Who wins when public transit challenges private transit? Lessons from Lagos

Lagos is Nigeria’s economic engine, home to more than 22 million people and responsible for over a quarter of national GDP. It is also one of the world’s most difficult cities to move around. The average commuter spends up to four hours each day commuting. Mobility challenges threaten not only diminish quality of life but also threaten the productivity that underpin Lagos’ central role in the national economy.
 

Filling the Gap: The Role of Private Transit

For decades, this city’s public infrastructure gaps have been filled by the private sector – most notably, tens of thousands of privately operated minibuses known as danfos. These vehicles dominate the city’s transport landscape, accounting for more than half of daily trips.  While danfos are often crowded, polluting, and sometimes unsafe, they offer frequent departures and serve an intricate network that covers entire city. Similar informal transit systems—matatus in Nairobi, jeepneys in Manila, colectivos in Bogotá—play a vital role in urban mobility across the globe.
 

The Push for Formal Transit

As cities grow wealthier and busier, many have started investing in formal transit systems such as light rail or buses. However, these systems are expensive, especially in countries where the cost of capital is high. To inform policy decisions, we set out to understand how much developing cities should invest in formalizing transport and what benefits such investment yield.
 

Studying Reform: The Lagos Bus Reform Initiative

In partnership with the Lagos Metropolitan Area Transport Authority, we evaluated the impacts of a large-scale public transit roll-out to ensure more reliable service on several routes. Between 2019 and 2022, the Lagos State Government launched the Bus Reform Initiative (BRI), deploying 820 modern buses across 64 new routes. We gathered extensive data on the city’s existing transport system, mapping hundreds of private minibus routes, recording fares and departures over multiple survey rounds, and combining this with traffic counts, smartcard records, and commuter surveys. This unique dataset allowed us to measure how the reform affected both commuters and minibus operators, and to draw lessons for designing a public–private transit system that maximizes benefits while minimizing harm. Our new paper presents these findings, summarized here in an AI generated podcast.
 

Commuter Dividends: Cheaper Rides, Cleaner Air

Our analysis found that the introduction of the new public bus system generated welfare benefits for commuters worth approximately US$1.84 million per month. These gains were felt not only by those who switched to the new buses, but also by those who continued using minibuses.

• Longer Waits for Minibus Riders: Minibus routes that faced competition from public buses saw 16% fewer departures, leading to longer waits. Some drivers shifted to routes without public service.
• Minibus drivers reduced fares. As drivers moved to new routes, increased competition led to an 8–11% decline in fares across both affected and connected routes. On average, commuters benefited more from fare reductions than they lost from increased waiting times.
• Public transit entry led to localized emissions reduction: The displacement of older minibuses with new modern public buses is estimated to reduce CO₂ emissions by 9% on treated routes, thanks to newer vehicles meeting higher emissions standards.

The cost for private operators

While millions of commuters benefited, the reform also disrupted some livelihoods. Around 11,000 minibus drivers affected by the new routes lost an estimated US$1.1 million per month in income – about 60% of the size of commuter gains.
 

Net returns

We next compared the benefits of the investment relative to its costs. The benefits to commuters are outweighed by the operating costs of motorparks and public buses, which amount to US$2.26 million, higher than the social surplus calculated. These calculations exclude other possible benefits, such as emissions reduction or setting up the city for a less congested future. When weighing the costs and benefits, it is important to consider how building a public system affects drivers and commuters even on routes that are not treated (indirect effects).

A mixed system is here to stay

Even after the rollout of new buses, private minibuses still accounted for 52% of trips. The Lagos case suggests that in many emerging cities, fully centralized public transit is unlikely to completely replace private transit any time soon. Most emerging cities will have hybrid public-private systems. In such systems, public investment can be targeted to raise standards and develop alternate modes like rail, while integrating private actors.
 

Policy lessons for cities on the move

For Lagos and other rapidly growing cities, our study offers key lessons:

• Leverage Private Sector Strengths: Private, or “informal” operators have sustained urban mobility where public provision lagged. Reforms should leverage that dynamism.
• Balance gains and costs: While commuters benefited from fare reductions, some faced longer waits, and thousands of drivers lost income. Designing integrated bus stops can help reduce the impact on waits. Compensation, retraining, or integration strategies can help soften the impact on displaced drivers. This need is reflected in LAMATA’s future plans.
• Design for coexistence: Investments in safer, greener transit should be made with the expectation that private transit will continue to play a major role. Policies should foster integration and coexistence, rather than competition alone.

Lagos’ experience shows that the path to better urban mobility lies not in choosing between public and private transit, but in designing systems where both can thrive—delivering broad benefits while minimizing harm.