Zupco subsidy: Killing the goose that lays the golden egg

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Cliff Chiduku

A FORTNIGHT ago, Zupco took delivery of 65 new buses from China. This came after the parastatal bought about 500 buses from Belarus as government seeks to recapitalise the ailing State-owned transport company in its quest to provide mass public transport to alleviate the plight of commuters.

Last year, the government decided to reintroduce mass public transport after realising that commuters were being ripped off by unscrupulous private bus operators who were charging exorbitant fares.

Private commuter omnibus operators have since November 2017 been increasing fares willy-nilly.

Last week, scores of commuters were left stranded in many urban areas after fares were increased, with some charging as much as $18 a trip, a route Zupco is charging $1,50. Private players plying the Harare-Norton route were charging $30 a trip during peak hours and $25 off peak. Incessant rains that pounded most parts of the country worsened the plight of commuters as transporters took advantage and charged ridiculous fares.

Private transport operators cite the acute shortage of fuel, which they are buying on the black market, as the reason for increasing the fares. The commuting public has been forced to resort to boarding pick-up trucks, which charge cheaper fares, but they risk losing hip and limb as some of them are overloaded.

While government efforts to cushion commuters by providing a cheaper transport system should be commended, but with the ever-rising cost of fuel, how sustainable are the fares charged by Zupco?

In December last year, the Parliamentary Portfolio Committee on Local Government revealed that the Zupco subsidy was costing the fiscus $51 million a month and was not sustainable.

It should be noted that it is one thing having very cheap fares, but it is another to sustain the same fares. With a litre of diesel and petrol selling at $19,44 and $18,28 respectively, charging $1 would not make economic sense. There are concerns that as the government tries to cushion its citizens, Zupco has been left to contend with charging fares that are too low to keep the business viable and procure more buses — cost reflective tariffs.

The hiring of private buses to augment Zupco’s depleted fleet is just another looting platform for the boys as millions are channelled towards that scheme every month. Certainly, it is a feeding trough for the well-connected, with “Zupcopreneurs” getting a whopping $90 000 per month for each bus on the road when that same bus is cashing out less than $1 300 a day for its 10 trips. The government is now being forced to dig deeper into its pocket year in, year out. This is tantamount to killing the goose that lays the golden egg.

Government should put in place mechanisms of mobilising resources to fund programmes that seek to cushion the vulnerable members of society. It is the duty of the government to provide safety nets to the poor and vulnerable.

Ploughing back motor licensing and tollgate fees to road maintenance and public transport is a sure way to fund social service. Sin tax can also be a good source of funding subsidies. South Africa, Philippines and India are reaping the rewards of charging sin tax on alcoholic beverages and cigarettes. Five years ago, Berkeley in California became the first city in the United States to enact a soda tax: a 1% surcharge on every ounce of sugar-sweetened drinks sold. While the idea of soda tax was to reduce high sugar consumption, it was also meant to raise funds to fund local authority programmes.
However, Zupco needs to tighten its corporate governance systems, transparency and accountability and move away from depending on Treasury for sustenance. With the Zanu PF government’s unbridled appetite for looting, Zupco will be collapsed with the full co-operation of management, drivers and conductors. This company should declare dividends to the government if it is run along professional lines and not as an extension of the ruling party. It is not in doubt that the Zupco model, if refined, can be a game changer in the public transport system.
With reports that the prices of coaches imported from Belarus were heavily inflated, the deal is likely to be a burden on the fiscus. The opaque nature of the Zupco reintroduction, most of the parastatal’s rickety buses are death traps as they are not being serviced for good mechanical functionality and passenger safety. A fortnight ago, a Zupco bus accident near Kwekwe claimed the lives of nine people with 55 others left injured. The accident followed more accidents involving the company’s buses countrywide.
This comes after the Passengers Association of Zimbabwe laid bare the truth about the buses’ liability cover. The report also follows that of the Auditor-General which revealed that the Zupco buses did not have insurance cover.

Even though public transport is heavily subsidised by governments the world over, self-sustenance should guide in fare charging model — a cost recovery basis. The government cannot continue pumping more resources into the public transport operator year in, year out without reaping from its investment.