The Informal Transport Sector Faces Many Challenges

Informal transport plays a major role in the mobility and access of millions of people, especially in developing countries. It is the main - and sometimes only - supplier in cities and rural areas, and an essential part of everyday life, enabling the livelihoods of millions of commuters who depend on affordable transport on a daily basis. This sector is a significant source of employment, but at the same time, it faces many challenges.

As a decentralised industry, the informal transport sector has proven to be agile, dynamic and adaptive. However, as it is focussed on generating income by offering low prices, passengers don't always get a service that is consistently reliable, and of a high standard, whilst service providers are offered little social protection.

Other hurdles faced by the informal sector include a lack of available data and impact awareness, together with a low level of industry knowledge and expertise. Due to the existence of large numbers of small businesses it is also difficult for them to benefit from economies of scale in terms of operating costs.

Since informal transport operates on a cash basis, it is difficult for owners to track the flow of funds, and payments are neither efficient nor safe for commuters. Businesses in the informal transport sector also do not generate enough turnover to enable re-investment, and have limited access to financing, due to financial institutions categorising them as having inadequate liquidity. All these factors contribute to the informal transport sector being unable to realise its full potential in terms of efficiency, growth and ability to enable financial inclusion.

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