SUBSIDIES NOT NECESSARILY THE ANSWER IN UGANDA’S PIONEER BUS SAGA

It’s been more than a month since the Pioneer Easy Bus Company was pulled off the streets. 

Interestingly, after only a year, their removal from the Kampala streets has caused a transport crisis. Investors in taxis probably sold out and left the business altogether and in the last year maybe no more new taxis joined the ranks, hence our current situation.

Pioneer found their fleet grounded by Uganda Revenue Authority (URA) due to an accumulated tax bill of sh8b.

This tax bill came about because Pioneer was allowed a twelve month holiday to pay the import duty on the buses. Maybe they thought URA would forget.

The case of the Pioneer Bus Company raises several issues about how business is done in this country.

No one will deny that Kampala is in dire need of an efficient public transport system, especially when this lack means that lawless taxis and irritating boda bodas rule our streets.

It does not take nano technology to work out that with an ever expanding day population and the sprawling growth of Kampala’s suburbs that our transportation needs are growing.

Up to this point we have been content to let public transport grow as it may and in the process we ended up getting held hostage by Uganda Taxi Owners and Drivers Association (UTODA).

So desperate were we to be rid of UTODA that Pioneer was like rain in the desert.

The business potential of running a transport service seems quite obvious. So calls for the Government to run the service are really unnecessary.

What the Government can do, however, is to open up the sector to businessmen in an orderly fashion, but not before carrying out a thorough study of environment, which study would serve as a basis for businessmen to make informed decisions of the viability of such an industry.

An open bidding process would be the logical progression that would attract time tested operators with the financial muscle to do the business. And, maybe, city authorities would give different routes to different service providers – as I know is the plan, instead of direct competition on the routes.

Government would have factored in the possibility of tax breaks and other concessions it would have made to the business operators to make the endeavor more commercially viable.

Government has its share of blame to carry but also the promoters of Pioneer have shown themselves to be clearly out of their depth on this deal.

It’s amazing how the populists who barely a year ago were criticising the Government for helping force UTODA off the streets are now the very same ones who are saying that Pioneer’s tax should be waived.

Government subsidies to private businessmen are always a sticky issue and are likely to cause more damage, which damage would be masked by the service provided however inefficiently, never mind that the distortion to the playing field may have discouraged more credible operators.

There has to be a coincidence of needs by the technocrats and businessmen.

The current mutual distrust between technocrats and businessmen has to be bridged.

Technocrats view businessmen as cunning and always angling for advantage at the expense of the public while businessmen see technocrats are bribe seeking good for nothing other than throwing up impediments to progress.

The preferred attitude would be for the public sector to see their role as enabling businessmen to thrive so they can pay more taxes, which taxes can be employed in improving the provision of public goods.

It is unlikely to happen soon.

In the Pioneer case such an attitude may have ensured that we have a better quality promoter of the project – never mind what country they are from, provided a transparent raft of incentives to ensure the business succeeds and cooperated with the businessmen to vault the inevitable challenges that come with doing business.

The solution to the Pioneer saga is not for government to take over the service, neither is to forgive the company the taxes that are rightfully due to the country, the solution will come with a sincere appreciation for a working service by the powers that be and a genuine search for the best possible provider available to get the job done.