The former Managing Director of Intercity STC Coaches Limited, Nana Akomea, has shed light on the factors behind the company’s rapid growth in recent years and its current decline.
Speaking to Mark Smith on A1 Radio’s Day Break Upper East Show, Mr. Akomea explained that between 2017 and 2019, the transformation STC experienced under his leadership was largely due to a stable economic environment and a thriving network of international bus routes connecting Ghana to neighboring French-speaking countries.
According to him, in the pre-COVID era, bus routes from Ghana to countries like Ivory Coast, Togo, Benin, and Burkina Faso accounted for about a third of the organization’s profits—profits significant enough to cover the salaries of over 700 staff members.
“The terminal in Abidjan alone was able to pay the salaries of all 700 workers. Their currency, the CFA, is strong. You collect fares in CFA, and that’s a more stable currency,” he noted.
In addition to strong cross-border operations, Mr. Akomea said favorable economic conditions in Ghana at the time meant the company was able to generate reasonable profits and savings. Operational costs such as fuel and spare parts were manageable. He emphasized that fuel accounted for just 28 percent of the company’s total operating costs during this period.
Flush with cash, the company was able to undertake repairs, procure new buses, and clear pension arrears that had accumulated over several years.
However, things began to deteriorate during the COVID-19 pandemic. Mr. Akomea said the closure of international borders meant STC immediately lost a third of its business, particularly its routes to neighboring French countries.
“The borders were closed for two years. So with COVID, for two years, one-third of the business was gone. We had to observe social distancing. That meant a 44-seater bus could only take 22 passengers. That went on for like eight months. We lost a lot of money.”
But beyond the pandemic, he cited the unstable macroeconomic environment as a more critical issue.
“Working at STC taught me how important it is for government to maintain a stable macro environment. It is the most basic factor in business success. Anytime the cedi lost value, our costs went up the very next day,” he recalled.
The continuous rise in the cost of fuel and spare parts worsened the company’s woes.
“Literally every week, especially from mid-2021, fuel prices went up. In 2022, it was so bad. It destroyed the business,” he said.
Fuel costs rose from 28 percent pre-COVID to over 60 percent post-COVID, leaving very little for maintenance, salaries, or investment in new assets. “At one point, fuel accounted for 62 percent of our costs,” he stated.
To make matters worse, around GH¢3 million that had been saved during the good years was lost during the banking sector crisis. The inability to replace aging buses has also affected operations. Buses that were supposed to be changed after four years or after hitting 300,000 to 400,000 kilometers are still in use—some with over one million kilometers on the odometer.
“Even the newest buses are like five or six years old,” he revealed.
To help STC recover, Mr. Akomea urged the incoming government to ensure macroeconomic stability, which he believes is the foundation for business sustainability in Ghana.
Source: A1Radioonline.com|101.1 MHz|Mark Kwasi Ahumah Smith|Bolgatanga
