Thursday, April 29, 2010

The economic incentive of a dala dala driver.

The Drivers of the dala dalas in Dar have only one incentive; to make more than TZS 100,000.00 a day. Yes, that is the sum total a dala dala driver is required to bring to his boss - the owner of the those ubiquitous little traveling machines. Anything earned above that amount goes first towards fuel and then the remainder is split with the conductor.  This TZS 100,000 offers a strange incentive for the rest of us on the road.  The dala dala driver knows he must hand over that bottom line figure each day in order for him to keep his job.  So to him nothing else matters, regardless of the consequences he will always race, slow down, over take or block other cars in order for him (and always a male) to get the next passenger, or in his mind the next opportunity to top off that TZS 100,000 for his own income.   But please do not start pointing the finger to the bus drivers alone in the city.  This behavior is aided by two other economic agents: the bus owner and the traffic police.

The bus owner is in business to make money.  So he also does not care what may come.  He is not concerned with his drivers following road safety, navigating treacherous, rain-soaked streets, or even letting a pedestrian cross at the cross-walk. For the bus owner, what matters most is that TZS 100,000.00 a day.  A dala dala driver might suffer if he does not deliver that bottom line amount, but he will never get in trouble from the owner if he fails to follow driving laws.  It’s an incentive that, in fact, encourages the driver to be egregiously inconsiderate to wellbeing of others on the road. 

As incongruous as it sounds, the traffic police (the very people whose job it is to keep drivers protected and traffic safe) are utterly corrupt.  That corruption provides a sense of security only to the dala dala drivers, who know that they can bribe their way out of any situation. Safe in the knowledge that there is no need to follow traffic laws, they can be as maniacal as they want on the road, all in the name of topping off that TZS 100,000. In fact, the traffic police have reached such an extreme level of corruption that their bosses saw the need to outsource their job!  They brought in the Majembe Auction Mart to put a noose on the dala dala driver’s head. Unfortunately, that outsourcing did not pay off.  The incentive of the Majembe is not safety or an orderly transportation system, but to arrest as many of the death vehicles as possible so they can get paid.

The result of the above scenario is a serious assault on a precious public good – road safety.

As I am writing this more people are being killed on the road because dala dalas, large trucks, bajajes, and taxi drivers know no boundaries in their pursuit of a little profit.  A study published by the East African News Paper in March ranked Tanzania as the second highest in East and Central Africa for deaths caused by road accidents.

The problem of having a transportation system where buses are run by individual owners is that their incentives and those of their agents will never align with the needs of public safety. Safety requires players to sacrifice a small piece of their profit for the greater good?  Is that possible when one individual’s bottom line is the only incentive?  Is there a way to avoid buses overtaking each other on a single lane road just to get another TZS 500 first?  Is there a way to avoid buses stopping traffic to pick a passenger in the middle of the street rather than the official bus stops?  Is there a way to prevent the disregard for others on the road when the only incentive is individual profit?

That is why developed societies always have bus companies provide service to the city dwellers. Under the system of a bus company, it does not matter which bus picked up a particular passenger because all drivers are motivated to serve the same owner – the shareholder.  Consistent and adequate salaries further encourage drivers to focus on safety rather than mad dashes for profit.  With a bus company, the incentive is to remain safe so that the company can have as many passengers as possible.

The new Dar es Salaam bus system, DART, has been in planning for the last five years, waiting to replace the defunct UDA. Every time a new report comes out to explain reasons for its delay, it is so cumbersome it reminds you of Andy Cap and the drinking gang.  If these death machines are running for decades now they must be profitable to the owners. Why not just force the same owners to form a company and list it in the stock exchange. Furthermore, the government could issue bonds through a municipality to increase the capital of the company. That way there would be ample funds to modernize the system. These bonds could be paid back using ticket money and renting out vital “moving” space to the advertisers. If the fairy godfather (i.e. world bank) wants to help, they can help. They can go to the market and buy some of those shares!



Majaliwa said...

This is very good,nay,excellent analysis of the perverse incentives facing daladala drivers. It goes a long way - if not the whole way - towards explaining the policy failure that we witness kwenye sekta ya usafiri dar-es-salaam.



Anonymous said...

Nice post.

For every daladala that is on the road, it creates two jobs for utingo and dereva. And these folks could have been vibaka if it weren't for these daladala. My take is leave it the way it is, and focus more on enforcing the rule of law. I understand the safety side of it is enormous, we have to find a way to crack down and impose massive fines. But to have daladala centralized, then we will be loosing jobs that our youthes desperately need.

Anonymous said...

Great topic!

