Cairo tackles privatisation of public transport sector

Data from Egypt’s Central Auditing Organisation show that public transportation systems in Egypt move about 1.4 billion passengers a year.
Sunday 09/06/2019
Motorists stuck in a traffic jam on a street leading towards downtown Cairo. (Reuters)
Daily headache. Motorists stuck in a traffic jam on a street leading towards downtown Cairo. (Reuters)

CAIRO - The Egyptian Ministry of Public Works announced a plan to merge three public land transport government companies into one entity and offer it as an opportunity for foreign investment.

Egyptian Minister of Public Works Hisham Tawfiq said the companies involved were Upper Egypt Transport, Tourism, and East and West Delta. He explained that the new entity would be presented to the private sector for development to provide competitive services, including electronic ticketing and Wi-Fi service for passengers.

The Egyptian public transport system suffers from a deterioration in service and the poor condition of most vehicles, which allowed for the private sector to compete with high-quality transport services.

Ride-sharing entities have entered the competition. The Egyptian start-up Swvl was the pioneer followed by the UAE company Careem and American giant Uber. Data from Egypt’s Central Auditing Organisation show that public transportation systems in Egypt move about 1.4 billion passengers a year.

Mohamed Sameh, president of the Arab Union for Direct Investment, revealed the intention of the Abu Dhabi Investment Authority and individuals from Saudi Arabia and Kuwait to invest in Egypt’s land transport sector. He said the investors are waiting for Cairo to announce the percentage allocated for private investments in the sector and for a detailed government memorandum.

Sameh suggested that the state hold 60% of the project, provided that the private sector be granted the right of management.

Cairo has boosted the investment climate in road transport and implemented a road network project, adding some 3,400km of roads at a cost of about $2.2 billion.

The transport companies’ merger is important because the companies otherwise would not be able to keep up with the progress in the private sector. The merger is expected to cut operating costs, especially in senior management, which will increase profitability after restructuring.

Obstacles for developing public transport in Egypt  include overstaffing, which arose from heavy bureaucracy, and the lack of a culture of consumer satisfaction because many sector employees consider themselves state employees and not accountable to customers in terms of the quality of service.

Ride-sharing companies banked on the negative reputation of public transportation. Their digital applications offer riders the chance to evaluate both vehicle and driver after each trip, pressuring drivers to provide exemplary service.

Adel al-Lamai, chairman of the Transport Committee of the Egyptian Businessmen’s Association, said the government’s privatisation move should have been made much earlier because it was obvious that public transport companies were having difficulty keeping up with population increases.

“The government must become convinced that its role is regulatory, not competition, to ensure the success of the new (economic) direction and (the privatisation move) could become a model for the rest of the transport sector,” said Lamai.

The transport company Muwasalat Misr, a subsidiary of Emirates National Group, launched at the beginning of last year the first smart collective transport project in collaboration with Cairo governorate, aimed at providing safe transportation.

In the first phase, 56 new buses were put on the roads. The company is planning to increase the fleet to 2,000 vehicles by next year with the goal of serving 8 million passengers. Bus users can pay fares by using prepaid cards instead of cash payments for tickets.

Ibrahim Mabrouk, professor of transportation and traffic at the Faculty of Engineering at Al-Azhar University, said the land transport sector cannot be developed separately from improving the entire transportation system in general. He pointed out that the government is required to link the road transport system with railways and include the river transport system, air transportation and the transport of goods. The entire transport system must work as one and should not be fragmented.

Mabrouk said the transport sector in Egypt had been neglected for decades, which led to the accumulation of problems, notably the lack of qualified drivers. Egyptian authorities have ignored the dilapidated condition of public transport vehicles and drivers taking on more passengers than allowed by law.

Mabrouk pointed out that other countries’ transport sectors often operate as one integrated system. They encourage investors and the private sector to bring in new capital to meet imbalances in the sector, ensuring the continuous maintenance of the whole system.

Cairo needs to increase investment in the sector and activate the role of the Supreme Council for Traffic Safety, which includes representatives from the ministries of Interior, Health and Justice, to ensure the safety of roads and the enactment of the relevant legislation.

The transport sector in Egypt lacks a clear investment plan that sets priorities for development and promotes investment circles locally and internationally.

18