During an April Transport Forum webinar, Ubunye Group senior economist Alistair Maxwell predicted that minibus-taxi owners would enjoy increased spending power. He expected South Africa’s post-Covid-19 economy to grapple with the realities of junk status, while seeing the petrol price decrease to R11.58 per litre and the repo rate decrease to 6.5% by November.
The expected increase in unemployment will mean lower revenue for taxi owners. At the time, Maxwell predicted that the taxi industry would see a national average fare revenue reduction of between R300 to R600 a month, per taxi.
Now that we are in June, the outlook is different but still remains positive. The reduced revenue in fares can be offset by the reduced fuel costs, and a decline in interest repayments on fleet purchase loans. Before the announcement by SANTACO of July fare increases, Maxwell expected fares to remain constant. This would have seen owners pocket between R200 to R800 additional income each month, per taxi. This additional capital for minibus-taxi services could have provided a watershed moment for passengers.
To take advantage of this opportunity, it is vital that society accurately understands the minibus-taxi industry. Over the past 26 years, most passengers have regarded the taxi industry as owned and operated by violent and reckless gangsters. Few passengers have the gall to challenge drivers behaving badly, because they fear them. These stereotypes are frustrating for the industry and inclines drivers to rebel against the rules of the road because of the disrespect and lack of dignity bestowed on them by society.
Minibus-taxi drivers are reckless on the roads, overload their vehicles, and turn to violence to resolve disputes because the structure of the industry incentivises such behaviour.
There are several operating models in the minibus-taxi industry, ranging from owners driving their own vehicles to drivers leasing vehicles from owners for a daily fee. The “lease of vehicle” model is more dominant in metropolitan areas such as Cape Town.
Drivers compete for passengers by competing with other taxis on the road. Drivers who transport the most passengers in a day generate the most revenue. This results in speeding, swerving through traffic, driving on the shoulder lane, jumping intersections, stopping abruptly and overloading. This competition, combined with expensive vehicle loan repayments, high fuel costs and high leasing fees means that drivers are under immense pressure to keep minibus-taxi services profitable.
The second misunderstanding is that the minibus-taxi industry provides public transport. It does not. It provides privatised mass transport. Taxis are owned by private, almost always informal, businesses. Government cannot dictate their operations or fares. But it can enforce road safety regulations through mandatory operating licences, and regulations that govern all road users.
This means that taxis are not a form of transport whose operations the government ensures for the good of all citizens. Minibus-taxi passengers are customers paying for a transport service, which has a profound impact on the way they relate to the taxi industry.
Although the point of conflict for passenger experience is between customers and the drivers; the point of reform is between vehicle owners and regional associations. Drivers make all the daily operational decisions, but the owners and the regional associations hold the real power.
The passenger experience can be improved if the on-the-route competition structure is reformed to for-the-route competition, which will require formalisation into operating companies and competing for the route through tender processes. Although this is the best prospect to improve the experience of both the passenger and the fellow road users, it is too difficult to achieve now. Therefore, passengers must use the free market opportunities given to them by the industry structure to encourage the minibus-taxi industry to reform.
In every metropolitan area in South Africa, the minibus-taxi industry is oversupplied. This means that the power to choose a better service provider is in the hands of passengers. A passenger can refuse to board a minibus-taxi, if it is in a dissatisfactory condition and can wait for the next one, confident that it will arrive shortly.
This consumer choice is the hallmark of every private sector. The same way that customers choose their cellphone providers, brand of bread and clothing labels, they can choose their minibus-taxi service provider. The industry is not a mammoth monopoly that controls customers like Eskom; it is a highly individualised, oversupplied industry, driven by demand and supply principles. If customers demand better services, the beauty of the free market at work will reform the experiences of all road users.
As cities are phased out of lockdown and life returns to the new normal, this opportunity must be seized. It is predicted that minibus-taxi operators will have extra spending power in a market that is still oversupplied.
Passengers must demand cleaner and better-maintained vehicles, safer drivers, no overloading, no speeding, and no reckless driving. The reform of the minibus-taxi industry is possible. With all stakeholders playing their part, the forces of the free market will incentivise the minibus-taxi industry to reform. DM/MC
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