Centralize the system. The rule of law has been like a fairy tale for our systems and we as a people(our work ethic as well as our habits) have a long ways to go. We have to incorporate realistic, measurable and personalized interventions that will fit the nature of the crisis and our capabilities in implementation. how do we measure quote in quote' enforcing rule of law' in as corrupt a city as Dar alone?
kwa kweli, centralizing the system doesn't necessarily mean cutting down jobs. Those drivers should be required to submit a one page application to indicate their experience as bus drivers and get re-hired. pamoja na hao makonda as well. This will actually allow a near accurate estimate of how many bus drivers and kondaktas we have. Through the system, bus drivers and kondaktas can form their own unions and advocate for more benefits with finer and more defined limits/leadership. They can represent themselves in legal, political as well as social issues. I cannot emphasize enough the win-win outcomes from the suggested centralized bus system. Hapo hatujazungumzia the safety of our people which was the main focus of this article!!
Why is it taking so long for this to happen? ama ndo mambo yetu yaleyale, nothing gets done on time,,mpaka watu wote wafe huko barabarani ndo tutajua. I am just disappointed kwa kweli!hali ni mbaya sana~


Anonymous said...

The path to development will have to go across our appreciation of rule of law. That is by our police enforcing it, and we the people obeying it. Now, if we are going to bypass commonsense solutions because we don't trust the law then that should be a concern. I definitely think that Daladala should be a private entity. If I have few millions and I want to buy a DCM to improve my income, I should be able to do that.Granted my utingo and dereva will behave while on the road.

I agree it is a tricky situation, and it start with rungu la sheria. My understanding with a centralized system is it is run by the city, and not a private industry anymore. In Tanzania we don't need to be reminded how awful state run endeavors have performed in the past.

Anonymous said...

Trust the police? and expect people to follow the regulations? Come on, how many things are already in place today that are supposed to be governed by police and nothing is being done? Let me share a personal incident when i was in Dar in December hapo juzi, i was in a cab(taxi) and the police stopped the cab driver for not having the right insurance tags. while i was in the cab, i witnessed the taxi driver paying the police in white uniform 'kitu kidogo' so he could proceed to earn his livelihood.

Sasa, ndugu yangu, of all people, can i really have faith on the POLICE to IMPLEMENT anything in this way kwa kweli? I beg to differ, and emphatically point out that Rungu la sheria lina-fail as we speak. And just because the government failed before, doesn't mean it is going to fail on this one as well. I understand the uncertainty and the distrust, however, we cannot rely on hopes that people will follow the rules when the authorities to enforce the rules are severely crippled from top to bottom. Centralize the system, we have already seen what the private sector is doing to the transportation issue as indicated by the current outcomes(increased # of deaths, car accidents). Something needs to be done, changes need to be implemented. The private sector has failed so far.


January Makamba said...

Great discussion all. Thanks Jaffer for your great posting. An efficient public transport anywhere - BART in San Francisco, MBTA in Boston, Metro in New York, the Tube in London, etc - is a loss-making venture. The government - municipal or central - normally subsidize public transportation because these are seen and operated as "services" and not "businesses". The attempt to make a buck out of public transportation results into chaos, a la daladala.

Then, you have a small matter of our driving habits which is a reflection of social attitudes: no common courtesy, pursuit of fatalism, and the jungle (or Bongo) mentality.

I think this is a much bigger problem than the economic incentive question. The economy of cabs in New York works the same way as daladala in Tanzania, that as a cab driver in New York you are to bring a certain (fixed) amount of money per day or week to the cab company. The more money you make in a day, the more better off you are. So, they have an incentive to be competitive but they do not risk people's lives along the roads. Why the daladalas?

Anonymous said...

Anon, Monday May 3rd. I think the venture can be a public private partnership, that is why, if I am not wrong it was suggested to float the shares in the stock exchange and getting the owners to form a company. If the state runs the service it will be no different than the previous UDA. That is an experiment we have already done. However, January is right. Large public services have to be subsidized by the government over time. I believe there is a possibility to find a happy medium in between.

Furthermore social attitudes do come to play and so does the culture issue. However, the craziness, which is economically induced behavior, is common to all of these kind situations. Referring to January's example of the NYC taxi drivers, they are known to be aggressive and to the most cases unbearable. When I used to live in NYC I used to ride a bike to work and I remember the city council used to hand brochures to bikers on techniques of watching out for a taxi driver. Like if there is a woman in front of you waving for a taxi, watch out, there will be a screeching taxi passing down your lane. The only difference is that the owners of the taxis do not condone. The police are "effective" and the Taxi and Limousine commission regulates drivers. That way the craziness does not fully manifest on the road.