Gauteng Taxi summit at Avianto: The black taxi industry – an unanticipated success story
In many respects, the emergence since the late 1970s of the South African black taxi industry on the principles of personal initiative and self-empowerment is a success story. It is estimated that 200 000 jobs were created over the past 40 years and a good many successful and lucrative secondary businesses related to the industry have emerged. An additional 150 000 jobs are indirectly associated with this sector, mainly in motor manufacturing, fuel, spare parts and maintenance.
The industry has created an interesting array of role players - owners, drivers, cleaners, fare collectors, rank marshals and associations. In 2003, SATAWU researcher, Jane Barrett, stated that based on estimates of passenger numbers, the taxi industry turnover had been estimated at R11 million a day and R12.6 billion a year.
In Gauteng, the Department of Roads and Transport has registered 180 taxi associations and 62 500 taxi operators. These daily move 42 percent of the total number commuters from home to work, and back. Taxis transport the majority of learners that attend school outside of their immediate neighbourhoods. With the current bus strike in progress, taxi owners – with their taxis and pockets full - are smiling all the way as they transport the vast majority of commuters.
Notwithstanding the parallel growth of a sub-culture of armed violence and sporadic assassinations of drivers and key leaders of the various associations, the taxi industry has spawned an entrepreneurial culture and a passenger control system that literally moves millions of commuters daily to work and to other places of social and recreational interests. Unfortunately, the associated violence which accompanied the growth of the industry has obscured the real success story.
What is of interest to us today is not just the historical evolution of the black industry. Rather, it is its future that has drawn us together. How do we visualise the further development of this entrepreneurial spirit and the growth of this industry as part of an integrated public transport system in Gauteng over the next 25 years? Before we can explore this question, let us briefly trace the history of the taxi industry.
Tracing History
One can identify three distinct phases in the development of the taxi industry in South Africa. From the early 1960s, the apartheid government’s racially-based forced removal policy ensured that urban Africans were relocated to live in townships far from commercial and industrial centres in all cities. Apartheid spatial planning impacted directly on the public transport provided by buses and trains. Public transport became increasingly expensive for commuters. As buses and trains operated at peak times only, and routes became less flexible, the taxi industry responded to this new reality. Initially the apartheid government acted to protect the
existing public transport systems and prevented entrepreneurs from operating minibus taxis by refusing to issue road carrier permits.
By the early 1970s, black taxi operators defied apartheid laws and the strict regulations that were prejudicial to their emerging businesses. The Motor Carrier Transportation Act of 1930 stipulated that no transportation of goods or passengers was allowed without permission from a Local Road Transportation Board. Obtaining a permit from the Board was almost impossible for black operators, who were faced with influx controls and pass laws. This meant that over 90 percent of taxi permit applications by blacks were rejected by the Board. Hence, those blacks who operated taxis simply operated illegally.
The taxi industry grew dramatically in the late 1980s in the wake of the apartheid government’s policy of economic deregulation. The Van Breda Commission of Inquiry (1977) into the Road Transportation Bill found that South Africa “had reached a stage of economic and industrial development which enabled it to move towards a freer competition in transportation”. The Commission’s findings reflected a shift in economic policy that resulted in generalised deregulation, commercialisation and privatisation. Following on this, the National Transport Study (1985) concluded that the highly regulatory framework of existing transport policy was “contrary to the principles of national economic policy that emphasise the role of competition” and proposed the blanket deregulation of the taxi industry.
This resulted in the White Paper on Transport Policy (1987) along with the Transport Deregulation Act (1988) that effectively legalised minibus taxis. Henceforth, permit enforcement ceased to be a priority and the industry was soon flooded with aspirant drivers, resulting in heightened competition for passengers and routes as too many operators entered the market too rapidly. This ‘free-for-all approach’ was exacerbated by corrupt officials, who turned a blind eye to traffic enforcement and vehicle roadworthiness, meaning that from the outset, commuter safety in this mode of transport was not a priority.
An immediate and far-reaching consequence of deregulation was the rise of taxi associations, which have been associated with the violence that has shadowed the industry. As one of the few avenues for blacks to gain wealth, the taxi industry became a contested terrain with intense competition for routes and business. In the absence of any form of effective government regulation, taxi operators banded together to form local taxi associations, which controlled routes and prices, often using force.
