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Abstract
The rapidly growing city of Kigali has a bus network that is undergoing increased development as underlined in its Transport Master Plan. Two schemes of bus driver remuneration coexist in the city: One constitutes a hybrid salary and commission system, while the other pays a fixed monthly salary. This paper examines the effect of these differing compensation schemes on driver behavior in Kigali using survey data from 2019. The analysis applies linear models incorporating various aspects of driver behavior in a principal-agent framework. The results indicate that the performance-based compensation scheme is associated with higher per-trip passenger fluctuation and faster driving (possibly due to drivers aiming to accrue a higher income) compared to the fixed-wage system. Policy implications comprise the inclusion of further criteria in incentive contracts to internalize potential negative externalities on society, e.g., to hinder the endangerment of passenger safety by appropriately incentivizing drivers. In conclusion, bus drivers who are compensated by performance are more likely to alter their behavior, responding to the incentive scheme through several channels.
Highlights
The nature of passenger mobility is changing rapidly
Almost 9% of all trips start with just one passenger, possibly indicating that drivers are hoping to pick up more passengers along the road. This would especially be the case for RFTC drivers, as their remuneration partly depends on the number of passengers transported
The results demonstrate that a higher average occupancy rate makes it more likely that a given trip will be classified as belonging to a company paying a fixed salary, which directly contradicts the previous results from the Ordinary Least Squares (OLS) regression: While the previous regression showed that on average a trip belonging to KBS or Royal Express was associated with a decreased occupancy rate, the logit model suggests the contrary
Summary
Annual passenger traffic in the world is projected to exceed 80 trillion passenger kilometers by 2030, a fifty percent increase from 2015 figures [ITF 2017]. Despite this trend, transport infrastructure in the developing world has been slow to adjust to the rising demand, with Sub-Saharan Africa being a prime example. The annual urban growth rate in Sub-Saharan Africa is the highest worldwide at 4 percent, inadequate planning and degrading transport infrastructure remain defining characteristics of this region [Sietchiping et al, 2012]. Due to the rapid urban transformation of Africa, improving urban accessibility and mobility is critical for inclusive and sustainable urban development. Issues including poor traffic management and governance of public transport systems continue to contribute negatively to livability, and accessibility varies highly by income [Bryceson et al, 2003]
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