/ 16 August 1996

Taxi industry gears up for a safer future

Plans to restructure the minibus taxi industry involve attracting foreign investment, but will also saddle the government with massive debts, reports Tebello Radebe

The strife-torn minibus taxi industry can be made attractive to foreign investors if the government’s plans for the R8-billion sector take off.

So says Dipak Patel, head of the National Taxi Task Team (NTTT), set up early last year by Transport Minister Mac Maharaj to find a way to halt the industry decline.

“Foreign investment in the taxi industry may still appear to be unrealistic at this stage, but it can become feasible some time after the next two years,” Patel told the Mail & Guardian.

He said foreign government grants and other forms of aid may be precursors to partnerships or joint ventures once the planned restructuring of the industry takes root. In simple black economic empowerment terms, he said, the industry outweighed by far any of the initiatives being talked about at present, since it is already owned by the previously disadvantaged.

“What is required is to turn it around to provide it with a sound interface with the government, business and the investment community as a whole,” he said. He indicated that the Canadian government and a large German non-government organisation (NGO) had already shown interest in the NTTT vision.

According to Patel, the Canadians are keen to provide technical and human resource support arising from their own extensive experience with co- operatives, while the NGO is looking at supporting funding proposals.

Among the key elements of the NTTT proposal is a plan for “Codesa-type” talks, culminating in electing “credible leaders” for the industry, the rationale being the need for leaders who command the respect of all and are able to sign binding agreements to end conflicts. All too often, peace agreements to stop the endless bloodletting at the taxi ranks do not stick.

Launching the plan, Maharaj said: “An estimated 50% of the minibus operations are run illegally, leading to uncontrolled competition, which breeds problems such as violence. We have now provided illegal operators with a once-off chance to become legalised.”

He added that the opportunity to legalise means legal operators will be protected by the law on routes they operate. In future, law-enforcement officers will penalise all illegal operators.

Paul Browning, a road transportation consultant, described the NTTT recommendations as a bold plan to formalise, legalise and restructure what could be described as a “third world initiative” into an entity that can be supported by the government and controlled more effectively. “At the moment, it [the minibus taxi] has no relationship with authority. The proposals represent a bridge between the first and third worlds.”

The process to rectify the ills of the industry will take up to 10 years, but will kick off immediately with the registration of all taxi-owners,drivers and their vehicles, as well as their associations. The revamp will also include the “metered-taxi” sector, which has until now been overshadowed by the focus on the minibuses. The NTTT notes that the neglect of this important taxi sector has had adverse effects on tourism.

Other aspects of the legalisation process include the redrafting of the taxi permits, turning the Local Road Transportation Boards into more representative bodies, drawing up a standard constitution for all taxi associations, a code of conduct for drivers and owners, as well as self- disciplinary mechanisms to punish delinquents. A range of extensive proposals for training both drivers and owners are given prominent attention. Vehicle safety regulations are to be beefed up as well.

To underpin the planned process of change, far- reaching proposals to ensure the economic viability and sustainability of the taxi industry are set out. If most are accepted, they may cost the government over R72-million in cash and R200-million in guarantees. It is primarily expected that the government will foot the entire bill for two years only, with the private sector and foreign investors contributing.

The NTTT argues that the cost to the government will be minimal when compared with the current and past subsidies paid by the Transport Ministry. However, the NTTT goes on to negate this assertion by proposing unquantified “new forms of subsidies” to be paid to transport service providers, including taxis on a contract basis after these contracts have been put out to tender.

According to the NTTT, R16-million will be used to pay the staff costs of 36 co-operatives, which will apply for tenders, negotiate trade deals and run Taxi Retail Installations (TRIs) — profit-making retail outlets for fuel, tyres, spares, etc — on behalf of taxi operators. The co-operatives will cost R18-million to set up and all profits will be ploughed back into the taxi industry.

Two guarantee funds of R100-million and R10-million are planned. One fund is expected to indemnify finance houses against a co-operative member who defaults on repayments. In return, finance houses should offer interest rates at three points above prime. The other fund is expected to be used for “stop loss” reinsurance.

Other recommendations tabled are for moves to obtain Japanese finance for a vehicle tracking system and the allocation of a radio frequency to be used by co-operatives and the setting up of provincial taxi offices which will cost R500 000 each.

The NTTT recommendations quite accurately predict “resistance and apprehension from some quarters” to the range of measures it has proposed. It suggests that pilot projects, gradualism, persuasion and “layers upon layers of explanations should be some of the strategies used to address scepticism and opposition”.

When asked what he thought of the idea for guarantee funds and lower rates, Stuart Grobler, Council of South African Banks representative, said: “While we would welcome any moves to correct problems, the idea of guarantee funds is unworkable. Why should it apply to the taxi industry and not others? Where do you draw the line?”

He said guarantee funds would encourage non-payment and not stop it. The government would in the long run be saddled with massive debts.

However, Joe Mabaso, Southern Africa Black Taxi Association president and one of the authors of the recommendations, said it was imperative that the government had to come to the rescue of the taxi industry because “over the years the past government supported other modes of transport to the tune of millions and used the `third force’ against the taxi industry, potentially fuelling the taxi wars, while the industry moved half the country’s workforce around without any government support”.