Working Remotely Shrinks Demand for Parking in Africa

March, 2022

Africa’s nascent parking industry is yet to regain its operational consciousness after being hit hard by the COVID-19 pandemic as movement restrictions and lockdowns emptied parking facilities and a new trend, involving working from home emerged further cutting earnings by parking industry players and city authorities.

A number of corporate entities and government departments adopted working remotely to reduce chances of COVID-19 spread hence leading to drastic reduction in demand for parking services.

 In some cities such as Nairobi in Kenya and Cape Town in South Africa, local authorities announced parking fee holiday for both private and public vehicles as a mitigation measure against the effects of COVID-19 on vehicle owners and passengers.

The falling demand for parking space has reduced revenue earnings for most parking management companies, city authorities and property owners especially owners of parking garages or parkade operators.

For cities such as Cape Town, a loss in parking fee revenue has meant reduction in budget projections both for 2020/2021 and 2021/2022 fiscal year.

For example, the Cape Town City Municipal has announced a ZAR 53.8 million (US$ 3.3 million) reduction in its budget allocation for the transport directorate.

The concept of working from home, although not yet determined how widespread it has become in Africa, has since early 2020 seen an estimated 6 percent of the workers in Sub-Saharan Africa engage in occupations that allow them to work remotely according to the International Labour Organization (ILO).

“The current crisis has introduced a new dynamic for all types of corporate occupiers, from multinationals to corporate occupiers in Africa,” says Tilda Mwai, a researcher at Knight Frank, an international real estate company.

“While we are unlikely to witness an extreme shift to remote working, flexibility, and collaboration are going to be core values to any organization going forward,” she adds.

“In the short, to medium term, we will probably see a change in office layouts and design, as the overall employee density remains low, in line with the pandemic’s containment measures across different countries,”

In South Africa, an estimated 1.9 million of the country’s 15.1 million employees were working from home as the pandemic ushered in a period of lockdown and restrictions of movement to avert further spread.

This new normal of working remotely says Amelia Beattie, CEO of South Africa-based Liberty Two Degrees (LCD), a property management company, has put the country’s office sector under pressure “with the industry oversupply further impacted by the shift from working from home.”

“Office occupancies declined to 86.6% in June 2021,” adds Beattie.

“The office sector remains under significant pressure due to increased pressure from the work from home trend with businesses reassessing their space needs adding additional pressure to the already oversupplied market,” she adds.

This trend has translated into a reduced office foot count and empty parking space.

Delivering work remotely and retention of some restrictions has also impacted the operations of some leading market players as demand for parking management services nosedived. Some of the firms have been pushed into either shutting down a few of their operations or reducing staff to enhance their safety during the pandemic period.

For example, South Africa’s market leader in revenue collection, parking and admissions management, Excellerate Parking Management, observed previously all sectors in the country “are facing serious economic headwinds.”

 The company had to reduce remuneration for senior management and support staff until such as a time when South Africa’s economic activity increases as lockdown restrictions are eased.

“As a result of adjustments to business revenue during COVID-19, Excellerate Services has also been forced to initiate a limited retrenchment process as envisaged in terms of s189 of the Labour Relations Act, and has followed all the necessary steps as required,” the company says in a previous statement on effects of the pandemic.

The company said nearly 550 of its staff were affected by the decision to reduce employees but added the “decision was not taken lightly, but was the only possible decision in light of the deterioration in economic circumstances, and the loss of some contract revenue.”

Parking industry revenues have also been affected by measures introduced by either national and city governments or their entities to cushion vehicles owners and users from the effects of the pandemic.

In Kenya’s capital Nairobi, the Kenya Revenue Authority (KRA) announced a discounted seasonal parking fee for all passenger service vehicles (PSVs) to mitigate effects of the COVID-19. The discounted parking fee came after the government directed all passenger vehicles to carry 50% of their seating capacity.

The discounted rates were US$17.6, US$32.2 and US$44.1 for 14-seater, 42-seater and 62-seater PSVs respectively.

But with the easing of COVID-19 related restrictions, KRA has from last September done away with the discounted parking rates after the PSVs resumed carrying full capacity.

The upward revised seasonal parking fee for all PSVs are a maximum of US$44.1, US$70.7 and US$88.3 for the 14-seater, 42-seater and 62-seater PSVs respectively.

It is estimated the Nairobi City County Government, through KRA, the principal revenue collecting agent, earns up to US$889,000 monthly from the seasonal parking of the passenger carrying vehicles.

But a lobby representing PSVs, Matatu Owners Association says local government should exclude the public vehicles from paying parking fees “because we bring a lot of business to them.”

“If you are going to charge us more for fuel and parking, the cost will ultimately be passed on to commuters,” said Simon Kimutai, the lobby’s chairman.

In the City of Cape Town, the authorities have announced the end of COVID-19 induced parking holiday for the use of on-street parking bays within the CBD.

“Given the much-needed surge in economic activity and anticipated arrival of tourists and visitors over the festive season, the city is resuming management of parking to ensure a turnover of bays in popular areas and where people do business,” said a statement by the City’s media office.

“This will benefit business owners because their clients need parking, and those who are looking for parking will also benefit because parking bays will not be hogged for hours on end by the same person,” the statement added.

Going forward, emerging parking markets in Africa would have to contend with the changes that have come with the COVID-19 pandemic and which may require a re-thinking of the manner existing parking facilities are utilized and how evolving parking technology can steer these young parking markets to the path of growth.

Shem Oirere is Parking Today’s on the ground reporter in Africa. He can be reached at shem@shemoirere.com.