Understanding why the taxi industry is the way it is and why their protests are justified

Today saw the beginning of yet another major taxi industry strike, who are protesting against the relief fund of R1 billion offered by the government to the industry as being too little to make any significant difference in the plight they are facing as a result of the COVID-19 pandemic. As usual, a lot of people have formulated opinions they are sharing freely on social media, and many of these shared opinions are uninformed.

I therefore thought it prudent to bring some context of this industry into the conversation, so that some of the cringe-worthy opinion statements I have seen can be quelled. I genuinely don’t like doing this anymore, but someone has to do it; and having spent years researching how the taxi industry works and interacting with the industry itself, I believe I can bring some insights that can help the conversation to be more robust and solutions-oriented.

Before I proceed to the crux of the topic at hand, I must state that I am vehemently against the deployment of the military to the taxi protests. Soldiers are not public order police officers, and are not trained to deal with crowd control; how then the government has found it prudent to assign the military even before they could assess the nature of the protests says to me that our government, that is meant to be a steward of democracy, has in fact since descended to intimidation as a means of bending the will of the citizens. Nothing was learned from Marikana, which brings the fears that Marikana was just a turning point of how the government is going to deal with civilians going forward when they are in protest of whatever they have deemed unjust. I do hope I am wrong, but time will tell.

Sometimes, it is wise to understand the position of people who protest, before antagonising them; and so, the point of departure must be to understand why SANTACO and other taxi industry associations have called this strike. The R1 billion offered by the Department of Transport as relief is meant to cater for the entire industry of over 250 000 taxis, which amounts under R4000 per taxi. To bring in the context of the expenses associated with a taxi, it must be known that the average monthly installment of a taxi bought from the SA Taxi finance scheme in the 2018 financial year was just under R15 000 – or R14 569 to be exact with an exorbitant interest rate of 23.6% on origination – and this is what puts the repayment fee over the 72 month period well over R1 million for a taxi that by then will have done a million kilometres (https://www.transactioncapital.co.za/downloads/taxi/FY18_SA%20Taxi%20Funder%20Prospectus%20(1).pdf). With the lockdown situation in the last 3 months, a lot of taxis have not been able to keep up with installments and pay their drivers properly, and so the relief of R4000 for significant loss of income as a result of the pandemic will not be able to help the taxi owners get relief from their taxis getting repossessed. This is why SANTACO has put its relief demand at R20 000 per taxi, as it is closer to the realistic financial burden that is on each taxi than the R4000 can ever be.

For almost 20 years since the taxi recapitalisation programme took effect in 2003, the finance sector has made a killing with taxi repossessions, something we will touch on further down. The response of the Department of Transport should, therefore, be to say how can they best deal with the problem, which leaves them with two options. The first one will be to put R5 billion on the table, which brings the equitable distribution among 250 000 taxis to R20 000. The second option is for the Department to bring Transaction Capital and other creditors at play to the table, as well as National Treasury, and negotiate a debt restructure wherein the Department of Transport ensures no taxi will be repossessed because of the pandemic. This can also be a starting point of providing a subsidy to the taxi industry.

To understand the taxi industry today, you need to understand its history. This industry was birthed 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. To address the commuting needs, the government of the day ensured that municipalities catered cities buses and commuter trains that brought the black labourers from the townships in the mornings and took them back in the evenings. Trains were always packed to the brim, and a very fertile ground for crime, plus the fact that they only stopped at their respective stations meant people had to walk long distances to get to their places of work. This is why people took morning trains at 4 A.M to make it to work at 7 A.M and would get home late in the evenings too. To the Apartheid system, to colonialism, the black body was always seen as a tool of labour and nothing else, hence it didn’t matter that parents would not see their children unless they were off work, and families would not spend time together. The municipal buses were marginally better, and in towns where there were no commuter train systems, they were the only available mode of transport. However, like the system that owned these buses, they were exploitative and charged high prices as an additional way to tax the natives. This of course created problems and buses strikes against fare increments were common. In 1944 there was a major strike against fare increment in Johannesburg, that created an opportunity for a private company called the Public Utility Transport Corporation (PUTCO) to be formed in 1945 and provide competition to the municipal buses that became listed on the JSE that year. PUTCO grew rapidly and became the de facto bus service provider in Gauteng. As all monopolies behave, they began pushing the buck on fare pricing, much to the disapproval of the passengers who in 1957 organised the Alexandra bus boycott that spread to Tshwane and Soweto and had at its height 70 000 workers opting to walk to and from work for 6 months in the time period from January to June 1957. At the end of boycott, PUTCO had rescinded the 25% increment of 1 penny it had introduced in January 1957.

