Addis taxi economics

A is in his early 20s, and he’s my go-to taxi driver. He speaks good conversational English, which he picked up in part through being befriended by a Canadian couple who lived in Ethiopia for a while. Addis traffic is crazy but a bit more forgiving than some cities I’ve seen — there don’t seem to be many real traffic rules, but there’s more deference to other drivers. “A, you drive like a pro,” my friend says. “How long have you been driving?” “Oh, just six months!” (We gulp.)

In Addis “taxi” is used to refer to both ancient minibuses that drive set routes throughout the city and to traditional blue-and-white cars — often ancient-er — that will take you wherever you want to go. (Google Images of Addis taxis here.) A‘s car is the latter type, an old model that breaks down often and has one window handle you have to pass around to roll down each window.

Minibuses charge a flat rate on pre-specified routes, usually just a few Birr (ie, less than $0.20 US), but the personal taxis can charge much more. So having a few reliable drivers’ cell numbers is helpful because the prospect of your continued business helps ensure that you’ll get a better price for each ride.

Regarding taxis more generally: always negotiate a fare before you get in. Depending on the mood of the driver, current traffic and road construction, and the evident wealth, race, or nationality of the prospective passenger, the prices quoted will vary widely. I was once quoted 60 Birr and 150 Birr as starting prices ($3.50 and $8.80 US) by two drivers standing right next to each other!

Almost all of the taxi business seems to come from internationals and upper-class Ethiopians. Thus, taxis often congregate around the neighborhoods, hotels, and restaurants frequented by these groups. You’ll also get quoted a higher starting price if you’re seen coming out of a nice hotel than if you pick a cab just around the corner.

Starting prices definitely differ by race as well. (Here I cite conversations with Chinese-American and Bengali-American friends living in Addis.) Drivers will generally assume you’re from America (if you’re Caucasian), China (if you’re East Asian), and India (if you’re South Asian) and charge accordingly. White people get the highest starting prices, whereas if they assume you’re Chinese or Indian the starting price will be about 70% of the white price. This is, of course, entirely anecdotal, so econ PhD students take note: there’s some fascinating research to be done on differential pricing of initial and final fares for internationals living in Addis. In economics this differential pricing is called price discrimination (which can actually be good for consumers as it allows producers to provide services to a broader range of people, who often have different preferences and ability to pay).

A doesn’t own his taxi, and says that most drivers don’t either. Instead, he rents/leases his from a man who owns many taxis. That guy made enough money (“he is rich now!”) that he now goes to Dubai to buy other cars to import into Ethiopia. (Dubai is the go-to place for importing many things here.) A pays the owner a flat rate to have the taxi for a 10-day period, with more or less automatic renewals as long as he’s doing well enough to keep paying the fee. If he gets sick or wants to take a day off he has to pay that day’s rental fee out of earnings from another day, so A gets up at 6 am and drives until after midnight. Seven days a week.

A is only six months into the job, but he’s already looking for the next gig. He aspires to work as a tour guide — better pay and better hours, he says. And, I think, less risk of injury: almost all the taxis in Addis are from an era before airbags and seatbelts became commonplace. I think A would be a great tour guide — I hope it works out.


06 2012

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  1. 1

    Thanks for posting this. I really like stories about real people my friends meet abroad. Hope your summer is going great!

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