REGINALD KGWEDI: Not subsidising taxis should be declared economic sabotage

REGINALD KGWEDI: Not subsidising taxis should be declared economic sabotage


The transport sector has proved to be the heartbeat of every economy and central to society. It is a fact that without transport systems, we are doomed. The planned increase in fares by the Alexander Taxi Association as announced this week called for government intervention. The association announced they would be increasing their fares to R30,00 across the board. This covers trips from Alex to Midrand, Joburg, Sandton and Randburg, among other routes.

This decision should be viewed as a plea for help. Now is the best time to design a public transport subsidy structure and model for the industry. A transport subsidy is the simple difference between the economic fare and what the commuter pays. Subsidies are intended to provide affordable public transport to low-income households which, as a result of apartheid laws, live far from the industrial and urban centres where they are employed. It is closely associated with the inability of the majority of Africans to pay their transport fares in general, as Khosa Meshack elaborated in his discussion. Although the state has been providing transport subsidies to African workers since the 1950s, transport subsidies do not cover all public transport modes.

The Minister of Transport, Fikile Mbalula, was quoted saying he was enjoined by the regulations to refer the matter to the Competition Commission to assess if the fare increases were fair and justifiable . This was in relation to the minibus taxi (MBT) industry fare increase. In actual sense, it should be the industry taking him to the Competition Commission for not creating a level playing field.

There is no public transport without the MBT in South Africa. It is the backbone of the public transport system. The MBT industry is dominant among the users of public transport even when compared to the state-subsidised public transport modes - trains and busses. Minibus taxis transport 67% of public transport passengers passengers, raise 71% of the total fare revenue collected, and receive 0% of subsidies. In comparison, the Gautrain transports 1% of public transport users, raises 7% of the total fare revenue collected, and receives 15% of subsidies; while conventional buses transport 8% of passengers, raise 9% of fare revenue and receive 39% of operating subsidies, according to an expenditure and performance review prepared for the presidency.

The MBT industry is the most critical pillar of our public transport system, making over 15 million commuter trips daily. It is not the most available mode of public transport, but the preferred and most affordable to the public at large. This mode of transport offers door-to-door services, and is able to compete with private cars in terms of travel time from point A to B. This is the only industry where black people have control through their ownership of the taxi mode of transportation.

Therefore, the failure of government to subsidise the MBT industry should be declared economic sabotage. According to the National House Travel Survey (NHTS) 2013, South Africans on average spend 15% to 30% of their disposal income on transport. This is money that could be spent elsewhere. Many of them (67%) rely on minibus taxis. In simple terms, we are saying the poor should not continue to bear the costs of commuting, while we subsidise the affluent. Any taxi fare increase would harm and deprive the poor of access to economic opportunities; resulting in less disposable income for the poor. Unlike the affluent, the poor do not have choices.

Public goods should be subsidised. We call the MBT industry public transport, but we don’t financially support it. This must be implemented under the confines of formalisation. Formalisation forms part of regulation, which is the role of government. The current 70% loading capacity due to COVID-19 regulations is not sustainable for the industry, unless government is able to cover the loss incurred by the operators. On average, a taxi driver collects around R1,200 per day when in operation with full capacity. Currently, under the new rules, no one is covering the shortfall other than the users themselves.

It would seem there is a vacuum of political leadership in the transport sector, which is regarded as the heartbeat of economic growth and social development. These are trying times for the country; we do not need emotional decisions but to be rational and considerate.

We need to acknowledge the fact that the taxi industry is here to stay, and that it is critical to regularly engage them when we make decisions. You need a strong consultation process with all stakeholders (i.e. SANTACO, NTA, etc.) in the MBT. We need to understand that (public) transport issues cannot be solved through social media, neither now nor in future. Those at the helm seems to confuse the transport ministry with fame. There simply is no economy in the absence of working transport systems. When it comes to public transport, especially the taxi industry, we need ground forces, not Twitter fashionistas.

In order to achieve an integrated public transport system with a level playing field, we need:

  • Political will,

  • A dedicated public transport authority,

  • Effective regulation of the taxi industry,

  • Dedicated law enforcement in respect of public transport, and

  • Empowerment of the taxi industry.

It is important to note, as Ofentse Mokwena has mentioned, that even without legislated essentialisation, it is quite clear that associations, owners and operators could transform their business for their collective development, wealth creation and long-term sustainability.

These are capable and responsible people in society. Let’s support them.

Reginald Kgwedi is the founder of the Transport and Logistics Students Association (TaLSA). You can follow him on Twitter at @ReginaldKgwedi.