With all these challenges, black people began looking into participating in the transportation industry to solve their transportation challenges (trains and buses operate on times for instances, but many people need to be moving outside the times that trains and buses operate in, and taxis spoke to this need from their inception as a service). To operate any business during apartheid, one had to get a permit for it. The transportation industry also needed a permit for a vehicle like a bus or a taxi to transport people. Black applicants seeking to get permits for taxis were simply rejected by the government, but by the 1970s with the coming of the Toyota HiAce and the Nissan E20 into the market, taxis were taking a significant market share of public transportation. Through clubbing together to form associations (which culminated in the first national taxi association: South African Black Taxi Association (SABTA) formed in 1979) the black-owned taxi industry forced the apartheid government to consider deregulation and the Van Breda Commission found that the politicisation of the transport industry meant it was no longer in the government’s best interest to keep monopoly in the transportation space. It would take 10 years after the commission for taxis to be legal in South Africa, with the introduction of the White Paper on Transport Policy introduced in January 1987, that influenced the Transport Deregulation Act, 80 of 1988, legalising taxis overnight. All taxis prior to the White Paper on Transport Policy were operating illegally. The legalisation was not however intended to groom the taxi industry into a working industry with policies, government support and structure. The Nats were just easing pressure from themselves and throwing off public transportation of black people from state responsibility. Without regulation people find whatever works for them to create order; and so, the rise of Taxi Associations as the lawmakers of the taxi industry was only inevitable, so were the wars over routes.

Having found the taxi industry the way it was, the Democratically Government that took power in 1994 had a near blank canvas to model the industry into a BEE success story that everyone would be drawing reference from throughout the world. By 1996, 50% of transportation to work, schools and institutions of higher learning was already being handled by the taxi industry, a figure that stood at 75% at the end of 2019. The taxi industry being in place solves a huge headache for government to this day. It means the millions of people that still have to be carried from city peripheries to come work in business districts are not the headache of the government like in other countries. Without taxis, the government would have to ensure that 3 out of every 4 workers in this country get to work efficiently through state provisioned public transportation. This is the case in many countries in the world, in the developed world; public transport is provided by the state largely, or the state in partnership with corporations.

How then our government missed the opportunity is beyond me.

The first point, regulation, would have been to formalise associations into bodies that are regulated and audited and supported by government; and to formalise the need for a CIPC (then CIPRO) registration to accompany the registration for an operating license. This would have immediately created an opportunity to see taxi ownership as a business, instead of treating owners as sole proprietors. Associations would also assume the role of commerce chambers in a way, and have city associations, provincial associations, and a single national overarching association instead of the fragmentation that is in place today and is responsible for all the violence. With the formalisation and structure in place, it would be much easier to create a working taxation regime for the industry. By the way, most taxi owners are tax registered, as an operating license that is issued for a taxi requires a tax number to be attached to it. The challenge is that SARS and the Department of Transport have not yet figured out how to ensure broad compliance to tax within the industry because they cannot think outside of the box of inherited systemic constructs, the same way hawkers who sometimes make way more money than retail workers are classified as unemployed and therefore go untaxed.

With such an industry in the hands of black people, it would have then followed due course for intelligently crafted subsidies and partnerships to be put in place to grow the taxi industry into an ecosystem of closely-knit industries. Let me give a few examples: PetroSA had no downstream outlets from its formation, not allowing it to access the consumer directly and only rely on wholesalers for offtake of its petroleum production. A prudent move would have been a partnership with the taxi industry for subsidised fuel, of which the revenue would have come back to the state and grown PetroSA as an entity. When Petronas put its 90% share of Engen on sale, PetroSA would have easily acquired this, same as when Chevron put up its entire stake of Caltex for sale to exit the South African Market. Another key intervention, that speaks to the South African Automotive Masterplan Policy that kicked off this year, would have been planned parts localisation that brought Toyota to the table to agree that 60% of the components of a Taxi must be manufactured in South Africa. The ripple effect of this intervention would have changed how the local automotive industry is shaped long ago, but it is not too late to start doing this. A few billions have been allocated by OEMs to parts localisation in order to meet the requirements of the SAAM policy, and perhaps a good place to start is with the vehicles that carry 75% of the workforce to and from work daily, and rope in the industry to benefit. We don’t even make the tyres that are consumed by our vehicles in South Africa. The value chain to exploit around the taxi industry is vast, including making a local taxi. This change must be spearheaded by the government as the chaperone of industrial policy and innovation policy. We will then be able see meaningful change in the lives of people, and start seeing what economic empowerment is, beyond nicely worded policies.

We are here today because those who were meant to have foresight and bring the necessary interventions timeously failed to do so. The taxi industry not operating within a greater government-coordinated transportation and industrial framework that is mutually beneficial to everyone is primarily the fault of the democratically elected government. The responsibility was theirs to put things in place the apartheid regime had left in a mess. We have given tens of billions to SAA as bailouts, which is but one entity within the transportation sector; why then would we be blinking and thinking twice when we have to invest some billions in the industrial upgrading of the taxi industry that keeps the economy of South Africa running. Do we consider what would happen, and what it would mean for the economy if 3 out of 4 workers did not make it to work in certain industries tomorrow because the taxi industry suddenly stopped? Perhaps we need to think of taxis as an industry in the truest sense; and not just an industry, but a bedrock industry closely linked to the success of other industries that make up our economy. From that viewpoint, we will perhaps appreciate it more, and better understand the need to invest in its industrial upgrading alongside the holistic industrial upgrading our economy undergoes in its development cycle.