The taxi industry is South Africa’s longest-standing orphan that has managed to not only survive on its own but it also offered one the foremost solutions to the black majority population: transportation services. Photo: Bongani Mbatha/African News Agency (ANA)
The taxi industry is South Africa’s longest-standing orphan that has managed to not only survive on its own but it also offered one the foremost solutions to the black majority population: transportation services. Photo: Bongani Mbatha/African News Agency (ANA)

OPINION: Taxi business deserves better

By Siyabonga Hadebe Time of article published Jul 6, 2020

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PRETORIA – South Africa is quick to dismiss what it already has as inadequate or insufficient. It has even adopted such things as Uber to try and solve the national transportation challenges. However, the ghost-like American company is not really geared for the South African environment in totality

 Uber has thus proven to be grossly unsustainable for local circumstances and is much more expensive compared to Europe or America. 

But where exactly is the solution to the provision of an accessible public transportation service? It is definitely the loathed taxi industry.

In every class in business schools across the country, students learn about Coca-Cola as the most agile and popular brands simply because they can be found it almost anywhere in the world.

Locally, SAB is hailed for bringing beer wherever you are, and this has led to some even saying that "in some places there is more beer than water." It is quite common these days to suggest if the government were to adopt SAB strategies, its service delivery challenges will disappear overnight.

Alas! There is the taxi industry whose services and resilience are unmatched. Yet business schools like UCT, GIBS or Wits have tended to disregard the black-led taxi industry in their research in terms of how its business innovation has and continues to be important to solving gripping social problems in the past fifty years or so. 

The taxi business probably outperforms some of the major, known brands by far but Eurocentric attitudes relegate it to junk by overemphasizing its problems. People disregard everything else that makes the taxi industry a true champion in SA and overly focus on the challenges that beset it, including violence and poor working conditions for drivers. 

Maybe that is the reason people call for decolonisation of education. As a start, it is necessary to ask: Why has South Africa dismally failed to integrate the taxi industry into the county's economic development plans, with a more particular focus on rolling out cheap, accessible transportation for all? This article will therefore demonstrate how, using the taxi industry, which is homegrown but it is ignored, can potentially turn the country’s economic fortunes and how it can provide solutions to public transportation policy environment.

A glance on the South African public transportation

What most people easily forget is that the the taxi industry provides a service that the national, provincial and municipal governments should be extending to citizens. It is like private hospitals, but it doesn’t enjoy any fiscal support like the health sector. And other providers in infrastructure development, social services and security make good money from assisting government. The taxi industry is South Africa’s longest standing orphan that has managed to not only survive on its own but it also offered one the foremost solutions to the black majority population: transportation services.

The South African public transportation has SAA which government bails every other month with billions of rands. There are reports that a new airline is on the cards, even it will require a massive capital injection from the public funds. The national rail company PRASA provides transport to urban workers in places such as Johannesburg, Cape Town and Durban. The province of Gauteng has the Gautrain. Cities such as Pretoria, Johannesburg and Cape Town have the bus rapid transit (BRT) system. 

Obviously the capital outlay and running costs for such public infrastructure are quite significant. However, the problem is that not even 15% percent of the population uses the public transportation system notwithstanding its burden on the fiscus. In the past ten years alone, government has spent a whopping R16.5bn to bail out SAA. It also paid about R6 billion to get the Gautrain off the ground. 

The Gauteng government in 2019 announced that it is paying R100 million a month, or R1.6 billion a year, to subsidise the running of the less than impressive Gautrain operations in terms of profitability and reach. The elitist Gautrain is a train going to the airport and Sandton.

In addition, the Gauteng province has spent billions in the BRT-system over the years. In 2017, former MEC for Roads and Transport Dr Ismail Vadi declared: “Current BRT ridership usage is not that great. We have already invested around R15 billion in the system in the three metros, but Gauteng ridership usage is not more than 75000 people per day.” Notwithstanding all these inefficiencies, and possibly wastage, places such as Tshwane continue to invest in more routes for its A Re Yeng bus system. 

