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Future of transport sector lies in technology, says report

BUSINESS
By Dominic Omondi | February 11th 2016

Kenya’s transport sector can lead to economic transformation if it leverages on technology, a new report says.

The report by UK’s think-tank Overseas Development Institute (ODI) and UK’s private lending organisation Department for International Development (DFID) urges the Government to invest in modern information technology, modern equipment and civil construction to make the transport sector more productive.

These investments will lower the cost to the customer, reduce the time merchandise or people spend in transit and improve reliability, predictability and safety in the transport sector.

“Achieving some of these aims requires investments in modern equipment and civil construction as well as in modern IT that can not only dramatically reduce paperwork but also obviate corruption,” read the report in part.

The role of technology in urban transport has made for animated conversation in both mainstream and social media after conventional taxi drivers in Nairobi rose against Uber operators. Uber’s disruptive technology has been widely described as the M-Pesa of the transport sector.

While the conventional taxi operators accuse Uber operators of price undercutting, the latter counter by saying they have leveraged on technology to make their services more cost-effective.

The report, The Role of Service in Economic Services Transformation-with an Application to Kenya, also looks at the role of financial services, tourism and ICT on economic transformation.

Conventional taxi drivers have asked for the ousting of Uber from the Kenyan market. Uber says it is going nowhere. The feud has since attracted the interest of the government that has announced that it will soon be coming up with regulations to help streamline the sector and avert crisis in the future.

The report fell short of endorsing Uber’s hail-a-taxi app. “Towards this end, the nascent and innovative software start-ups could be mobilised to develop custom applications that will likely find markets in other African countries,” read the report in part.

The report noted that the next phase of globalisation, one which is driven by ICT, will contribute in extending the reach and key attributes such as reliability and predictability of transport systems. Already, this has spawned a whole new industry known as third party logistics (3PL) providers that are active in developing countries.

Kenya’s transport sector contributes between eight and nine percent of the gross domestic product (GDP).

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