Minibus Taxis

The third brief dealt with trains and the fourth with buses.  The final brief will discuss the planned future of the transport system in the five largest metros.

Introduction

The minibus taxi industry plays a major role within the South African public transport system and more generally, in the South African economy. Even though it is a privately owned (and an unsubsidised) segment of the transport sector, the taxi industry is nevertheless often referred to as part of the public transport sector. 

In this analysis, we are only considering the minibus taxi industry, and not metered taxis or the more recent uber phenomenon. Although we have no statistics at our disposal regarding metered or uber taxis, we feel it safe to assume that they would account for a negligible segment of the larger transport statistics. 

Inception of the South African minibus taxi industry

The establishment of the minibus tax industry was difficult.[1] The industry has its origins in the transport requirements of persons excluded from white areas in the apartheid era, who were often required to live considerable distances from their place of work. The Road Transportation Act of 1977 defined a “bus” as a motor vehicle that conveys more than 9 persons (including the driver) and “motor cars” as vehicles that carried up to 9 persons (including the driver). As long as taxis limited their passenger numbers, they could therefore operate without having to comply with regulations that were applicable to buses. As Colleen McCaul points out, “This failure to define taxis specifically opened the way for the advent of the legal kombi-taxi. By 1982 it was estimated that over 90% of black taxis were minibuses carrying up to 9 passengers. Much of the industry nevertheless operated illegally, as permits were difficult to obtain. The industry also survived the Welgemoed Commission, which in 1983 proposed that minibus taxis be prohibited and that a subsidised bus service should be supported. These proposals were, however, never implemented.

Since the publication of Colleen McCaul’s research in 1990, the lack of serious published material on an industry which is so important within the general economy, is striking. We have therefore tried to piece together a coherent overall picture from a number of disparate strands of information.

Basic statistics

Excluding those who work from home from the statistics, 37.6% of South Africans use their own cars to go to work, 26.2% use taxis and 23.3% walk. Trains and buses cater for a total of only 8.8%[2]. It is assumed that “taxis” in this 2013 survey means minibus taxis and that metered sedan taxis only make up a negligible portion, if included at all. In addition, it is not clear to what degree there is an overlap in these statistics, as many use more than one means of transport in going to work.

In comparing the more general use of minibus taxis, buses and trains by households (as distinct from the more limited sphere of travel to work), 69% of households used taxis, 20.2% used buses and 9.9% used trains, during the calendar month preceding the survey[3]. In this latter survey, “taxis” are expressly referred to as minibus taxis.

What is the size and value of the taxi industry?

As far as the revenue that is generated by the taxi industry is concerned, there are divergent estimates. Given that taxi fares are unregulated and that taxis still operate on a cash basis, any revenue estimates seem to be the result of educated guesswork. Transaction Capital[4] estimated in its 2017 results presentation that the industry’s annual revenue amounts to approximately R50 billion. Transaction Capital also estimates that there are a total of more than 200 000 minibus taxis, where the fleet is on average over 9 years old, requiring replacement and recapitalisation. SANTACO’s[5] estimate of the total number of taxis amounts to 300 000.

Specific features of the minibus taxi industry

The minibus taxi industry displays many unique features. It is therefore difficult to analyse it on a comparative basis with other parts of the wider transport sector. Some of the problems are well-known, whereas others are hidden from view. 

Some of the more serious issues are the following[6]:

• the industry is largely self-regulated, due to lack of labour law enforcement. The Basic Conditions of Employment Act of 1997, in trying to place limits to hours of work and overtime, shows a lack of understanding of the industry’s nature - as a consequence of the early morning and late afternoon peak hours for taxi traffic and little business in between;
• drivers are often unaware of their rights with regard to labour legislation;
• given the informal employment structure and flexible wage arrangements (mostly only on an informal verbal basis), the industry lends itself to exploitative labour practices;
• the majority of taxi drivers take care of their own individual problems and therefore do not see the need for collective action;
• probably the only supervisory method is through daily financial targets for drivers - even then, these targets are often not be spelt out, although in practice everyone involved knows what an acceptable daily fare receipt amounts to;
• there is no way of checking on how much is pilfered by drivers from the fares they receive, and this may be a factor in resisting smart-card payment systems;
• the difficulty in regulating the industry has ensured that it operates in what some would describe as a ‘mafia-style’ structure; and
• · it is formalised in some aspects in the sense that it is recognised as part of public transport (and requires formal permission to operate, owners have to be members of recognised taxi associations which are given permits to operate certain routes) - but in other aspects, it is completely informal.

