalising the first phase agreements progresses, but the financial impacts of the compensation principle in future phases is as yet unknown. If pressures on the City’s overall budget increase in future years, the appetite to continue to provide compensatory pay-outs to affected operators e which in the public eye may be difficult to link to improved public transport service on the ground e may well be limited. 4.2. Reform relies on human capital
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destructive inter-modal competition on a portion of the city’s roads. Operators and associations may arguably benefit even more through gaining the long-term security of income streams guaranteed by the operating contracts, and being compensated financially over and above such income by way of the agreements around the withdrawal of existing operating licences. The benefits to operators would, however, only accrue once the contracts are finalised. A continued reliance on interim arrangements may undermine the relationship that has been built so far between the City and affected paratransit operators and associations, and work against operator buy-in in future phases. Despite the beneficial outcomes achieved so far, engagement between the municipality and paratransit has been a timeconsuming, intensive and at times volatile process, and the effort and commitment required to engage paratransit around reform in future should not be underestimated (section 3 illustrated some of the complexities of this challenge). It is likely to remain difficult to gain access to paratransit operators and associations, which in essence constitute a closed community that has managed to develop a sector of the public transport marketplace largely on its own initiative and often in spite of government initiatives to prevent its expansion (see Schalekamp & Behrens (2010) for an analysis of the historic interplay between government and paratransit in South Africa). Government and private sector players may well be seen as outsiders attempting to ‘meddle’ in paratransit’s affairs, and gaining the trust of operators would require sustained effort to overcome such perceptions. One of the key ways in which more trusting relationships have been established around the negotiating table has been to employ intermediaries between the municipality and paratransit who have a track record with actors within the paratransit hierarchy, but who also have credibility in the City’s eyes. In the authors’ view there are few people who can play such an intermediary role, in itself not unsurprising: reform on the scale of the MyCiTi and IRPTN programmes has been unprecedented, and was initiated relatively recently. There has not been a long history of training and development in, and exposure of existing professionals and officials to, this particular field, and consequently there is little expertise with sufficiently grounded knowledge of local conditions to fulfil such roles. This may potentially be an area where increased investment in human capital may be critical as the scope of engagement in the upcoming MyCiTi phase grows to involve a larger number of stakeholders. 4.3. Disjuncture between national policy and local circumstances The national IRPTN policy targeted 12 cities and six districts for the initial round of investment in BRT-based networks. Of these only a handful has made progress in planning new services, and such planned services have only become operational in two cities. The slow progress is perhaps illustrative of the path dependencies related to the specific contexts of each of these locales. Existing infrastructure, public sector capacity to manage the transition, available professional expertise, and the pre-existing relationships e if any e between municipalities and operators all influence the likelihood of initiating and sustaining the successive phases of BRT operations. Operators’ business needs and expectations may vary widely between each city, but also within the different parts of the same city and even within the same association, and play a decisive role in their readiness to be engaged on, and included in, the reform process. The immediate pressures on upgrading public transport services may also be dependent on the circumstances of prospective and existing passengers: traffic congestion levels and travel costs, travel times and distances exacerbated by urban sprawl, the quality and size of existing public transport networks, and perceptions of safety and convenience are some of the many considerations.