Most of the population lives in small towns, townships and rural areas. SAA doesn’t go to Sibasa or Matsulu. PRASA has no rail line in Msinga and Ga-Mphahlele. Qwaqwa and Mbizana are a million light years from having their own BRTs. What this means is that the persistence of the ‘two-economies’ dilemma is more visible in the public transport system. It is for that reason one World Bank study refers to the shabby state of public transport in predominantly black areas as “an incomplete transition.”

The taxi industry as the people’s champion 

With all said and done, the taxi industry has for the longest time come in handy to close the gap. Yamkela Spengane explains that the origins of the taxi industry originated “as a protest industry to address the challenges facing black people as a result of deliberate apartheid spatial planning that placed black people on the outskirts of cities and business districts, guaranteeing that they had to commute to get to their places of employment.”

 Over the years, the taxi industry has become the only real connector between Sandton and remotest areas of South Africa. The World Bank acknowledges that the minibus taxi is “by far the most accessible mode of transport. “Up to 83% of households in South Africa have access to taxi routes. 

If the internal security lens were to be used to understand the power of the taxi industry, its spread is bigger than that of government. Lack of public infrastructure in rural South Africa and the hinterland implies that the state broadcast of its political power is quite limited. This is something that the likes of transport minister Fikile Mbalula seem not to grasp well. With all things being equal, the taxi industry can easily pull its weight and collapse whatever little of the economy that is there.

Perhaps one of the glaring mishaps of the past 26 years of democracy is failure to take power from the taxi industry and shift it to government, in terms of control and regulation at least. The taxi recapitalization programme which took effect in 2003 capsized and did not do what is was said to do. 

Instead, this programme handed over power and control of the expansive taxi industry to the greedy financial services sector. Spengane supports this view by stating, “the finance sector has made a killing with taxi repossessions, something we will touch on further down.“ White-owned Transaction Capital holds not just the taxi industry ransom but the country as well. One taxi costs approximately R15 000 per month and this has to be borne by individuals with no help from the state.

An opportunity denied but there is hope for the taxi industry 

Essentially, the taxi industry and unscrupulous financiers have occupy the void created by public transportation policy. And for obvious reasons the finance sector calls the shots. This has to change very quickly. It cannot be denied that with all its ills and shortcomings, the importance of the taxi industry in South African economy cannot be understated. It has changed the lives of millions, whether directly or indirectly. 

It is a given that of the 40 plus million blacks in South Africa (and beyond) have had to use a taxi at some stage of their lives, and many continue to use taxis to work and for recreational purposes. However, a small percentage who have made it and now owning cars cast aspersions on the taxi industry. They promote an incomprehensible narrative that castigates the industry as thuggish, violent, and not tax paying. 

What many of these people however omit to talk about is that the taxi industry could be saving the National Treasury at least R50 billion per annum. This rough estimate includes capital expenditure, equipment and infrastructure, maintenance and salaries.

Instead of turning away from the industry because it is viewed as problem due to bad driving and factional wars over routes. Ideally it must be formalized without making owners to lose the sense of ownership by entering into a long standing agreement with operators to make public transportation available and accessible to all.

lntegrating the taxi industry in the South African public transportation system 

If the public procurement system enables private individuals or entities, then why not recognize the taxi industry as a partner through direct financing and via subsidies? This lapse in policy creates unnecessary tensions and commotion.

The idea of public-private partnerships (PPPs) is a long standing arrangement between government and private businesses, particularly white-owned ones. It has had relatively good successes in the provisions of public goods and services to the public. Nobody has objected to it. Even government buildings and other infrastructure are delivered using this model. The Gautrain is an example of this scheme in public transportation sector. The Gautrain is thus a PPP project involving the Gauteng government and the private sector.