The problems of the industry - a more official view

An inquiry was held in 2015/2016 by the Gauteng Provincial Legislature’s Roads and Transport Committee on the subject of the issuing of permits and operating licences for taxis. The inquiry’s recommendations address a wide variety of aspects. Its concluding statement in the final report of 15 November 2016 reads as follows: 

“It is evident from this Inquiry that there are enormous endemic problems and challenges facing the process concerning the application, granting and issuing of taxi permits and licences. In part this is largely attributed to corruption manifested through undue influence, forgery, fraud, conflict of interest, abuse of authority and a culture of impunity and lack of consequences management prevalent within the entire system. Some of these factors are historical in nature given the deregulation of the taxi industry that took place in the early and mid-90s and a culture of violence engulfing the taxi industry prior to the 1994 democratic and constitutional dispensation and beyond. The other factors are systemic and stem from poor leadership, fragmented processes, legislative gaps and corruption. This involves a number of stakeholders central to this process and industry namely, the departmental officials, taxi operators, taxi associations and law enforcement officials. The other significant observation made by this Committee relates to inadequate political and administrative leadership needed to inculcate a culture of good governance underlined by responsiveness, accountability, efficiency, effectiveness and professional ethical conduct. Therefore, a comprehensive organisational overhaul of the administrative component of the regulatory entity residing in the Department of Roads and Transport is required in order to optimally drive its performance aligned to the transformation and restructuring imperatives underpinning the National Land Transport Act and the Provincial Land Transport Framework and other applicable legislation and regulations.”[7]

SANTACO’s two major issues: industry regulation and subsidies

Aside from the issuing of permits by provincial authorities, there is little official involvement in regulating the minibus taxi industry. SANTACO, the industry’s umbrella governing body, has no regulatory powers and sees its own lack of authority in this area as a major defect in trying to bring order to an unregulated industry. Since neither the national umbrella body nor government has been enabled to regulate the industry, one can ask whether there is any intention on government’s part to do so, given the well-known problematic issues that affect the industry. Government may see this whole area as so difficult to deal with that it only sees political downside in trying to interfere.

A second issue arises in this broad context: the question of subsidies. SANTACO is not satisfied on this point either, as the taxi industry is privately run and financed with no state support, but is competing with services (mainly bus and train services) that enjoy state subsidies. SANTACO also refers to other preferential treatment accorded to public transport such as buses, which are able to use dedicated lanes on public roads.

Government involvement: recapitalisation of minibus taxi fleet

According to statements by the Department of Transport, the Taxi Recapitalisation Programme (originally announced in 1999) is still on track. R 389 million was allocated in the 2017/18 Budget for the programme. The programme envisages the payment by Government of cash amounts for the scrapping of old minibus taxis, partly to remove old vehicles from the roads, but also to enable owners to purchase new vehicles or to exit the industry altogether. Apart from confirming that a large measure of controversy has accompanied the whole programme since its inception, it is not feasible to assess whether this programme has in fact achieved any success, on the basis of the piecemeal information which is published from time to time.

Is co-operation achievable between the formal public transport sector and the taxi industry ?

Following years of initial engagement between various interested parties in Johannesburg, discussions started in 2009 to address the interests of minibus taxi operators within the context on the envisaged Bus Rapid Transport service (BRT - or more commonly referred to as Rea Vaya). It then took 14 months to reach a comprehensive agreement between the City of Johannesburg and taxi minibus operators who would be affected by the establishment of the BRT. The agreement was concluded for a 12-year contract between the City of Johannesburg and 313 minibus taxi owners from 9 taxi associations. It dealt with the first phase of the BRT project, for a single trunk route between Moroka in Soweto and Ellis Park, east of the Johannesburg city centre. This phase included the establishment of 27 BRT stations and is supported by a variety of distribution and feeder routes. A total of 143 buses were procured by the City for the project, which was implemented by February 2011. 

The essential concept was for existing minibus operators to withdraw their vehicles from competing routes, in exchange for participation as operators of the new system. This process ended in the formation of a “taxi-owned” bus operating company. 

In order to facilitate an agreement, the City’s Acquisitions Committee authorised a deviation from normal procurement procedures by, instead of a public tender process, negotiating only with the public transport operators affected by the project. Some of the other aspects which are dealt with in the agreement include: the process whereby affected operators became shareholders of the operating company, the compensation payable to operators for loss of income, the employment of displaced taxi drivers and compensation for operators unable to participate due to intimidation and harassment, the number of taxis to be withdrawn from operation (a total of 585 for this Phase 1), and the price to be paid for each share in operating company (equivalent to the scrapping allowance for a vehicle in the national taxi recapitalisation programme). Finally, the City also guaranteed payment for the service relating to a minimum number of kilometres, for a period of 12 years, come what may.

Given the wide range of issues which had to be resolved, the respective interests at stake and the incentives required to make an agreement attractive to all parties, it may appear surprising that an agreement was concluded at all. SANTACO’s view is, however, that the taxi operators concerned had no real choice but to submit to a deal and that it should not therefore be viewed as a reliable example of co-operation between the difference sectors.[8]

Conclusion

Viewed from a national perspective, the portion of the country’s transport services which is supported by Government (ie. bus and train) is used by a very small percentage of the population. The taxi industry, as a privately black-owned segment of the transport sector which is effectively unregulated and enjoys no subsidies or other support, has been extremely successful in making up for the lack, paucity or inefficiency of the train and bus transport offering. 

The minibus taxi industry is, of course, not a new phenomenon in South Africa: a basic transport need, coupled with an entrepreneurial attitude by black taxi owners, led to the establishment of what has become a permanent feature of the South African landscape. Whilst it provides obvious evidence of private sector flair and efficiency in exploiting market gaps, it at the same time shows up the inefficiency or plain unwillingness of government (whether apartheid or post-apartheid) in not only not subsidising an essential component of urban services but also of not putting in place a regulatory mechanism. One cannot avoid the impression that government prefers not to get too involved in this area, given the difficulties it would have to confront.

Anton van Dalsen
Legal Counsellor
anton@hsf.org.za