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The translation of the policy into local roll-out may hold unintended consequences impacting not only on operators but also on passengers. Some of these considerations, by no means a comprehensive list, are highlighted here. Firstly, the hybrid public transport system that results almost accidentally from the introduction of a new mode while existing modes are still in operation leads to greater modal and fare level choice, and thus to an improved offering to passengers. Secondly, the current official view is that IRPTNs such as Cape Town’s MyCiTi will eventually replace all existing paratransit and formal bus services, and that consequently the hybrid scenario and its benefits would be temporary at best. However, formal public transport provision is unlikely to keep up with the rapid and unplanned urban growth which is characteristic in Cape Town and around the country. Paratransit typically addresses this continuously developing segment of the public transport market. The insistence on formalisation e if it proves at all feasible e would render such emerging paratransit operations illegal, again impacting negatively on passengers through, for instance, reduced public control over vehicle safety standards. Lastly, the policy focuses on the urban public transport role of paratransit without addressing the after-hours and long distances services for which paratransit vehicles are also used. By gradually removing paratransit vehicles the full array of services that paratransit presently offers to passengers would be eroded. Beyond context-specific issues, the appropriateness of a national policy and funding framework that directs, and to a certain extent dictates, local action is increasingly being questioned by professionals and officials at the coalface of the reform process. The subjects of debate and concerns expressed at a recent BRT workshop session at the Southern African Transport Conference (SATC, 2011) are indicative of a possible shift in focus from ‘BRT at all costs’ to ‘at what cost BRT?’. On the infrastructural and operational side these views included: that there was an insufficient assessment of the costs to run BRT services at the standards specified by the National Department of Transport; that funding out of the national infrastructure and systems grant is highly discretional, which may be appropriate at the outset, but works against long-term commitments; and the disconcerting admission by a local consultant working closely with the Department on the reform programme that “[South Africa] jumped straight into this BRT story without understanding the financial implications”. Besides concerns around the overall affordability of highspecification BRT infrastructure and operations, the reliability of funding streams from the national government are particularly relevant to the paratransit engagement process. Should funding levels be curtailed to the extent that compensation to operators for surrendering current operating permissions becomes unaffordable, little incentive would remain to entice paratransit operators to be incorporated in the BRT systems, and the hoped-for efficiency gains and positive impacts on ownership and competition regulation would be unlikely to be realised. 5. Concluding remarks Efforts to improve public transport services should be lauded, not least because many impoverished people in South African cities rely on public transport services to access economic opportunities. However, bringing about such improvements comes at a cost, and in the constrained fiscal state in which South African cities find themselves, investments should be made cautiously and with a keen eye on the benefits that can be extracted from such investments. As a case in point, the City of Cape Town has invested heavily in the first phase of a BRT system with a number of positive outcomes in mind. With the launch of the first services associated with this phase of the project successfully completed, now is the
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time to take stock of the costs of the outcomes achieved to date, the risk factors that have been associated with these costs, and the steps that can be taken in future to ameliorate such risks. In this paper the authors have focussed on what is, in their view, one of the critical risks to the present and continued success of the City’s public transport reform programme: that is, the process by which the pervasive paratransit sector is engaged around the impacts of the reform programme on its present structure and mode of operations. While there certainly has been progress on corporatising paratransit operators and associations, the first round of long-term operating contracts and compensatory agreements remain to be concluded, and the number of operators and associations engaged to date is small in relation to the overall paratransit sector in Cape Town. The strategy that has been employed to engage paratransit e targeting associations rather than individual operators e may also work against gaining a better understanding of the diverse needs of operators, thereby allowing opportunities to understand the incentives driving individual operators and to empower the numerous small and micro enterprises which constitute much of the paratransit sector, to be passed over. It remains to be seen if the current reform model, based on BRT operations, operator consolidation, and competition regulation restructuring, can be replicated in future. Certainly, the disjuncture between national policy and local circumstances and the financial uncertainties that may impact upon continued national funding for the reform programme may well compel a revision of the scope of the reform programme. However, operators lie at the core of public transport services, and engaging them successfully is key to the success of reforming public transport. It would therefore be judicious to invest in the social capital of paratransit well before committing the significant financial capital that will be required to construct a full-specification BRT system in the remainder of Cape Town and indeed elsewhere in the country. Acknowledgements The research presented in this paper was funded by the Volvo Research and Educational Foundations, and forms part of a broader research programme conducted by the African Centre of Excellence for Studies in Public and Non-motorised Transport (ACET, www. acet.uct.ac.za). References Arce, C. (2003). Multi-cultural and multi-lingual conditions. In P. Stopher, & P. Jones (Eds.), Transport survey quality and innovation (pp. 209e213). London, UK: Pergamon.
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