After 1994, the new democratic government intervened in the industry and in 1995 established the National Taxi Task Team (NTTT) to investigate the causes of and potential solutions to taxi violence. It was also established to examine ways to ensure industry sustainability and competitiveness. The NTTT released its first report a year later, recommending the re-regulation of the taxi industry. In essence, this was rejected by ‘mother-bodies’ of taxi associations. In 1999, government changed its focus to restructuring the industry through the recapitalisation process. In essence, the recapitalisation strategy aimed to recreate the taxi industry from scratch, by phasing out the 16-seater minibus taxis in favour of new 18- and 35-seaters, and introducing smart card technology to eliminate cash from commuter transactions. These processes have run into problems and even today, taxi recapitalisation has had limited success. Lastly, the suggestion to form a single, national taxi federation had not succeeded in that no sooner had SANTACO been established as a business association, its rival, the National Taxi Alliance, was formed. Even as taxi violence has abated somewhat; it has not been eliminated altogether.
Where to from here?
It is now 15 years since the publication of the NTTT report. Since then, government policy has also seen some important changes. So, is there going to be a fourth phase of development in the taxi industry? The National Development Plan; the 5-Year Gauteng Transport Implementation Plan (GTIP5), and the soon to be published 25-Year Integrated Transport Master Plan (ITMP25) for Gauteng are indicators of government thinking of the future of public transport. Similarly, academics and consultants working with the industry have also called for a new strategic approach. For example, Sias Oosthuizen, who will make a presentation later, suggests that the taxi industry must make a mind-shift from ‘thinking-small-about-myself’ to consider the opportunities of being an organisation; see change not as a threat, but as an opportunity to set new boundaries, and take action to realise opportunities as such opportunities are only available for a limited time, afterwards it no longer provides the potential return.
H Schalekamp, D Mfinanga, P Wilkinson, and R Behrens, in an interesting research paper entitled, “An International Review of Paratransit Regulation and Integration Experiences: Lessons for Public Transport System Rationalisation and Improvement in African Cities”, state: Paratransit (taxi) operations are an essential part of passenger public transportation systems in African cities. These entrepreneurial services deliver highly demand-responsive, affordable transport in settings not conducive to scheduled or ‘formal’ public transport operations. They also present problems in the form of ruinous and violent competition between operators for higher volume routes, ‘cream skimming’, and aggressive driver behaviour...
In order to improve the level of service to passengers, many cities around the world have embarked upon processes to incorporate paratransit into expanded formal public transport networks, with varying levels of success...Public authorities across a range of international contexts have responded to these problems by planning integrated public transport networks within which paratransit operators are given the opportunity to become contracted service providers alongside existing rail and bus companies.
Christoffel Venter, from the University of Pretoria, argues that: the minibus-taxi industry in South Africa has reached a state of stasis and maturity, with limited opportunities for further growth in its present form. BRT, as it is implemented locally, offers opportunities for re-invention – for moving onto a new potential growth trajectory – by overcoming the binding constraints of informality and by opening up new markets to operators.
What all this suggests is that the time has come to critically assess the state of the taxi industry and to chart a new way forward. At this summit the taxi leadership that is here is invited to think (or rethink) the way it conducts its business. In the foreseeable future, it cannot be business as usual. You have to lead your broader membership in what could only be a more challenging future business climate that is forever changing and demanding innovation and smarter business solutions.
Organisational unity
Of all the challenges you have to address nothing is more important for the success of your business case and to increase your stake-holding than the need to unify your industry by speaking with a common voice and rallying behind a shared agenda. You will have to come away from this Taxi Summit with a greater sense of purpose and a clearer view on the future organisational structures for your industry.
Achieving organisational solidarity is not an event whereby we kiss one another at this summit, and when we leave from here, the same culture of infighting and organisational rivalry persists in the market place. There is a good business case for your increased solidarity because it would increase your stake-holding in the entire transport business value-chain for the greater good of you and your membership.
A unified taxi ‘industry’ with a greater sense of solidarity amongst its leadership and members would be a coherent and powerful voice to speak with government. Like all businesses and industries, the solutions for the taxi industry would have to come from inside the industry. You know your business best and the solutions which would take your industry into a better and more prosperous future must come for yourselves. We as government can only play a supporting role to ensure that the regulatory regime is conducive to the industry to conduct its business without any undue constraints.
As a government, we need to manage the critical elements of a public transport system such as reliability, accessibility, safety, affordability, and environmental sustainability. Public policy has to ensure that all these elements are harmonised and achieved in the area of public transport to protect not only commuters, but our society and environment at large. Although rail and rapid bus transport are the backbone of our public transport system as mass movers of commuters, the taxi industry is unique as being more accessible to commuters as a close-range service.
But the other elements like reliability; commuter safety; more considerate driver behaviour; more environmentally-friendly vehicles, and sound labour relations should also be a focus of the industry as it attempts to reposition itself as a more dynamic public transport mode.
If at the end of this taxi summit, the leadership emerged more united in its approach to creatively resolve the challenges facing the taxi industry, we would have achieved a great deal. My mind tells me that the taxi industry should be at the top end of the chain to seize the new opportunities that are opening in developing our transport infrastructure. May I wish you well in your discussions and deliberations and may we all benefit from the ideas that will emanate from this summit.
