Last week Pioneer Easy Bus, the company that has over the
last year been providing bus services in Kampala, had 98 of its buses impounded
by the Uganda Revenue Authority (URA).
URA moved in order to recover sh8b in taxes it says are due
to it.
Pioneer’s orange buses hit the street last year just in time
to detooth a strike by the taxi operator association UTODA. At the time UTODA
was protesting moves by the new incorporated city authority to collect dues
owed it by the taxi operator.
The bus company came with the promise of decongesting our
roads, lower fares and sparing road users the obnoxious behavior of our taxis.
They were such a relief that the public was willing to
overlook the fact the new buses had not complied with all formalities.
The honeymoon is over.
No one doubts that Kampala’s transport system is in need of
an urgent overhaul and that bus transport is part of the solution.
There must be money to be made and no one was surprised when
the Pioneer slipped into the sector like a duck to water and started making
money hand over fist.
But problems begun to creep in, understandably so as
Pioneer’s business plan did not call for such an early entrance into the
sector.
At the end of last year the bus company’s management in
explaining their decision to hike prices said KCCA had not lived up to its
obligations of among other things providing bus lanes. Bus lanes the company
argued would make it possible for their buses to make more round trips and
therefore justify the low prices.
There were reports of drivers striking over pay, changes in
top management and talk of negotiations with authorities to provide concessions
that would make the company’s business model more viable all of which may have
been brushed off as teething pains.
That being said they say that deals are not bad it is the
people handling the deals.
Think about it you were going to have 100 buses, the
majority of which will be plying the various routes in and out of the city
almost simultaneously, there would be logistical challenges – fuelling,
maintenance and even meals, human resource issues – this is a startup that was
going to hit the ground with easily a 100 drivers and conductors, not to
mention backroom and other support staff. Then of course there were financing
issues to consider – how do you not only get the startup capital but also the
operating capital to tide you over the steep early learning curve.
The record of startups the world over is very dismal with
nine in ten new companies not seeing their fifth birthday. And just because you
start big does not mean the risk goes away if anything these are magnified.
Business is about managing risk. Risk is a function of
knowledge. The more knowledge you have the better you can mitigate against
risk.
You pay no particular attention to driving to work. Through
years of experience, the accumulated knowledge will allow you to cater for any
risks along the way to work. So the risk of you not getting to work is
minimized. But if you give your car keys to your ten year old son to drive the
same car, at the same time on the same route
to work, the risk is suddenly
life threatening.
Similarly in the wide scope of things a bus company with a
fleet to 100 buses is nothing to write home about. Across the border in Kenya,
KBS which has been servicing Nairobi has been doing so for decades with a fleet
which dwarfs Pioneer’s.
Management knowhow and experience more than money is the key
mitigant of risk.
Thankfully the travelling public will not penalize Pioneer
for this hiccup in operations if they get back on the road.
One hopes that Pioneer can bounce back, -- if only so we do
not return to the chaos of a taxi dominated industry, but one hopes too that
whether they do or they don’t, that this experience will provide key lessons
for anybody going into the business.
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