The minibus taxi industry, despite popular opinion, is more organised than is commonly believed.
The taxi industry lends itself to serious corruption and questionable law enforcement practices, putting the participants at a very high risk.
The taxi industry can get away with providing substandard services such as bad customer service and operating unsafe vehicles because there are few to no standard operating procedures that it has to adhere to.
The South African minibus taxi industry elicits a variety of emotions from road users, most of them unfavourable. However, it is an industry on which the vast majority of public transport users are dependent. It is also an industry swathed in misconceptions and one that is open for exploitation.
Now, Nozi Ramatlhape, a transport expert at the School of Transport Economics and Logistics Management at the North-West University (NWU), lifts the lid on the South African minibus industry by identifying the laws it is governed by, the lack of formal regulation, and how – despite high usage – it receives minimal subsidies. She details how it exploits captive users, the financial challenges the industry face and how it needs reforms as well as business model improvements.
1. Can you explain to us how the taxi industry is being regulated currently, and what the biggest pitfalls regarding this approach are?
Ramatlhape: The minibus taxi industry currently operates under the National Land Transport Act, No. 5 of 2009, which regulates and governs the transportation of passengers for reward and whose objective is to provide for the transformation and restructuring of the national land transport system. The National Road Traffic Act, No. 93 of 1996, which provides for road traffic matters and applies uniformly throughout the Republic and for matters connected therewith, also governs the industry. However, in spite of the above pieces of legislation, one cannot say that the minibus taxi industry is fully regulated.
Apart from provincial authorities currently responsible for the issuing of permits, there is little official involvement in regulating the minibus taxi industry. One of the biggest pitfalls is that the industry continues to operate without any formal boundaries, further exacerbating issues of taxi wars and displaced authority.
2. How do subsidies for the taxi industry work?
Ramatlhape: According to the National Household Travel Survey (NHTS) 2020 by Statistics South Africa, taxis account for most public transport use, with 80,2% of workers using taxis, which is more than the proportion reported in 2013 (67,6%). Despite this increase, the industry is currently not subsidised if compared to trains
and buses. The only direct subsidy paid to minibus taxi owners is the scrapping allowance through the Taxi Recapitalisation Project (TRP), which they receive if they bring in and scrap old taxis.
3. The taxi industry is dependent on captive users. What and who are these captive users, what is their outlook for the future, and how are they being exploited by the industry?
Ramatlhape: In transport planning, captive users are defined as people who make use of a specific form of transport because of a lack of travel choices and they may continue to use the transport service, even if they are unhappy with the service. In the minibus taxi industry, captive users include people from outlying areas who often have to travel far to reach various activity nodes such as schools, shopping centres and places of employment. If the current public transport service offering remains the same, captive users in South Africa will continue to make use of the few options available to them. The minibus taxi industry can get away with providing substandard services (for example, bad customer service and operating unsafe vehicles) because there are few to no standard operating procedures that it has to adhere to.
4. Should we distinguish between the taxi industry, taxi owners and taxi drivers?
Ramatlhape: Despite popular opinion, the minibus taxi industry is more organised than is commonly believed. In distinguishing between the industry itself, taxi owners and drivers, one would need to rather highlight how the industry operates to ascertain what has made this unregulated and self-sufficient form of public transport system stand the test of time. The key stakeholders on the operational side of the taxi industry include the owners, operators and drivers, who mostly are not the same persons. These entities are represented by overarching structures, namely the South African National Taxi Council (SANTACO), the National Taxi Drivers’ Organisation (NATDO), and the South African Transport and Allied Workers’ Union (SATAWU), with which owners affiliate. The role of the drivers is predominantly to operate on the ground on a “target system” that generates revenue for both the driver and the owner.
5. Is the taxi industry itself being exploited or manipulated by external role players?
Ramatlhape: Most traditional banks see the minibus taxi industry as too risky to finance and often offer financing and repayment terms at exorbitant interest rates. Taxi operators who do not have a good credit record can move from pillar to post looking for suitable terms to upgrade their fleet and purchase new/roadworthy vehicles. In addition to the lack of financial access and empowerment, the minibus taxi industry lends itself to serious corruption and questionable law enforcement practices, putting them at a very high risk.
6. Banks are hesitant to give loans to the industry. This leads to finance being sourced through unscrupulous means. What are the net results of this dilemma?
Ramatlhape: With operators not being able to get financing/easily purchase new vehicles, this exposes them to loan sharks. The quality of the fleet also becomes compromised, as operators postpone the replacement of vehicles and take shortcuts when purchasing key parts and fulfilling other maintenance requirements. Passenger safety then becomes highly compromised when unroadworthy minibus taxis are left in operation.
7. What are the biggest challenges facing the taxi industry and what would you propose as the most feasible solutions for these challenges?
Ramatlhape:
Lack of a formal business model with specific service requirements and quality standards – the minibus taxi industry needs to be provided with the necessary business remodelling support and guided on better operational practices.
Poor reform of the minibus taxi industry by the government, leaving associations “a law unto themselves” – the government needs to provide the necessary reform support.
Over-saturation of routes, which causes stiff competition – establishment of a public transport arbitration office, a key intervention that will assist in monitoring operating licence allocations and mediating route disputes.
8. Anything you would like to add?
Ramatlhape: The minibus taxi remains one of the most dominant forms of public transport in South Africa. Providing support through capacity building, upskilling programmes, government subsidisation and business support would enable the industry to make an even greater contribution to the economy and the country as a whole.
Nozi Ramatlhape