In many respects, the emergence since the late 1970s of the South African black taxi industry on the principles of personal initiative and self-empowerment is a success story. It is estimated that 200 000 jobs were created over the past 40 years and a good many successful and lucrative secondary businesses related to the industry have emerged. An additional 150 000 jobs are indirectly associated with this sector, mainly in motor manufacturing, fuel, spare parts and maintenance.
The industry has created an interesting array of role players - owners, drivers, cleaners, fare collectors, rank marshals and associations. In 2003, SATAWU researcher, Jane Barrett, stated that based on estimates of passenger numbers, the taxi industry turnover had been estimated at R11 million a day and R12.6 billion a year.
In Gauteng, the Department of Roads and Transport has registered 180 taxi associations and 62 500 taxi operators. These daily move 42 percent of the total number commuters from home to work, and back. Taxis transport the majority of learners that attend school outside of their immediate neighbourhoods. With the current bus strike in progress, taxi owners – with their taxis and pockets full - are smiling all the way as they transport the vast majority of commuters.
Notwithstanding the parallel growth of a sub-culture of armed violence and sporadic assassinations of drivers and key leaders of the various associations, the taxi industry has spawned an entrepreneurial culture and a passenger control system that literally moves millions of commuters daily to work and to other places of social and recreational interests. Unfortunately, the associated violence which accompanied the growth of the industry has obscured the real success story.
What is of interest to us today is not just the historical evolution of the black industry. Rather, it is its future that has drawn us together. How do we visualise the further development of this entrepreneurial spirit and the growth of this industry as part of an integrated public transport system in Gauteng over the next 25 years? Before we can explore this question, let us briefly trace the history of the taxi industry.
Tracing History
One can identify three distinct phases in the development of the taxi industry in South Africa. From the early 1960s, the apartheid government’s racially-based forced removal policy ensured that urban Africans were relocated to live in townships far from commercial and industrial centres in all cities. Apartheid spatial planning impacted directly on the public transport provided by buses and trains. Public transport became increasingly expensive for commuters. As buses and trains operated at peak times only, and routes became less flexible, the taxi industry responded to this new reality. Initially the apartheid government acted to protect the
existing public transport systems and prevented entrepreneurs from operating minibus taxis by refusing to issue road carrier permits.
By the early 1970s, black taxi operators defied apartheid laws and the strict regulations that were prejudicial to their emerging businesses. The Motor Carrier Transportation Act of 1930 stipulated that no transportation of goods or passengers was allowed without permission from a Local Road Transportation Board. Obtaining a permit from the Board was almost impossible for black operators, who were faced with influx controls and pass laws. This meant that over 90 percent of taxi permit applications by blacks were rejected by the Board. Hence, those blacks who operated taxis simply operated illegally.
The taxi industry grew dramatically in the late 1980s in the wake of the apartheid government’s policy of economic deregulation. The Van Breda Commission of Inquiry (1977) into the Road Transportation Bill found that South Africa “had reached a stage of economic and industrial development which enabled it to move towards a freer competition in transportation”. The Commission’s findings reflected a shift in economic policy that resulted in generalised deregulation, commercialisation and privatisation. Following on this, the National Transport Study (1985) concluded that the highly regulatory framework of existing transport policy was “contrary to the principles of national economic policy that emphasise the role of competition” and proposed the blanket deregulation of the taxi industry.
This resulted in the White Paper on Transport Policy (1987) along with the Transport Deregulation Act (1988) that effectively legalised minibus taxis. Henceforth, permit enforcement ceased to be a priority and the industry was soon flooded with aspirant drivers, resulting in heightened competition for passengers and routes as too many operators entered the market too rapidly. This ‘free-for-all approach’ was exacerbated by corrupt officials, who turned a blind eye to traffic enforcement and vehicle roadworthiness, meaning that from the outset, commuter safety in this mode of transport was not a priority.
An immediate and far-reaching consequence of deregulation was the rise of taxi associations, which have been associated with the violence that has shadowed the industry. As one of the few avenues for blacks to gain wealth, the taxi industry became a contested terrain with intense competition for routes and business. In the absence of any form of effective government regulation, taxi operators banded together to form local taxi associations, which controlled routes and prices, often using force.
After 1994, the new democratic government intervened in the industry and in 1995 established the National Taxi Task Team (NTTT) to investigate the causes of and potential solutions to taxi violence. It was also established to examine ways to ensure industry sustainability and competitiveness. The NTTT released its first report a year later, recommending the re-regulation of the taxi industry. In essence, this was rejected by ‘mother-bodies’ of taxi associations. In 1999, government changed its focus to restructuring the industry through the recapitalisation process. In essence, the recapitalisation strategy aimed to recreate the taxi industry from scratch, by phasing out the 16-seater minibus taxis in favour of new 18- and 35-seaters, and introducing smart card technology to eliminate cash from commuter transactions. These processes have run into problems and even today, taxi recapitalisation has had limited success. Lastly, the suggestion to form a single, national taxi federation had not succeeded in that no sooner had SANTACO been established as a business association, its rival, the National Taxi Alliance, was formed. Even as taxi violence has abated somewhat; it has not been eliminated altogether.
