Collusion and infighting halt taxi industry reforms

The South African National Taxi Association and the government seem to be in cahoots in keeping other associations out and cashing in on taxi scrapping programmes that keep failing.

The Department of Transport’s relationship with the South African National Taxi Association (Santaco) dates back to 2001, when the two entered into a formal relationship. The department said in a 2003 statement that the “government assisted the industry in sealing the formalisation of the taxi industry, a democratic process which translated into the formation of a national body for the industry”. 

Santaco operates from the department’s offices and receives an annual income currently of R20 million. An unnamed source alleged that for at least three years, the department’s auditors have been unable to account for this allowance because they don’t understand what it is for. An attempt to access copies of audited statements was unsuccessful. 

Santaco is the largest taxi association in the country, but its authority is not accepted by the National Taxi Alliance (NTA), which is the second-largest association. Tensions and conflict between the two are well known. 

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The NTA refused to participate in the department’s 2020 National Taxi lekgotla because it had no speaking rights. The association’s spokesperson, Theo Malele, said: “No clear reasons were given to us [as to why we had no speaking rights and] that is why we said to the ministry that we were not going to participate [if we] were going to be [silenced]. We said we cannot attend when we are not going to be able to participate as equals.”

Spokesperson for the minister Ayanda Allie-Paine said: “The minister continues to engage with NTA and remains committed to ensuring that the voices of every operator in the taxi industry are heard, irrespective of affiliation.”

Allie-Paine said the minister has made a commitment to appoint a “panel of eminent persons to address issues relating to unity and leadership in the taxi industry and facilitate a dialogue between Santaco and NTA.”

At the lekgotla it was decided that Santaco should be given the authority to lay down norms and standards for the industry, as long as the minister is given legal powers to recognise a single industry representative body and prescribe its functions. 

It is widely speculated that Santaco has its sights on being given legal powers to run the industry so it can decide the fate of taxis that do not comply with the requirements the association determines. 

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Asked about the possibility of Santaco being legally empowered to play this role in the industry, Allie-Paine said: “Santaco is the recognised industry representative body. The commitment to ensuring that the taxi industry is able to speak in a united voice will enable the industry to regulate its internal affairs through a professional body with requisite authority. This is part of the process agreed to at the National Taxi lekgotla. The shape and form of the final product will be guided by the work to be undertaken by a joint task team comprising … representatives from the taxi industry and government.”

Minibus taxis are the most commonly used public transport in South Africa, with 70% of commuters relying on them. According to the Council for Scientific and Industrial Research’s Household Travel Survey published in October last year, nearly 60% of households spend 10% of household income on public transport.

But that survey also quoted Gauteng member of the executive council for public transport and roads infrastructure Jacob Mamabolo as saying “commuters are not satisfied with the taxi industry and this is clearly indicated in the report, as it relates to matters of safety in terms of accidents and the treatment of commuters. It is a matter that needs serious attention.”

The Commission into Taxi Violence in Gauteng released in February 2021 found that investigations into as many as 500 unsolved murders associated with the industry are pending.

Taxi recapitalisation 

In 2006, the department introduced a taxi recapitalisation programme (TRP) for the period 2006 to 2014. The aim of the programme was to replace old taxis with new ones to “facilitate safe, effective, reliable, affordable and accessible taxi operations”. Siyazi Consortium won the tender to administer the programme in all provinces. Santaco had a 40% share in Siyazi, which appears to represent a conflict of interest. 

“We would not be surprised because we have always known that there is something sinister between Santaco and the minister of transport,” said the NTA’s Malele. “They have these big shares but what are they doing for the taxi industry, for the man on the street, for the taxi operator who is driving a vehicle that is dilapidated and doesn’t even know how to make ends meet? What are they doing for those people? What are they doing about the infrastructure that is falling apart at most taxi ranks? What are they saying about the potholes on the roads that taxis that are carrying the masses of the people are traversing? Santaco is saying absolutely nothing about any of this.

“Santaco and the department are singing from the same hymn book and they protect each other. You need a magnifying glass to probe this.”

The new vehicles were required to meet new standards and only legally registered taxi operators were qualified to take part. The government set aside a R4 billion “scrapping allowance” for trading in or scrapping existing taxis. Taxi owners were given R50 000 for each scrapped vehicle. This was supposed to help them buy new taxis. 

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Apart from the scrapping allowance, an additional R7.7 billion was allocated to set up the taxi scrapping administrator. Initially the aim was to remove 100 000 old taxis from the road. This figure was increased to 135 000 in 2007. But by the end of 2017, only 70 000 had been scrapped and, by September 2018, that figure was at 72 653, with a total of R4.4 billion paid in scrapping allowances. 

