Leasing: A Sustainable Alternative to Promoting a More Efficient, Inclusive and Safe Public Transport System in East Africa.
According to World Bank estimates, city residents on average spend an hour to travel to work and another 60 minutes commuting back home due to traffic congestion. In East Africa, public transport accounts for nearly eighty percent of motorized travel.
In Kenya, the matatu paratransit network has been an integral part of Nairobi’s public transport for decades, providing an accessible transportation option to the vast majority of its residents. However, matatus being in the informal sector, have raised concerns including safety issues, environmental issues, dangerous driving patterns, poor working conditions, and corrupt business structures; subsequently increasing traffic congestion, air and noise pollution, and accidents.
A growing desire to tame city’s congestion and improve overall transportation has prompted the development of The Bus Rapid Transit System (BRTS), which many developed and some developing nations have adopted and implemented successfully among them, Curitiba in Brazil and New Delhi in India.
Bus Rapid Transit Systems in East Africa
Thankfully, Kenya, Rwanda, Tanzania, and Uganda have not been left behind and have demonstrated much interest in developing sustainable public transport systems. The major cities in these countries are currently implementing bus rapid transit (BRT) systems to improve public transport, and have also realized the urgency to strengthen walking and cycling facilities.
Lease Financing to Accelerate the Realization of More Efficient Transport Systems
Today Leasing is playing a major role in the modernization of the economy via technology transfer, efficient marketing, and production methods especially in the areas of transportation and primary processing.
Means of acquiring and financing transportation vehicles and systems have evolved and savvy providers are now demanding more flexibility in the timing, terms, and commitment than traditional purchasing can offer, leading to an increased interest in leasing as an alternative source of finance.
RentCo Africa, the leading Leasing firm in Sub-Saharan Africa has financed 1,030 buses (980 Diesel/ 50 Electric) to a tune of USD 130 Million in neighboring Uganda.
Courtesy of a joint venture investment by Kiira Motor Corporation (KMC), Tondeka Metro Company Limited, RentCo Africa Limited (RentCo), the formation of Tondeka Bus Transport Company Limited, a special purpose vehicle (SPV) for operating mass public transportation will see to the successful implementation of BRTS in Kampala and the Greater Kampala Metropolitan Area (GKMA).
This mega project is an off-balance-sheet financing (operating leasing), meaning the Government shall have no direct liability in the operationalization of the SPV, since the project takes the form of a public-private partnership.
The parties plan to produce and deploy 1,030 buses by the end of February 2022. Out of these, 50 will be electric for the Mass Transit Bus System (MTBS) project in the GKMA.
Collaborations with the Private Sector
In countries where public transport has been very successful, you will notice that the private sector and the government worked together. This includes funding, working on projects like automatic cards, and employing people who work in the transport industry.
Recently, the government revealed that private transport companies will now be tapped to manage the Bus Rapid Transport (BRT) system. Likewise, partnering with leasing companies will accelerate the acquisition of the vehicles and scale up the numbers to increase the progressive impact of a more efficient public transport system to the economy.
A Closer Look at the Impact of Leasing on the Tondeka Project in Kampala, Uganda:
As part of implementing the BRTs, RentCo Africa endevours to ensure that the existing paratransit industry is able to take part in the operation of the future BRT systems.
Tondeka Joint Venture will:
- Create over 10,000 jobs directly and indirectly, including but not limiting engineers, welders, painters, designers, architects, layers, accountants, economist, logistics and supply chain managers, auditors, human resources managers, sales and marketing personnel, drivers, stewards and cleaners.
- Improve passenger boarding and aligning times and reduce overall waiting and travel times.
- Catalyze investment by small and medium enterprises in the manufacture of vehicle parts components and systems.
- Promote and catalyze the shift to environmentally friendly transport solutions, which will go a long way in improving sustainable energy consumption, safeguarding air quality and demonstrating the parties’ commitment to enhance environment stewardship.
- Increase passenger comfort and safety
- Structured price strategies to reduce fraud and the unfair impromptu fare increments by other forms of public transport.
The aim of this public-private partnership strives to help modernize public transport in the urban centres and beyond, while building the indigenous motor vehicle industry through technology transfer and localization of auto parts manufacturing.