Where to from here?
It is now 15 years since the publication of the NTTT report. Since then, government policy has also seen some important changes. So, is there going to be a fourth phase of development in the taxi industry? The National Development Plan; the 5-Year Gauteng Transport Implementation Plan (GTIP5), and the soon to be published 25-Year Integrated Transport Master Plan (ITMP25) for Gauteng are indicators of government thinking of the future of public transport. Similarly, academics and consultants working with the industry have also called for a new strategic approach. For example, Sias Oosthuizen, who will make a presentation later, suggests that the taxi industry must make a mind-shift from ‘thinking-small-about-myself’ to consider the opportunities of being an organisation; see change not as a threat, but as an opportunity to set new boundaries, and take action to realise opportunities as such opportunities are only available for a limited time, afterwards it no longer provides the potential return.
H Schalekamp, D Mfinanga, P Wilkinson, and R Behrens, in an interesting research paper entitled, “An International Review of Paratransit Regulation and Integration Experiences: Lessons for Public Transport System Rationalisation and Improvement in African Cities”, state: Paratransit (taxi) operations are an essential part of passenger public transportation systems in African cities. These entrepreneurial services deliver highly demand-responsive, affordable transport in settings not conducive to scheduled or ‘formal’ public transport operations. They also present problems in the form of ruinous and violent competition between operators for higher volume routes, ‘cream skimming’, and aggressive driver behaviour...
In order to improve the level of service to passengers, many cities around the world have embarked upon processes to incorporate paratransit into expanded formal public transport networks, with varying levels of success...Public authorities across a range of international contexts have responded to these problems by planning integrated public transport networks within which paratransit operators are given the opportunity to become contracted service providers alongside existing rail and bus companies.
Christoffel Venter, from the University of Pretoria, argues that: the minibus-taxi industry in South Africa has reached a state of stasis and maturity, with limited opportunities for further growth in its present form. BRT, as it is implemented locally, offers opportunities for re-invention – for moving onto a new potential growth trajectory – by overcoming the binding constraints of informality and by opening up new markets to operators.
What all this suggests is that the time has come to critically assess the state of the taxi industry and to chart a new way forward. At this summit the taxi leadership that is here is invited to think (or rethink) the way it conducts its business. In the foreseeable future, it cannot be business as usual. You have to lead your broader membership in what could only be a more challenging future business climate that is forever changing and demanding innovation and smarter business solutions.
Organisational unity
Of all the challenges you have to address nothing is more important for the success of your business case and to increase your stake-holding than the need to unify your industry by speaking with a common voice and rallying behind a shared agenda. You will have to come away from this Taxi Summit with a greater sense of purpose and a clearer view on the future organisational structures for your industry.
Achieving organisational solidarity is not an event whereby we kiss one another at this summit, and when we leave from here, the same culture of infighting and organisational rivalry persists in the market place. There is a good business case for your increased solidarity because it would increase your stake-holding in the entire transport business value-chain for the greater good of you and your membership.
A unified taxi ‘industry’ with a greater sense of solidarity amongst its leadership and members would be a coherent and powerful voice to speak with government. Like all businesses and industries, the solutions for the taxi industry would have to come from inside the industry. You know your business best and the solutions which would take your industry into a better and more prosperous future must come for yourselves. We as government can only play a supporting role to ensure that the regulatory regime is conducive to the industry to conduct its business without any undue constraints.
As a government, we need to manage the critical elements of a public transport system such as reliability, accessibility, safety, affordability, and environmental sustainability. Public policy has to ensure that all these elements are harmonised and achieved in the area of public transport to protect not only commuters, but our society and environment at large. Although rail and rapid bus transport are the backbone of our public transport system as mass movers of commuters, the taxi industry is unique as being more accessible to commuters as a close-range service.
But the other elements like reliability; commuter safety; more considerate driver behaviour; more environmentally-friendly vehicles, and sound labour relations should also be a focus of the industry as it attempts to reposition itself as a more dynamic public transport mode.
If at the end of this taxi summit, the leadership emerged more united in its approach to creatively resolve the challenges facing the taxi industry, we would have achieved a great deal. My mind tells me that the taxi industry should be at the top end of the chain to seize the new opportunities that are opening in developing our transport infrastructure. May I wish you well in your discussions and deliberations and may we all benefit from the ideas that will emanate from this summit.
