Digitisation could drive the “informal” sector by leveraging on the hidden formalities. Regulators have a choice: prepare, encourage or catch-up.
“By producing their means of subsistence [people] are indirectly producing their actual material life.”— Karl Marx & Friedrich Engels
We are what we do, and we probably do what we are or aspire to become. In some way or another everyone is trying to get somewhere or find out where it’s best for them to go. Shantayanan Devarajan and Wolfgang Fengler describe the structural complexity of reforming Africa to getting somewhere and being ‘someone’ are intertwined with a “structural transformation: a shift from low-productivity agriculture to higher-productivity manufacturing and services” this is in a continent where most people are “working for small farms or household enterprises, in what is often called is called the informal sector”. Talking with Lena Stiller really made me ask what the role of transport will be in facilitating the just transitions we will need to navigate through. The “informal sector” is an important part of what and how Africa is and thrives, but regulators need to be observant of its role in structurally shifting large numbers of people toward a deeper array of work, a deeper sense of material life.
What some call “household enterprises” or “hidden economies” others call informal sectors— even though these enterprises are the only service point for many people. Such enterprises, respond to a gap in the market. A gap resulting from the formal economy: regulatory inaction, failures in public spending, inequitable land-use practices, or sclerotic public transport service offerings. For many people, the line between the formal and the informal is blurred in reality. There’s barely a difference, only an option worth choosing.
Minibus taxis, or paratransit as global term, like non-motorised transport seem to be part of a network of informalities. In nearly 30 years of democracy, the term informal is stemmed from the violence of the 2000s; entangled with the reluctance to join the Bus Rapid Transit projects of the 2010’s; and now apparently “informal” stems to cause limitations to intervene, once more. Yet, the security function some marshals serve at taxi interchanges will not go unnoticed, because the market fails to provide transport related security and safety for commuters in all modes (recall the situation at PRASA). All public transport modes depend on non-motorised transport networks— completely integrated with public transport networks. This enables people in neighbourhoods and towns to access transit or their destinations with ease, confidence, and security in a safe environment. The technology companies leveraging, leaning in, and exploring the minibus taxi and non-motorised transport frontiers chart a new path for regulators. What I see is probably a lack a synthesis on the part of how to intervene in a sector that “is” informal.
In hindsight, how did we get here?
A lack of synthesis at a regulatory level highlights how the complexity of public transport and NMT operations in SA is largely misunderstood; but they show an engineering tradition highlighted in Malcolm Mitchell’s paper with Jackie Walters in the 2011. They argued that regulating public transport is a much more complicated effort than highways and railways, and this makes policies for public transport unattractive. In their paper they were referring to commuter bus transport, now imagine how much harder it could be for paratransit policy (i.e. minibus taxi). For NMT, we have the guidelines, but they are not necessarily instruments for regulating bike-sharing, pedestrian data collection, and kinetic energy generation in a network company setting. In the same breath, the minibus taxi industry is in the same policy trench that the Passenger Rail Agency of South Africa is in: structural products of the 60s-90s, with policies trapped in time. Only through synthesis could a regulator determine this dynamic, it is out of convenience that we can over-simplify our structural solutions to the problems we face in mobility and access as “informal” after 30 years since it was recognised, structured and should “self-regulate” as Shaun Mhlanga from the CSIR put it once. How did we get here?
Well, one point of departure could be to start in 1996, after the National Taxi Task Team made its recommendations and the South African National Taxi Council was formed. But that is not only too far back, but I still have to study the people and documents associated with that process in more detail. Where we can start is in 2007, when the Public Transport Strategy was formulated. This strategy aimed to transform “public transport” in South Africa, but it excluded minibus taxis outright— even though the initial proposals of concomitant projects such as the Gautrain acknowledged their importance.
It is also important to consider that this was also around the time when the “eTolls” or Gauteng Freeway Improvement Project was underway. Not only that, but PRASA was gearing up for a whole new shift in business and capital structure. Why all this at once? Because these were deeply complementary efforts, but disjointed by one thing: the transport mode which carried more than 60% of public transport users—and was fed by non-motorised transport users. It was still operating on policy principles that were formulated in 1996 to 2000 as transitional instruments— only when the National Land Transport Act No. 5 of 2009 came out did the industry change slightly: but municipalities appeared incapable. Capacity limits to regulate and interact with public transport services, associations and businesses perpetuated the traditional system of 1996-2000.
“Informal” but formally recognised
Even in the most recent times, regulating public transport remains a conversation about “formal” and “informal” whereas the industrial recognition of minibus taxis is clear through the DTI’s incentive scheme for such vehicles. The scale of these incentives are not just for the sake of domestic manufacturing, employment and exports; but they also serve as a guarantee that minibus taxi industries are here to stay. This makes recapitalisation and energy transitions profoundly easier. However, it is unclear why incentives for bicycle manufacturing domestically are not at the scale that could expound entities like Qhubeka and other local factories. Which perpetuates the underestimation of non-motorised transport industries as capital intensive, high-return and technologically empowering industries to invest in as lower hanging fruits.
Access to financing through appropriate financing houses also acknowledges that this is a type of business, although not enough detail is available for the financier. One step further, we could say that the fact that many of the minibus taxi operators are not “registered companies”; they are registered and licensed to operate specific routes and they’re part of an association which coordinates this activity. Many will also argue that they do not pay any company tax, which one may consider as an indirect subsidy if the cost of finance was not so high, and its main competitors are highly subsidised. However, with the Public Transport Subsidy, which includes the minibus taxi industry, underway there is a degree of institutional recognition at play. However, it must be explored if the carbon emissions savings from non-motorised transport are truly reflected in the government balance sheets as an input to justify investments. Especially as both public transport and NMT are inextricably interlinked.
Digitisation will drive hidden formalities
In a conversation with Neville Dipale from Moving Gauteng, he highlighted the importance and role of transport data, how it can serve both operators and users. This is an important part of our future. Even in the Indian case, Alok Jain talked with Singh Bagel on the Transport Podcast by VERCOS (Ep. 2), he highlighted how multidimensionality in transport data, operations and value are key dynamics for the future of transport. By virtue of recognition, one could argue that the “informal” sectors are actually quite “formal” in their parallel economy; or you could say they are informal because they do not operate within the company policy dogma. Even though the Competition Commission makes it quite clear that urgent reforms are necessary. Either-way, the hidden formalities are present and persistent. Technology, information systems and demographic changes are expounding the performance of these hidden formalities. Regulators should be observant of future needs, because the transport mode you grew up using might not be nearly similar to the ones that come next. As ideas change, they interact and learn, if not form from material life. It seems like the next digital revolution wave is coming closer, how will transitions to this future-present be just?
Thank you for reading this piece, it’s a great pleasure to share. Comment, share, like and subscribe—and be sure to tune in to Thursday’s Just Transport Podcast. Stay safe.