Road Safety – A case for market intervention and technology

As the cause of 1 death every 6 hours (with the economically active at most risk) and costing an equivalent to 1.6% of Ghana's GDP, road carnage presents a significant barrier to Ghana's development agenda.  It is the gravity of this problem that made the road safety conference (held on the 4th and 5th November) in commemoration of the 10th anniversary of the National Road Safety Commission (NRSC) and Driver and Vehicle Licensing Agency (DVLA) a timely reminder of the need for immediate action to stop the carnage on our roads. In their 10 years of existence, these institutions have performed remarkably in getting the fatality rate from 38 persons to 19 persons per 10,000 vehicles; making Ghana one of the best cases in Africa. Nevertheless, there was a unanimous consensus that more needs to be done as soon as possible.

Many infrastructural, behavioral and institutional factors were identified as key contributors to these preventable deaths and loss of assets on our road. It was shown that driver attitudes and behavior such as drunk driving and speeding posed the greatest risk to other road users. An interesting finding presented was the role of wealth. Growing wealth (measured by car ownership and currently growing at an average rate of 10% per annum) led to less safe roads. This means that if bad behavior remains unchanged, increasing wealth in the form of car ownership is a cause for concern.

With Ghana's development agenda aimed at reducing poverty and increasing wealth, the challenge on regulatory and legislative bodies is even starker if this functional relationship between increased ownership and increased road crashes persists. A solution could be an increase in Ghana's infrastructural capacity (supply side) to cope with demand caused by car ownership or to create a reliable public rail transportation system to compete with car use. While some road and/or rail projects have been planned or are ongoing, the harsh reality is that this is not sufficient even if we could overcome the affordability barrier.

In view of the above, I believe that a key strategy for tackling the problem of road crashes is to tackle what economists call the demand side. Tackling the demand side (including behavior) will be crucial as it has been known that even in some cases, road crashes have increased despite new road infrastructure. Policy tools that have traditionally been used to affect the demand side have included advocacy, education, legislation/regulation and enforcement. While more of these are needed, resource and capacity constraints plus the complexity of the problem undermine the scope and effectiveness of these efforts.

The crux of the demand issue is that despite its high social cost, the private cost of road crash is too cheap for perpetrators. It is cheaper to import older and relatively unsafe vehicles; it is cheaper to drive without documentation and pay enforcement officers; it is cheaper to hit and run because we do not have the database to trace criminals and even cheaper to lose one's driver's license because one can be bought the next day. . Even in the few cases where perpetrators have been brought to book, people who are de facto above the law have interceded on their behalf.

It is about time that individuals are made to include the social costs (actual or potential impact of risk behaviours) to their private motoring costs.

A further trick is to identify an implementation strategy that will increase the cost for offenders or those who pose a risk without unduly increasing implementation or monitoring costs. This strategy involves government intervention in the form of financial sanctions such as taxes. To give a quick illustration, we live in a country where it is cheaper to import a used car than a new car despite the better safety design of new cars. Any economics student will tell us that the demand for the cheaper yet relatively unsafe car will be higher.

If the government intervenes in the market and uses the tax mechanism to discourage the use of high risk cars while encouraging the use of safer vehicles, with insurance companies encouraged to give waivers for car safety features and banks encouraged to support the purchase of newer cars by commercial operators due to the high entry barrier. This way, our consumption minds will focus more on cheaper yet safer options. This approach is also politically viable as customers will still be able to choose less safe options (albeit at a higher cost) without any accusations of restrictive authoritarianism. A policy recommendation in this regard will be to nudge consumption towards safer and low risk cars through the use of financial instruments such as import duties, insurance, licensing costs and easy access to credit facilities. It is however important for policy makers to also acknowledge and control for moral hazard caused by increased risk-taking by drivers of safer cars or restricting competition in the commercial car market due to higher vehicular standards.

In addition to market intervention, the role of technology as a tool for safer roads should not be overlooked but actively pursued. The NRSC must be commended for putting measures in place to adopt of many these technological initiatives. Preventative low cost technological devices especially in the area of commercial transport to reduce high risk behavior such as overloading, long driving hours, database for insured cars, improved visibility and overspeeding are available and will be important complements to enforcement efforts. The allure of these solutions is that they reduce enforcement costs through better targeting while transferring the cost of compliance to users. Part of the revenues generated from the installation of such devices (subject to appropriate contract and procurement strategies) could even then be used to contribute to increase the financial resources of road safety organizations such as the NRSC and DVLA. A key consideration is to ensure blanket compliance to avoid giving non-complying cars gaining any competitive advantage.

Institutions like the GPRTU will therefore play a significant role in ensuring a level playing field to complement enforcement efforts.

While the above only addresses road safety at the personal level, road safety agencies still bear the responsibility for embedding a culture of institutional safety. It is heartening to note that the NRSC has taken steps to institutionalize safety through safety auditing at the appraisal and design stages of projects. At the institutional stage, NRSC should also be consulted and play a central role in the appraisal of any road infrastructure scheme with safety driven by an “As Low As Reasonably Practical” (ALARP) principle. This proposal goes further than the budget-driven principle of the Global Road Safety Partnership who recommend a 10% budgetary allocation to safety.

In sum, policy proposal should be driven by the objective of making road safety costly for those who pose a safety risk and the use of technology to reduce risky behavior. Market interventions have the potential to transfer social costs in the form of extra taxes to those who pose a high risk while technological solutions (with the right contract strategies) can provide revenue opportunities. Together, they are powerful demand side initiatives to engender a safety culture at the individual level. On the other hand, raising the primacy of safety during project appraisal and design stages and the centrality of the NRSC during road construction and maintenance consultations will do similar at the institutional level.