In terms of fixing South Africa’s public transportation, there is a need to recognize that the taxi industry enjoys an unchallengeable position and status in SA communities since it: 

  • Overrides apartheid spatial settlement by integrating townships/ rural area with cities and other urban areas; 
  • Moves more people that any of the heavily subsidised/ state-owned public transportation systems combined, e.g. SAA (100% state owned), Metrorail (100% state owned), Gautrain, underutilized and unaffordable BRTs in some cities, etc.;
  • Provides uninterrupted access from as early as 04h00 and as late as 24h00, and beyond in some cases, unlike the Gautrain which ends around 21h30; 
  • Provides flexibility: a passenger can literally jump into and or hop off a taxi literally anywhere along its route. This means that there is no or little extra capital investment on infrastructure that must be made. Also, it is better than the famed Uber and metered taxis, whose services aren’t available in Moletji and Nongoma. 
  • Ferries people for very long distances like no any other means of transportation in SA. 
  • It links the country’s urban centres including Cape Town, Port Elizabeth, Durban or Johannesburg and remote areas such as those in the north-western Eastern Cape like Sterkspruit and Mbizana, for instance.

The taxi industry and economic potential 

With billions reported to be spent in rescuing elitist public transportation systems like SAA and problems at PRASA, much of this money can be used to provide public transportation for all. Furthermore, the economic potential of the taxi industry in transforming the South African economy is grossly understated. The South African economy desperately needs new sources of growth and to grow output, arguably the taxi industry is an underutilized asset that lies idle or which is currently being explored by financial sector to consolidate its already unchallengeable power and influence. 

Although the list is not exhaustive, but these are the economic benefits of having a vibrant, properly organized taxi industry. 

  • The state can collaborate with major car manufacturers such as Volkswagen, Toyota, Nissan and Mercedes as well as companies responsible for car parts, fuel companies and banking sector to help the taxi industry to be more reliable and sustainable. This package can be sold as a generous subsidy to taxi owners. And these collaborative networks can instantly change economic relations in South Africa in a shortest possible time.
  • Government as a partner can instruct taxis on how they must operate: fares, routes, safety, affiliation, etc. Restored power can easily assist the government to re-organize the public transportation system in South Africa. 
  • And if needs be, part of the economic networks could be relocated to small towns and rural areas to support public transportation system. Writing in Cape Argus, taxi operator Basil Nagel is correct to argue that the taxi industry “must go down road of creating generational wealth.”
  • Where possible, government (municipalities and provinces) can purchase and own taxis in profitable and least profitable routes to recoup money, while at the same time ensuring that transportation is accessible even to most remote areas of the country. If cities can own buses which are part of their BRT-systems, it makes sense to do the same in rural and remote areas. 
  • Road fatalities can be minimised and lives will be saved when taxis are no longer in a rush to make a quick buck. 
  • Resource distribution can be guaranteed: individuals or groups can own minibus taxis and or parts of value chains.

What is critical with formally integrating the taxi industry in the economy is that it could be a "low hanging fruit" or springboard to catalyse economic development in small towns, townships and rural areas. The provision of infrastructure like fuel stations, car service outlets, roads, etc. could change the face of many communities in as little as 10 years. But what is even more critical is sorting out the country’s flagging public administration system at all levels, and governance issues. 

There may be other strong points that characterize the taxi industry rivals, but one thing is certain: it rivals SAB and Coca-Cola in its innovation and agility in terms of getting the service to the people. If South African academics, economists and opinion-makers were genuinely interested in local excellence, they would be singing praises as they do for Amazons, Coca-Cola, etc. At over R90 billion turnover per annum, the taxi industry ranks amongst the best in the world.

The support for the taxi industry should not be seen in isolation to other economic development initiatives aimed at improving communities countrywide. 

Siya yi banga le economy!

Based in Pretoria, Siyabonga Hadebe is an independent commentator on socio-economics, politics and global matters.

BUSINESS REPORT

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