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DoT conceptualising a sustainable empowerment model for taxi industry

Includes subsidisation of taxi operators and users – and possibly the production of an SA-developed minibus taxi and financing fund.
A taxi rank in Johannesburg. Image: Siphiwe Sibeko/Reuters

The Department of Transport (DoT) is conceptualising a sustainable economic empowerment model for the taxi industry, which includes subsidising the industry and taxi users.

The model might also involve the manufacture of a South African developed and produced minibus taxi and the establishment of a new fund to assist taxi operators to finance their taxi purchases.

“We are reimagining the recapitalisation of the taxi industry,” said Transport Minister Fikile Mbalula this week at the launch of the application process for the Taxi Relief Support Fund.

The R1.135 billion in the once-off relief fund was allocated by government for the benefit of the taxi industry and is intended to mitigate the negative impact of Covid-19 on the industry.

Read: Minibus taxi industry only pays R5m in corporate taxes

This benefit is based on the principle of an ex gratia payment and is not intended to compensate the industry for the loss of income caused by the pandemic.

The National Empowerment Fund (NEF) will be responsible for the disbursement of the financial relief to qualifying taxi operators.

“We believe that the disbursement process we are launching today [Tuesday] is a stepping stone towards the transformation and formalisation of the taxi industry,” Mbalula said.

“While this is a once-off ex gratia payment, it is a demonstration of the seriousness with which we take the role of the taxi industry in the broader public transport value chain,” he said.

Mbalula said the relief is intended for all minibus-taxi operators, metered taxis and e-hailing partners, adding that e-hailing partners refers to those South Africans who use the e-hailing platforms to provide a taxi service and not the corporate entities such as Uber or Bolt.

“We anticipate that if we are to reach all eligible operators calculated on the basis of the 137 000 legal minibus-taxis on our system, 25 000 metered taxis, 1 900 cross-border taxis and approximately 63 188 e-hailing partners, each operator will qualify for a quantum of R5 000,” he said.

Mbalula said that in order to qualify for this support, taxi operator applicants must be:

  • A South African citizen or a permanent resident;

  • In possession of a valid operating licence or a receipt as proof of renewal issued on or before the date of the declaration of the national state of disaster; and

  •  Registered with the South African Revenue Service (Sars) as a taxpayer.

NEF CEO Philisiwe Mthethwa said the fund has supported more than 1 000 black-owned and managed companies in all the key sectors of the economy and to date has approved transactions worth more than R9 billion.

But she added that the NEF has a dream about another opportunity it sees in the transport sector.

“We believe there is merit in the possibility of one day manufacturing a South African made minibus taxi because there is a market both locally and across sub-Saharan Africa as the continent drives towards growth and development,” Mthethwa explained.

She said people in Europe, the US and Asia do not make use of minibus taxis.

“But what is really sad about this situation is that we don’t have an African [taxi] brand …

“We are not saying we should now get rid of all of the other OEMs [original equipment manufacturers] that we have in the automotive industry … We are saying to the black entrepreneurs ‘just think about this’. We need some good news for the industry,” she added.

Read: Toyota boosts investment in taxi plant to more than R1bn

Mthethwa said the NEF’s wish, possibly in partnership with the DoT, is to work alongside a particular company that produces minibus taxis.

She noted that the NEF has young engineers who conceptualise projects from scratch, which means the DoT does not have to come up with this concept on its own.

“Even if it takes us another five years, we will have achieved our objective,” she said.

Mthethwa said another issue that is “boggling” their minds at the NEF relates to the financing of taxis in South Africa.

“It is something that we need to look into because [of] the terms and conditions that are attached to those financing arrangements – it’s very very sad. If we had a fund … we could potentially end up funding taxis at prime +2% or +3%.

“But at the moment if you look at the financing mechanisms around and the financial support that has been given to the taxi industry, it’s prime +8% or +10% so it takes years before operators can actually say they have equity and they fully own that particular taxi,” she said.

Mbalula said the DoT’s empowerment model for the taxi industry “is interrogating that very concept” and invited the NEF to make a contribution to the model.

“Remember we are dealing with an economic empowerment model and reimagining the recapitalisation of the taxi industry. That is what we are dealing with … as we speak. We are very keen to be your partner in this and also benefit from your ideas,” he added.

Read: Why operational subsidies are key to reforming SA’s taxi industry

“We have got different working groups because the taxi industry has got a raw deal but they are themselves to be blamed because they have got to be united in terms of this,” he said.

“We have got to deliver on this. We are the only brand in the whole of the world that has minibus taxis … and the biggest black industry that we have got makes a R40 billion plus injection into our economy and yet it doesn’t benefit our people,” he bemoaned.

“These are the issues we are dealing with. As we conclude the relief fund by March [2022], we should have concluded on a whole range of issues that are going to benefit the taxi industry economically going forward.”

Mbalula said the bus industry is not getting any Covid-19 financial relief because it is already a beneficiary of financial support from the government.

“That is why as a minister of transport I am now reviewing the subsidy for public transport. Part of the relief is going to focus on supporting the taxi industry,” he said.

Mbalula said Statistic South Africa surveys say the taxi industry is expensive.

“But I am going to support the working class for the first time, and subsidise the taxi industry so that the people can use taxis without feeling the pinch. That is what we are going to do when we talk about economic empowerment,” he said.

Read: Inside SA’s R40bn taxi industry

SA National Taxi Council (Santaco) president Phillip Taaibosch said he attended the launch of the application process for the Taxi Relief Support Fund to thank the government and the minister of transport for listening to the taxi industry when it said the conditions in the original regulations were problematic and would make life difficult for the industry.

Taaibosch said the major change is that taxi operators are no longer required to register a business to qualify for relief and also do not have to belong to a particular business organisation.

National Taxi Alliance (NTA) spokesperson Theo Malele said the leadership of the NTA deserves credit for taking the initiative and taking the DoT and the minister to court to force them to release these funds.

“It was out of that litigious process where the minister saw that instead of going to court, he should have an out of court settlement.

“So we are quite elated that most of the issues that we spoke of have been addressed. But we are watching the process with a hawk’s eye to ensure that these funds are being disbursed in the best and correct manner,” he said.

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