Origins and directions in the minibus taxi industry

‘Double Tap to edit our industry’- Snapshot of ORTIA operations, note the presence of minibus taxi vehicles.

Reflecting on policy trade-offs and odd notes. This piece is a scramble of ideas.

A few years ago I started pursuing an idea around the macroeconomy of the transportation industry with a focus on the paratransit sector — in the form of minibus taxis. Just to clarify, paratransit refers to public transit (passenger transport) that runs parallel to scheduled services such as buses. The main objective of this idea was to find a discussion that could balance the industrial and transport policy objectives in the South African context. At the time, this concept was driven by how the minibus taxi industry outlined their strategic direction beyond 2010. Perhaps, I’ll start there.

Summary of the history of minibus taxi services in SA

Without being to technical, the minibus taxi industry emerged as a result of the deregulation of road transport in 1977. Most of our colleagues in the transport industry refer to Colleen McCaul’s two books on the explosion of the industry as a base reference. The readings are compelling and clear, highlighting the extent of the industry growth, and it’s broad business layers. Meshack Khoza’s work had a rich political economy view, with strong transport economic basis to the minibus taxi industry: black taxi. His material points to the fact that minibus taxis were evidence of capital formation in the black community, while buses were subsidised to artificially sustain inequitable access at a low price. Jane Barret was also a popular author who described the industry’s labour relation needs and inefficiencies. She argued that the labour economics of the industry needed deep understanding and a complete reformation under the umbrella of being formalised. Two other authors on the historical basis are Malcolm Mitchell who describes the complex trade-off in public sector investment in road infrastructure to encourage car use and fuel consumption that would be levied to raise much needed public revenues, and propel development. Paul Browning is also a seminal contributor to the industry who outlines the inherent value and economic role of the industry within the context of its formalisation. At some point however, the scale and magnitude of the industry was such that vehicles were increasing in population, operating more often, running toward dilapidation and the industry was prone to violence and poor service. This was the basis of government intervention in the industry at the time.

Epitome of capital formation

Through national associations, taxi task teams and various other forms of engagement minibus taxi vehicles were being overhauled. I was excited to hear about this because growing up with E20’s and the HI-ACE through the Venture’s and Siyaya, it was pretty interesting to observe something new. Quantums and IVECO’s grew in terms of sales and expanded their footprint partly due to the general growth in the industry; recapitalisation in the form of financial incentives to scrap old vehicles; and buy new/larger ones and the improved access to financing. At the same time, the business principles were expanding toward improving customer service; business courses for operators; minibus taxi awards and decal competitions; and advertising services on the vehicle and at interchanges. This was happening at a time when the industry had just escaped the grips of deep violence, and a policy shift in industrial development and public passenger transport principles in SA. At the time, people were shocked that the industry wanted to own petrol stations, run airlines and generally expand its business scope as a conglomerate of individual entities. This was the epitome of capital formation in theory.

Biting bullets and new technology

The industry was shot down at policy level when Bus Rapid Transit systems were prioritised before complete industrial reform had taken place. The rush in transport policy was not only because of the soccer World Cup in 2010, but also because of the political need to re-brand SA. Without prior knowledge, some officials thought that paratransit was an African phenomena that needed to be eradicated. However, from a transport economic planning perspective, the blend between public passenger transport vehicle manufacturing incentives and the taxi recapitalisation programme was excellent. But instead of further deepening the trust, and supporting the financial and technological needs of the indsutry, BRT systems were brought in to serve major corridors and become catalysts of development. The end result is yet to be seen really. BRT systems in SA are relatively too young to judge as yet, related indsutries have not nearly adapted and the system wide impact has not been assessed. The labour and transport industry benefits and costs have also not been observed, relative to the travel behaviour/driver behaviour related issues. For the minibus taxi industry, I think this was a wake up call, and a shock to the traditional transport system. In a sense that some operators were absorbed into the new services, while others continued to operate as feeders or among themselves. The hybrid network thinking and integration end is now a hot topic, with electronic ticketing and network design in the mix of it all. But the role of emerging technology, mobile in particular has not hit the mark as yet.

The importance of financing, service and systems innovation

In a recent discussion with some representatives in Limpopo, in addition to reflections on work and engagements I had with operators in the North West Province, innovation is a key part of the industry’s culture. One of the biggest challenges relates to the extent to which the ideas in the industry are translated into practice. The lack of such translation frustrates stakeholders and has, already fueled conflicts around routing, pricing, operating licenses and other issues. Financing the industry is complex due to the manner in which financial institutions account and reflect risk relative to credit worthiness and interest rates charged to new entrants. At industry level, incentives related to manufacturing reduced the production cost, and thus retail prices relative to if they weren’t implemented. From a systems perspective, the quality of available industry data relative to the extent of available technology in SA is concerning, but also within reason. It is difficult to expect access to an industry that is used to being relegated and doing things themselves from the 70’s to date. It is only in 2016 that paratransit was reflected as an avenue for integrated public transport network planning and development. Meanwhile, a strategy published in 2007 practically ignored the role of the minibus taxi industry in public transport services — although it has been a dominant role player in mobility and access in SA. Innovation needs to be everywhere: institutions, policies, officials, industries, students, communities, planners and everyone else in the mix.

The industry is a bread winner for a number of young and old women and men. Each vehicle carries households, dreams and aspirations. Perhaps with through the Competition Commission Inquiry, although limited in scope, will we begin to see a mobility and access economy that is awake to both rural and urban areas, with all modes in mind. However, one should expect deep changes in how industrial sectors, technology sectors and business interact with the industry in future. From a business perspective, I’m compelled to wonder how the industry is not a receiving subsidies following perhaps Dawood and Mokonyama’s work; or evolving into a large conglomerate.

Here is a link to the paper which started my reflections on the subject: Click here

Thank you for reading, let’s continue this discussion maybe on Twitter or mail. Keep moving!

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