Opinion / Columnist
ZUPCO's three-tier fare structure unsustainable
06 Feb 2021 at 17:47hrs | Views
On the 16th of January 2021, the now monopolized urban transporter ZUPCO announced a 100% fare hike for urban routes sighting falling revenues due to reduced carrying capacity of buses which has been necessitated by adherence to covid-19 health guidelines. Reflecting on those statements, we are now certain that the reasons given in justifying the increase were false since buses still carry passengers to sit capacity, and in some instances, there will be passengers standing. I am not going to discuss this today but my attention has been drawn to the organization's newly announced foreign currency fares.
With so many months having passed without ZUPCO accepting forex fares, (this despite the country having had a relatively stable formal exchange rate courtesy of the forex auction system), the decision to introduce forex fares was long overdue. I always hate the inconvenience of having to run around trying to change a dollar/rand note to pay the bus fare before boarding. With the decision having taken management at ZUPCO more than half a year to come up with, one would have thought that a more carefully thought position on the forex fares would be announced by the transporter, but alas, the opposite appears to have happened. It seems the frustration of having to run around changing my dollar is still far from over!
The announced forex fares are careless, to say the least, leaving a lot to be wondered about the intentions of whoever made them up. They speak to a gross lack of appreciation or outright ignorance of the reality in the local forex exchange market, both its formal and informal versions. The ultimate effect is that ZUPCO now charges three separate prices for the same route with those in possession of US dollars forced to pay more for each equivalent distance.
This week the official exchange rate stands at US$1 - ZWL$82.6756 while the rate for ZAR/ZWL is ZAR1 - ZWL$5.5772. For a distance within a 20km radius, this translates to ZUPCO omnibus fares of ZWL$83 and ZWL$56 for commuters paying in USD and Rands respectively against a flat rate of ZWL$50 for those using local dollars. For buses, it translates to fares of ZWL$41.50 and ZWL$28 for commuters paying in USD and Rands respectively against a flat rate of $30 for those paying in local dollars. Now the question is why does someone have to pay more simply because of a currency they have in possession?
It boggles the mind how management at ZUPCO overlooked this simple mathematical calculation and failed to anticipate the shortcomings of such an unsustainable three-tier pricing structure. The existing fares were already burdensome to commuters who are constantly faced with rising costs of basic commodities against stagnant meagre incomes. It is therefore easy to predict that this unfair fare structure will be dismissed by hard-pressed Zimbabweans who will opt to change their forex to local dollars and pay the cheaper local currency fares.
Even if there be a few who are willing or indifferent to pay the forex fare, that money is less likely to be accounted for by the conductors who will prefer to keep it for themselves and replace it with the local denomination. So after a while, management at ZUPCO will begin to wonder why commuters are not paying their fares in forex and they will devise a means to cause them to do so, perhaps by fixing the ZWL$ fare to the prevailing forex auction rate. This will consequently push the cost of urban commuting beyond reach of many and will further sink millions of urban dwellers into poverty.
With so many months having passed without ZUPCO accepting forex fares, (this despite the country having had a relatively stable formal exchange rate courtesy of the forex auction system), the decision to introduce forex fares was long overdue. I always hate the inconvenience of having to run around trying to change a dollar/rand note to pay the bus fare before boarding. With the decision having taken management at ZUPCO more than half a year to come up with, one would have thought that a more carefully thought position on the forex fares would be announced by the transporter, but alas, the opposite appears to have happened. It seems the frustration of having to run around changing my dollar is still far from over!
The announced forex fares are careless, to say the least, leaving a lot to be wondered about the intentions of whoever made them up. They speak to a gross lack of appreciation or outright ignorance of the reality in the local forex exchange market, both its formal and informal versions. The ultimate effect is that ZUPCO now charges three separate prices for the same route with those in possession of US dollars forced to pay more for each equivalent distance.
It boggles the mind how management at ZUPCO overlooked this simple mathematical calculation and failed to anticipate the shortcomings of such an unsustainable three-tier pricing structure. The existing fares were already burdensome to commuters who are constantly faced with rising costs of basic commodities against stagnant meagre incomes. It is therefore easy to predict that this unfair fare structure will be dismissed by hard-pressed Zimbabweans who will opt to change their forex to local dollars and pay the cheaper local currency fares.
Even if there be a few who are willing or indifferent to pay the forex fare, that money is less likely to be accounted for by the conductors who will prefer to keep it for themselves and replace it with the local denomination. So after a while, management at ZUPCO will begin to wonder why commuters are not paying their fares in forex and they will devise a means to cause them to do so, perhaps by fixing the ZWL$ fare to the prevailing forex auction rate. This will consequently push the cost of urban commuting beyond reach of many and will further sink millions of urban dwellers into poverty.
Source - Nkosilathi Lesley Ngwenya
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