RE: Why should I pay for a service I will never need?- Asks Dr Frankie Asare-Donkoh

BY: Bernard Ohemeng-Baah

An interesting, and I must say well written, article by Dr Frankie Asare-Donkoh in the November 11 issue of The Daily Graphic under the above caption caught my attention. The article was in connection with the rebirth of the proposed “mandatory towing levy”. The levy, GH¢5 - GH¢10 annually for most saloon vehicles, is intended to create a national pool to finance the towage of immobilised vehicles from our country’s roads. Dr Asare-Donkoh’s opinion appears well-intentioned but misses the point on several grounds. I will attempt to shed light on the perspectives he misses and hopefully enrich the conversation on whether the so-called mandatory towing levy serves us well.

On never needing the “service”
Dr Asare-Donkoh and many other Ghanaians would never have their vehicles break down. So what is the “service” to such Ghanaians? Why should they care about other immobilised vehicles on the roads?

Allow me to recall a rather painful memory, an incident that stole one of our celebrities in his very prime. Kwame Owusu-Ansah, nicknamed the African Child, was killed when his vehicle ran into an immobilised truck on the Accra-Tema motorway. Now guess what, it was not the driver or owner of the immobilised truck who got killed. It was one whose vehicle would never break down.

So what is the “service”? Would the person whose vehicle never breaks down benefit from the “service”? I am convinced that the GH¢5 - GH¢10 annually per saloon vehicle is not so that every vehicle owner would benefit from towage of their vehicle. Rather, it is so that we can all drive on safe roads knowing that we would not run into immobilised vehicles and get killed. “In Ghana, I have come across all kinds of vehicles abandoned on roads, some even in the middle of the road for days, with many causing fatal accidents”, Dr Frankie Asare-Donkoh notes.

So would Dr Asare-Donkoh never need the service?

References to the UK and other countries
Dr Asare-Donkoh suggests that we consider the UK approach to fix the problem of immobilised vehicles on our roads. In the UK, vehicle owners voluntarily buy Roadside Assistance that gives them towing service among other benefits. In the absence of that, pay as you use or enforcement towing comes at a high cost.

There are at least three issues to pick apart with this suggestion.


The business case
The UK has 491 cars per 1000 inhabitants and a 67 million population. Ghana has about 85 vehicles per 1000 inhabitants and a population of 31 million. The UK’s income per capita is £29,147 while that of Ghana is below £3,900. It is costlier to set up a towing company in Ghana than in the UK owing to the comparatively higher cost of capital and duties, other things being equal. The simplest financial model reveals that an investment in a properly equipped towing company needs to charge higher subscriptions/fees in Ghana than in the UK to pay back over a comparable period. The lowest subscription for towing service in the UK is £6. If we go the way suggested by Dr Asare-Donkoh, a Ghanaian vehicle owner would need to fork out a minimum of 620ghs monthly to yield a comparable return to an investment in the UK. It is a non-starter to begin importing the UK approach to Ghana without doing proper analysis.

If we agree on well-equipped towing equipment in every district and at vantage points on major highways to keep the roads clear and safe at all times, we would need to think of a sustainable financing arrangement. As I have explained, our numbers do not support the UK approach.

The misunderstanding of the UK situation
No one in the UK voluntarily goes out to buy towing subscriptions in the manner suggested by Dr Asare-Donkoh. Vehicle owners in the UK buy Roadside Assistance. Roadside assistance gives you access to mechanics and other emergency services when your vehicle plays up. For example, if your vehicle fails to start, you could get a dispatch team to give you a quick fix. This makes sense because a mechanic call on a pay-as-you-call basis would cost you a decent fee. Unlike Ghana, no taxi driver would be willing to jumpstart your car for you and there will be no mechanic at the corner of your street to help you in case you get a breakdown.

The Ghanaian vehicle owner has a choice. In Ghana, you have “fitting shops” on every corner and there are taxi drivers who will jumpstart your car for you. Even better, we have ‘wonsi mpia’ here which you do not get in the UK. The adoption rate for voluntary roadside assistance would be predictably low to make any business sense for any investor.

As they say, a banana and a watermelon are both fruits but very different.

The capacity of the Ghana Police Service
Aside from the unsustainable business case, Dr Asare-Donkoh’s suggested approach imposes enforcement burdens on the Ghana Police Service. There is no gainsaying that our Police Service does not have the capacity presently and in the foreseeable future to enforce the suggestion of towing immobilised vehicles across the country and imposing fines. Ghana has police to citizen ratio of about 1:1200, far short of the UN benchmark of 1:220. The service still falls short of its resource requirements to fight crime across the country. We need to be clear on what we want in dealing with the risk of immobilised vehicles abandoned on the roads to kill citizens.

The social protection case
Immobilised vehicles and the risk they pose to road users is best viewed from a social protection lens. The object is the protection of human lives: the lives of people who themselves may not even own vehicles. It is similar to the requirement for every vehicle user to obtain third party liability insurance. The third-party liability pool ensures the compensation of injured persons.

Conclusions
Often, populist arguments win. The first introduction of the national towing proposition met fatal populism. It would be great to learn how many lives Ghana has lost through immobilised vehicles and obstacles since then. That might help us approach the current discussion differently.

As I have explained, voluntary towing arrangements do not guarantee social safety which underpins the proposed national towing pool. The numbers cannot convince any private investor to risk the hundreds of millions required to put proper equipment across the length and breadth of the country and the associated operational costs.

Would I pay 5-10ghs annually to guarantee that I would not get killed by driving into an immobilised vehicle or some other obstacle? Absolutely!


The writer is an insurance and risk management specialist.
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