Nairametrics|At an event yesterday, Lagos State Governor Akinwunmi Ambode announced plans to phase out commercial buses popularly known as danfo buses by year end. Admirable as this may be, it is quite clear that the economic implications were not considered.

An immediate phasing out of danfo buses will lead to massive unemployment. A danfo bus usually has a driver and a conductor. In some cases, two drivers and one conductor. With one driver taking the morning shift and the second driver afternoon shift.

Using a rough estimate of ten thousand danfo buses, that would put at least 20 thousand people out of work. That reduces spending power in the economy by ₦20 million naira a day, and ₦500 million naira a month. Assuming each person spends ₦1000 naira a day. With the economy in a recession, where will these sets of people find jobs ? Even if the new scheme where to create new jobs, will it absorb all the old jobs? Clearly not.

There is also the multiplier effect of the loss of jobs. Assuming a dependency ratio of three people for every danfo driver and conductor respectively, with dependants on average getting ₦1000 naira daily, the loss in income would mean ₦30 million naira monthly unavailable for spending. Or almost ₦1 billion naira in a month. That’s if one out of every two people previously employed in the danfo business is employed. This also excludes job losses by the National Union Of Road Transport Workers (NURTW) and revenue to the organization. NURTW by the way are the guys who wear green and white uniforms and stand at bus stops.

There will also be a loss in manpower hours, if the new scheme is unable to meet the huge number of people. Lastly, we are in an age of small government. The government would be more effective in fixing the transport system by concentrating on road construction and rehabilitation, and fast forwarding the completion of the light rail system. The rickety nature of BRT buses show that government off anything to do with transport.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

1 COMMENT

  1. why All this analysis , its not necessary we have joker of a Governor where this is concerned how does he intend to achieve this.its not as easy as how mouthful and boastful he was when he said it.i dont need to say more.

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