A lot of Zimbabweans questioned why transporters increased the bus fares given that the price of fuel had not changed. This kind of question seems to imply that fuel is the only cost for transporters. However this is not the case, and it made a lot of business sense for transporters to increase prices.
Spares are being priced in US$
Spare parts are sourced from outside Zimbabwe thus require the US dollar, which appreciated in its value against the Bond note. The Zimbabwe motor spares shops have adjusted the price of the auto parts so as to reflect the true USD Value. With the current rate, for one to get US$100 they have to fork out close to $300 in bond notes. Thus the spares are now expensive in local currency terms. The other option will be to buy the spares from South Africa. However to get the Rands, the transporters have to convert the Bond notes to Rands, of which the Bond:Rand exchange rate has appreciated just like the USD:Bond rate. Given these factors, hiking prices was the best way to ensure profitability and sustainability of the public transport business.
Cover up for lost time
The depreciating bond note value came along with fuel shortages and this called for more time being spent in queues or searching for the liquid gold. As a counter-measure, commuter bus drivers had to hike fares as a remedial way of meeting their daily cashing target and still be able to have some take home money. On average, a minibus could spend a sizable amount of hours in queue and this would limit the number of trips it could do per day. The only way to maintain the revenue of the business was to increase the prices.
To fund the growth of the Business
Growth is essential for every business. If I start with 1 minibus, it then follows that I should increase the number of vehicles which I have over time. This is done by reinvesting profits of the business. Buying more vehicles requires foreign currency, as the vehicles are imported. Let’s say that I needed one year profits ($13 000) to buy a second vehicle before the bond note collapsed. However, since the bond note has collapsed, $13 000 is no longer enough to buy another vehicle. I therefore need to make more profits, and this can only be achieved by increasing the prices.
A way to meet the increasing cost of living
The cost of living increased therefore the workers the transporters had to play around with their pricing strategy so that they can get more money. One operator is quoted saying sticking to the ordinary price would spell disaster for him and his family. To this effect they had to ensure that they reasonably hike their prices to match the higher cost of living. This resulted in increase in remuneration for some of the drivers and conductors.
Given all the above factors, transporters had to increase their prices to ensure that they remain profitable and the business becomes sustainable.
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