The industrial organization of motorbike taxis in Africa

In the motorcycle taxi market in Sub-Saharan Africa, the relation between the owners and the drivers is characterized by a principal agent problem with the following features: (i) the principal cannot observe the final output of the agent and therefore cannot condition his wage on it. (ii) The high effort from the agent depreciates the asset. These two features (i) and (ii) imply that the principal ideally wants the agent to exert as little effort as possible, while still leasing the asset from him.

The problem with low effort implementation is that the asset will not generate enough revenue. I analysis the contractual arrangements between the owners and the drivers in this market and use a survey data to address the determinant of the contracts and their implications. I show that trust between the principal and the agent can lead to the choice of a socially sub-optimal contract because of moral hazard problems.

A paper from Moussa Blimpo, who also made some of the most thoughtful blog comments on the Mamdani and Mbeki tirades against the world’s actions in Cote D’Ivoire (here and here).

The other contracting problem in motorbike taxis: how much does a foreigner pay? The key thing: never ask the price. Everyone knows the price, and if you have to ask, it’s like wearing a sign that says “Please charge me five times the going rate.”

My strategy is to just ask someone the rate structure in advance, then pay the driver slightly more. But the key is to self-assuredly hand the money over at the end and say thank you. You’ll get smiles and no more arguments.

(Some of you may say, “You are so insane as to take motorbike taxis in Africa?” to which I reply, (1) chill out, and (2) you have not seen Kampala car traffic. Cars get snarled so long in traffic there are now shoe salesmen by the roadside. You have time to try on many, many pairs.)

11 thoughts on “The industrial organization of motorbike taxis in Africa

  1. It was the same thing when I lived in the Dominican Republic (both the motorcycle taxis and regular taxis which were so beaten up that if you leaned against the door, it would often fall off) – you just have to know the price. I often rode the motorcycle taxis, in spite of the very real risks. I used to ride with a volunteer health worker to the cane cutting communities and she would sit side-saddle on the bike behind the driver and I would be barely clinging on behind her. We did interviews around the neighborhood about health risks and at least half the people we interviewed had family members who had died falling off the backs of the motorcycles. Then we would get back in the saddle and ride back to the city. I’d like to chalk it up to the insanity of youth, but I’d probably still do it (though I might spring for my own motorcycle taxi…)

  2. My favourite recent stat (courtesy of BBC Radio 4’s More or Less review of 2010) was that riding 200 miles on a motorbike and serving for one day in the British army in Afghanistan have the same average risk of death (33 micromorts). I at least use a helmet when on a moto here in Mali, and am interested to see how quickly (or not) take-up of helmet-wearing increases in general.

  3. When I used achaba in Nigeria, I started every ride saying: “I’m paying you […] Naira to get me to […], and I pay you […] Naira extra if you drive carefully.”

    We were both happy with that arrangement.

  4. I lived in Benin for a while and I always asked the price before a ride. If you don’t ask before, you may have an argument with the driver at the end of the ride. If you know the price there is no problem to ask the price before.
    To make people wear helmets is a worry for countries with motorbike taxis. Togo made it compulsory for passengers but has to abolish the law because of health issues (will you wear a helmet 100 people wear before you?). I don’t see a good system to fix this problem.

  5. Hehe, I love this. I always took boda-boda’s when I was travelling relatively small distances in Uganda. Best form of transport.
    I tended to ask locals the price of a trip if I could before hand, but then I made sure the Boda driver accepted that before we left. If you bargain hard enough, and there are a good group of them to play of each other, you tend to get a pretty good deal. Plus that way you avoid the confrontation at the end of your ride.

  6. there’s still a ban on taxi-motos downtown bujumbura. and tuktuks. =(

  7. Price discrimination is indeed another issues in that market. Though sometimes the bargaining can be fun too.

    The head of this company:
    http://www.fastcompany.com/1725184/introducing-the-first-real-taxi-meter-innovation-in-over-100-years

    got in touch with me after reading the paper. I think that if the company gets its way, the issues addressed in the paper and the price discrimination could be greatly mitigated, provided that the meters are not manipulable.

    Happy to see my work featured in one of my few bookmarked blogs! Just got back today from Gambia, no motorcycle taxi in Gambia. Thought a few 3 wheel taxis can be found here and there.

  8. I took zemidjans in Benin (and it was my first African country, 14 years ago) and even bicycle taxis in Malawi. My taxi negotiating technique is to tell them how much i am willing to pay before I go on/in. Sometimes they agree, at other times, I have to look for another driver, or sometimes, when I am really tired and do not feel like arguing, I settle for a slightly higher amount just to get to my destination

  9. I took motos all the time when living in SE Asia, and was very surprised to discover that there are none in Dar es Salaam. (Yes, there are bajaj – which are like tuktuks – but no motorbike taxis.)

    I agree that it’s best to settle on a price ahead of time — especially once you know what the price should be. This is true for unmetered taxis too. Otherwise, there’s too great a chance of hassle upon arrival at your destination.

    (I rarely wore a helmet when riding on the back of a motorbike taxi, except in places where it’s required and provided by the driver (like Bangkok). But I always wore a helmet when driving myself. Made absolutely no sense, but that’s just the way it was…)

  10. une application destinée à faciliter la localisation et réservation d’un taxi se trouvant dans une même zone que le client qui parfois a du mal à le localiser alors qu’il se trouve à moins d’un bloc de sa position.
    Taxi-Diali, comme son nom l’indique clairement, c’est une application bien adaptée à tout téléphone mobile fonctionnant sous le système Android. Une fois téléchargée dans chaque portable, du client et du chauffeur de taxi, elle permet à ce dernier d’être facilement repéré par son client qui cherche patiemment un taxi.
    Bien sur, pour le client dès que l’application lui signale la présence d’un taxi ou plusieurs dans la même zone où il se trouve, il aura toute la latitude de choisir et de faire appel à celui qui lui convient le mieux puisque toutes les coordonnées du taxi sont affichées dans son écran. Lorsque le client valide son choix pour tel taxi , le chauffeur du dit taxi peut également identifier la position de l’appelant grâce à la géolocalisation intégrée dans l’application et rappliquer directement à sa position sans qu’il ne lui la donne.
    Taxi Diali est un service gratuit qui permet de faire gagner beaucoup de temps et épargner des attentes indéterminées à tous ceux qui sont en déplacement dans une grande ville ou tout simplement à ceux qui veulent pour une raison ou une autre

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