Transport fare increase amidst economic decline

• Intra-city transport cost increased by at least 10 per cent between January and June 2020;
• 15 states recorded an increase between 20 and 44 per cent for intra-city bus transport while 13 other states reported increases between 10 and 19 per cent;
• While most of the states in Nigeria reported increases in intra-city transport fare across the three identity modes, a few states reported varying degrees of declines;
• The dire impact of transport price hike serves as a harbinger for economic downturn, necessitating the need for government palliatives among other reliefs.

“Everything increased in price, salary reduced”, Joy Agnes, a low-income earner in Abuja told us. Following the structured resumption of work after the COVID-19 lockdown, Agnes’ employers had renegotiated her contract. The new arrangement meant that instead of working five days a week, she would only work on three alternate weekdays. And while this new arrangement implied lesser pay, she was excited to still have a job;  some of her laid off colleagues did not share the same “luck”. Yet, increased responsibility with less pay amid increasing market prices is not the “Nigerian dream”. Not to mention, the increased cost of transportation; a tall order!

According to the June 2020 Transport Fare Watch, intra-city transport cost increased by at least 10 per cent between January and June 2020. By extension, intra-city bus fare increased by 14 per cent and intra-city water transport fare increased by 10 per cent. But motorcycle/ okada fare, arguably the most accessible means of transportation for poorer individuals, increased by a whopping 19 per cent! The data also revealed that the median increase in transport fare in states across the country was over 18 per cent for intra-city bus transport fare and motorcycle transport fare. Only intra-city water transport had a median increase of 12.7 per cent.

A closer look

Across the 36 states and the FCT, motorcycle transportation fare increased. While motorcycle transport fare only increased by about 1.5 per cent in Rivers State (the lowest percentage increase), it rose by 106 per cent in Benue State! Motorcycle transport cost increased by over 20 per cent in 15 states; and by 11 to 19 per cent in 15 other states. Benue (106%), Jigawa (43%), Zamfara (38%), Anambra (37%), plateau (32%), Abuja (30%), and Edo (27%) had the highest increases in motorcycle transport fare during the period under investigation. Rivers (1.5%), Gombe (2.1%), Sokoto (3.1%), Taraba (5.3%), Kaduna (6.4%), Osun (7.7%), and Akwa-Ibom (8%) recorded the least increment in motorcycle transport fare.

The situation is similar with fare for intra-city bus transport. 15 states recorded an increase between 20 and 44 per cent. 13 states reported increases between 10 and 19 per cent. Zamfara report the most increase which is 44 per cent. Following close after are Enugu (34 per cent), Bauchi (28 per cent), Anambra (26 per cent), Ekiti (25 per cent), Katsina (24 per cent), and Ondo (24 per cent). Kebbi, Borno, Kano, Kaduna, Kogi, Rivers, and Cross–Rivers had the least increases in intra-city bus fare between January and June 2020.

With a national average of just 10.5 per cent, water transport fare saw the least increase in intra-city transport fare for the period under review. Only six states recorded increases above 20 per cent. These states are Adamawa (30%), Ebonyi (29%), Lagos (27%), Jigawa  (25%), Nassarawa (23%), and Ekiti (20%). 18 states reported increases between 10 and 17 percent. Taraba, Gombe, Ondo, Borno, Rivers, and Delta had the least increases in water transport fare between January and June this year.

Wait a minute

While most of the states in Nigeria reported increases in intra-city transport fare across the three identity modes, a few states reported varying degrees of reductions. For instance, Kebbi reported a decrease of over 40 per cent in the fare for intra-city bus travel. Borno also reported a 3 per cent decrease. For water transportation, Taraba and Gombe documented decreases of 6 per cent and 1 per cent,. This is intriguing amidst the reality of the pandemic that has resulted in higher commodity prices in the country. Conversely, the 106 per cent increase in motorcycle transport fare is worrisome. Just in the space of six months, residents in Benue must pay over double of the usual fare to access motorcycle transport services.

Expert opinion on decreases in transport fare in some northern states

But Shakirudeen Taiwo (a Research Analyst with the Nigerian Economic Summit Group) surmised three factors responsible for the decrease in transport fare in those states. First is the geographic factor. According to him, the identified states have rural settings in their metropolitan structure. Transport fare is typically lower in rural or rural-adjacent areas. An example of this is the differential in transport fare in Epe or Badagry area of Lagos and Ikoyi or Ikeja district. While Epe and Badagry have low transport fares, transport fares in Ikoyi and Ikeja are higher.

The minute amount of markets present in the states identified is another factor. The logic goes, more markets, higher transport costs. And according to Taiwo, these states fit the bill in not being trading hubs. So where states like Niger, renowned for its trade, reported higher transport fares, Borno did not. Flow of movement to these markets also drive increased prices. This is because transportation is inelastic in demand and influenced by higher demand.

A third factor is the relative absence of invisible costs associated with urban areas in the identified northern states. Non-state actors (agberos) who create additional costs are minimal in the identified states. In addition, the relative uniformity of PMS price across the country because of the harmonisation of pump price could have also contributed to the lower fare charged. Thus, the overall transport cost in these states could have lessened, resulting in lower transport fare. Besides, charges by the National Union of Road Transport Workers are relatively cheaper in the north. These factors could have contributed to the decrease in transport fare in the identified northern states.

Counting the cost of transport fare increase

The negative impact of these increasing transport costs could be dire. Not only would the dominoes fall on businesses, distribution, and delivery costs, but commodity prices too. How, you ask? Well, as producers and service providers bear additional transport costs, the logical step would be to readjust prices. The multiplier effect of this will cause further inflation.

Worse, though, these transport cost surges come at a period of uncertainty. The existing economic hardships experienced during this pandemic is not news to anyone. Now add an increase in transportation and what do we get?

Further gloom

Beyond the income distortions and pay cuts, the instability of the Nigerian naira since the first quarter of 2020 spells further gloom to the average Nigerian. According to an analysis by DATAPHYTE, each ₦30,000 (minimum wage) earned in July, lost a minimum of $20 of its dollar value in January. Thus, more Nigerians have become poor, or even poorer, and may have fallen below the poverty margin.

Looking ahead

At such a time, sounding the need for palliatives doesn’t make you a broken record. We cannot overemphasise the need for relief support for lower earners and poor households. Similarly, Nigeria needs a comprehensive economic stimulus to mop up some effects of the pandemic. While the Federal Government (FG) proposed a stimulus of ₦2.3 trillion in its economic sustainability plan, experts believe that the stimulus size is low when compared to the impact of the pandemic. For instance, in an interview with DATAPHYTE in June, Mr Atiku Samuel, an economic analyst, highlighted the need for more stimulus to re-inflate the economy. To Samuel, Nigeria needs no less than ₦7 trillion as a stimulus, considering the current situation.

Perhaps the FG can also improve the plight of the people through government-assisted/ subsidised intra-city transport arrangements. For example, in Abuja, some observe that while the transport fare for private-owned vehicles increased, the fare for government-provided public transport buses remained the same. Thus, the FG can help by providing intra-city public transport vehicles across the country. The government should also provide reliefs and regulations for private transport services to improve the outlook. Such regulations should further discourage prohibitive hikes in transport fare, amongst other things.