Disruption is Never Painless


. By Christian Tesfaye



The Addis Abeba Transport Authority and Ride, a popular and an up-and-coming taxi-hailing service, have recently found themselves in hot water.

Some considered the taxi-hailing service costly, while others have never heard of it. The recent spat Ride had with the authorities has been a great vehicle for promoting the service to the public.

Many people have expressed positive experiences with Ride. I have seen it described as efficient, safe and accessible. Its use of Code-3 vehicles for transportation services has been considered an efficient strategy. It reduces the need for more vehicles on the streets, lessens traffic congestion and contributes toward solving the city’s irksome transportation problems. This is not to say that Ride is altruistic and is here to save the city from its entrenched transportation difficulties. It is a private firm whose decisions are informed by profit.

The Authority believes that Code-3 vehicles working for the company do not have the appropriate licenses to engage in public transportation services. The Authority further stresses that Ride itself cannot be engaged in public transportation services, an accusation that the company denies.

The Authority has a point to the extent that Code-3 vehicles are licensed for car rental services not for public transportation. But Addis Abeba’s transport system management is too inflexible, centralised and inefficient. The daily inconveniences faced by citizens, both pedestrians and drivers, as a result of traffic congestion and shortages of transportation services should speak to the need for decentralization and the introduction of a more flexible system.

Instead of banning Code-3 vehicles entering the new riding-hailing businesses, the Authority could put in place a legal framework for the vehicles to enter the business, at least for the short period. It would have several benefits including creating new employment opportunities, lessening traffic congestion and contributing to solving transportation service shortages. This could also help, however slightly, in reducing the need to buy and import cars by individuals, saving foreign currency and minimising the nation’s fuel expenses.

Inevitably, there would be some disruption. The blue and yellow taxi cabs may find the situation objectionable and may not welcome competition from service providers with better accessibility and, if not efficiency, a better sense of security. The traditional taxi cabs may find that their only option may be joining one of the taxi-hailing services.

But make no mistake, the dispute between the Authority and the taxi-hailing services is more than a spat between the two. It says more about the introduction of more sophisticated services and products into markets and industries, the ability of government organs to absorb changes and customer preferences.

Providing support to private entities, when the innovations and new products subvert government strategies, has not been the strong suit of Ethiopia’s recent regimes.

One of the elements that have factored into this phenomenon is the unhealthy depiction of the government as the “keeper” of the popular interest. It stands between the “unscrupulous capitalists” and the foreign multinational companies to safeguard the resources of the nation. True, a government that that looks out for its people is not a bad thing, but the regimes have been trying to save Ethiopians from themselves.

What should matter is the interest of the citizens. There are services that the government should provide to all, regardless of income levels, such as health care and education. Otherwise, it should stick to regulating markets.

Customer preferences drive demand and force business to correct for inefficiencies. There are no hidden intents when it is recommended that the government should decentralise its services and stop dictating who gets what and when. The government will never be able to efficiently allocate its resources to meet the demands of the citizens.

Instead, the government’s primary objective should be to regulate appropriately and adequately. This is especially true in the 21st century, where technology is advancing rapidly. The government’s capability in regulating markets thus needs to grow hand in hand with the private sector’s sophistication. Otherwise, the authorities and policymakers will only serve to discourage innovation, not to mention fail to protect against monopolies or offenses.

For a government that is serious about improving productivity, by investing in physical infrastructure and human capital, it would be antithetical to punish innovation for the annoying reason that it still lacks the regulatory capacity and legal framework to accommodate such disruption.



PUBLISHED ON [ VOL 19 , NO 968]



Christian Tesfaye was Fortune’s Op-Ed Editor and currently works as a researcher. He can be reached at christiantesfaye98@gmail.com.






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