Ghana’s STC loses $3m in Covid- MD hopeful of recovery as revenue losses threaten viability of transport companies
Ghana’s premier Transport Company, STC has seen revenues decline from an average of 5 million a month to 1.5 million cedis between April and August, due to the coronavirus pandemic. The company is spinning wheels and losing millions of cedis despite nationwide reopening’s following covid shutdowns. In total, over 17 million cedis, roughly 3 million dollars of revenue has been lost over the period.
It’s francophone routes, the largest revenue stream which accounts for nearly 50% of the company’s total expected revenue is down this year. STC, which connects rural towns with big cities, spans the regions of Ghana and carries more than 800,000 passengers a year.
While the fifty-five year old company has been through its ups and downs over the years, it is now facing its biggest challenge by trying to keep running routes and staying afloat while the COVID-19 pandemic practically threatens to erode the gains made so far. Like many in the transportation industry, intercity bus companies have seen a huge drop in customers because of the pandemic. It affected ridership not only on scheduled routes, but demand also dried up.
But there’s more, and it is not likely to make the people running STC – or any other public transport authority – feel at ease. “Before the covid, our monthly revenues averaged 5 million cedis, but have reduced to 1.4 million in the peak of the virus. We had two options which was to cut down on staff numbers or increase cost, but none was viable” Managing Director Nana Akomea tells Paakwesiasare.biz.
“In the month of April, we couldn’t work because of the lockdown, so you can imagine but we had to pay salaries”. Akomea stated.
The havoc caused by the coronavirus pandemic has made people feel unsafe about riding public transportation. It is of little wonder that most people did not feel totally comfortable getting on a bus which saw a drastic reduction in the levels of public transportation usage
Several factors, like more people working from home as well as people taking fewer trips than they normally would, given the potential dangers of being out, played into this decrease.
The response by governments, companies and communities over the pandemic has quickly affected our way of life and that of our local, regional and global transportation systems. The speed with which these impacts have been felt is significant as global airlines, national railways and bus systems experienced free-fall declines in customers.
The resulting pressure to reduce service or even shut down operations altogether has thrown the systems into worst-case scenarios and un-chartered territory.” The francophone business with lots of movement from Ouagadougou, Cotonou and Benin make up about 100 trips a month and account for 50% of STC’s revenue”. Mr. Akomea says
So with 50% of STC’s revenue cut off due to the closure of Ghana’s land borders, the domestic market revenue also declined by more than half after restrictions were imposed on internal movements.
With vehicles running down the line again after the easing of restrictions, STC is now set on a path to recovery. The company recently took delivery of its new fleet of buses after a temporary cut back on operations in March.
Nana Akomea says they have had to rely on government for support to pay salaries “Government has had to support us – Our wage bill is 1.5 million cedis a month. So, with the monthly 1.4 million cedis our revenues cannot even cover wages”.
Aside that, the company will have to cough up 1.5 million cedis monthly to cater for the cost of fuel.
Intercity bus company services are considered a vital part of the infrastructure that moves people across the country. Often, they operate in areas where there may be no alternative transportation and that is perhaps why the government has taken keen interest in the revival of the state Transport Company.
The Finance Ministry has recently shortlisted 8 companies for financial support including the STC that have been severely hit by the coronavirus. “For now, we have had to work 2 months to pay a month’s salary, even so we also have had to freeze statutory payments including taxes and SSNIT contributions” says Mr. Akomea.
Thankfully, there are things the Nana Akomea led STC is doing to make their riders feel more comfortable and safer getting on board.
Having staff and riders wear masks, using social distancing when getting on and off the bus and restricting the number of people on board are all things that people said would make them more comfortable riding again. Keeping buses clean – and letting riders know what steps are being taken.
Mr. Akomea is hopeful things will soon pick up when the borders are finally opened . For now the number of trips per day has gone up to 16 and revenues are slowly picking up with an average marginal increase to 2.5 million cedis monthly