Minibus-taxi industry needs to be formalised to receive subsidy
All sides agree the sector needs to be subsidised by the state, but monitoring how any money would be spent remains an issue
The current dispute between transport minister Fikile Mbalula and the taxi industry began with the minister’s announcement of a R1bn-plus fund to enable ex gratia payments to be offered to taxi operators affected by the lockdown regulations.
The offer was quickly dismissed by the taxi industry leadership as being wholly inadequate. There were threats from some areas that the regulation limiting taxis to loading 70% of capacity would be ignored. Mbalula very quickly held a further media briefing in which he looked beyond the current emergency.
“We have made a firm commitment that we are moving towards a funding model that will ensure the taxi industry is subsidised. This ... must be underpinned by an accelerated process to formalise this industry,” he said.
Formalisation of the industry is an obvious prerequisite to the provision of a subsidy. The government clearly cannot hand over public funds to informal businesses that operate entirely on a cash basis and keep almost no accounting records.
Luckily, a model already exists, agreed by both the government and the taxi industry, for the twin process of formalisation and subsidisation — and it has been in existence for almost 25 years.
In 1995, the first transport minister in the new democratic government, Mac Maharaj, set up the National Taxi Task Team (NTTT). It included representatives from a range of government departments and from the taxi industry in all nine provinces.
Its report began by describing the public hearings held throughout the country — no fewer than 36 meetings, each attended by taxi owners and drivers, as well as the local commuting public:
“Although a wide range of issues was raised at all the hearings, the issues that were raised more often, in greater detail, and with most passion, were the demands for the government to address the issue of subsidy to level the ‘playing field’ between taxi, bus, and rail.”
The report accordingly considered the argument for subsidy in three ways; in terms of a moral argument; a comparability argument; and a practicality argument.
The first two were unarguable — it was morally wrong for the (predominantly poorer) users of one mode of public transport not to benefit from government financial assistance. And there was no basis for the taxi to be discriminated against.
However, these views — accepted by both sides — came up against the practical problems of implementing a taxi subsidy system: “In the short term, there is no practical means of opening the minibus-taxi industry to the present subsidy system. There is a potential delivery mechanism, but no mechanism for reception and distribution.”
In other words, the government was in a position to dispense a subsidy, but the taxi operators had no means of showing that the funds would be applied to reduce commuter costs. The NTTT recognised that this would take time to resolve: “What is needed is to begin, now, with a development programme that will, in as short a time as possible, enable minibus-taxi operators to participate in ... subsidy schemes.”
Regrettably, that development programme was not implemented. The emphasis was on the registration of taxi associations and their routes, and there were one or two attempts to introduce taxi co-operatives. The recommendations of the NTTT were overshadowed, at the very end of the term of office of Maharaj in 1999, by the “ axi recapitalisation” scheme — something that is still grinding on in 2020.
However, the pronouncements by Mbalula offer new hope for the long-awaited transition of the taxi industry from the informal sector of the economy to (at least) the semi-formal. Quite apart from the subsidy issue, a more formal small business model would surely result in more orderly transport operations.
Mbalula’s departmental officers might do well to dust off the report of the NTTT and see what guidance it offers for SA’s post-coronavirus taxi industry.
• Browning is an independent transport analyst.