The programme was criticised for fuelling the formation of a government-created cartel of larger-scale taxi operators who were able to absorb the costs associated with scrapping old vehicles and buying new ones. Some of the smaller taxi owners and taxi drivers lost their jobs because the R50 000 compensation paid for each scrapped vehicle was not enough for small-scale operators to buy the new model, especially if they were still paying off their old vehicles.

Although the department promised that taxi owners or operators who gave in their vehicles for scrapping would be linked with vehicle finance houses and fuel and spare parts companies, thus reducing their costs, this did not happen. The new taxis also had to be serviced by the manufacturers because parts could not be repaired by individual operators and rank mechanics. As a result, many operators chose to keep their old models and continue to service their taxis themselves. Many old unroadworthy taxis still on the road are a legacy of the taxi recapitalisation programme. 

In April 2019, then-transport minister Blade Nzimande announced a revised taxi recapitalisation programme (RTRP) and an increased scrapping allowance. He thanked Siyazi Consortium for its work – though the TRP clearly had not been a success – and acknowledged the “strengths and successes of the previous taxi recapitalisation programme, particularly the robustness of the scrapping process”. 

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He announced the appointment of a new company, Anthus Services 84, trading as Taxi Recapitalisation South Africa (TRSA), that would administer and manage the RTRP. The minister said the balance of taxis carried forward from the previous scrapping programme, about 63 241 old vehicles, would be scrapped on already-established sites in all nine provinces as part of the RTRP.

Only two companies tendered for the RTRP and of the two, only Anthus Services 84 had the necessary expertise. The contract for the administration of the RTRP alone was worth just more than R640 million.

An anonymous source alleged that the tender was worded in such a way that only the original company could successfully bid for the RTRP. As it turns out, Sias Oosthuizen, the chief executive of Siyazi Consortium, is also a director of Anthus Services 84, although he is listed as Esaias Oosthuizen there. Oosthuizen was approached for comment but declined.

The scope of the RTRP was more extensive than the 2006 TRP. Beyond scrapping the remaining 63 000 old taxis, it was anticipated that 60% of the commercial benefits generated by TRSA operations would flow to the taxi industry. 

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The minister emphasised leveraging opportunities in the entire value chain for the benefit of taxi operators, ranging from affordable new taxis, finance, insurance, spare parts, repairs, fuel, lubricants, electronic fare collection technology and property management. He predicted that new revenue streams would promote the sustainability of the industry and ultimately fund the continued recapitalisation of ageing “new” taxis.

A nationwide survey was to be undertaken to establish a comprehensive database of operators and operations to enable the department to do proper planning and stage appropriate interventions.

Nzimande said he was confident that the RTRP would enable the minibus taxi industry to transform its operating model from an individual taxi ownership model, which was at the root of conflict and violence, to collaborative ownership and operating models using cooperatives and corporatisation. A spinoff of this would secure employment with benefits for the estimated 600 000 employees in the industry who work as taxi drivers and rank marshals, and also eliminate competition among drivers. 

Training and skills development was promised once the industry’s operating model became more collaborative. Rationalising routes and eradicating overtrading on routes would also result in wealth creation for taxi operators, Nzimande said.

At the State of the Nation Address debate on 17 February 2021, Mbalula announced the implementation of “a reimagined taxi recapitalisation programme, located within the broader ambit of an economic empowerment model, including increased local content of the vehicles in line with the South African automotive industry master plan, which, among other things, seeks to increase local content to 60%”.

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One of the targets of the reimagined programme was to scrap 63 000 taxis by 2024. It appears the approximately 63 000 old taxis Nzimande referred to two years ago have not yet been scrapped. If this is true, how has the R640 million allocated for the administration of the RTRP been spent to date?

When asked about the extraordinary parallels between the figures Nzimande quoted two years ago and the current figures, Mbalula said that “the target of 63 000 is a five-year target that was agreed to when the department sought Cabinet approval for the extension of the Taxi Recapitalisation Programme”. He said the actual number of taxis that get scrapped each year varies as the programme is demand-driven. The number of scrapped vehicles was also affected by the scrapping of illegally converted panel vans the Public Protector said must be included in the scrapping. The Covid-19 pandemic also affected the number of taxis scrapped in 2020. 

“In order for us to achieve the five-year target, we are considering various mechanisms to accelerate the scrapping process and making this process mandatory, rather than demand-driven. These are some of the issues we will be taking up with the taxi industry through the joint mechanism, as part of the implementation of the National Taxi lekgotla resolutions,” Mbalula said.

There have been no reports to date on the progress of the broader programme and the other targets Nzimande promised as part of the RTRP. 

During the taxi summit, Mbalula said a subsidy for the industry would be introduced by April 2021 as part of a new economic plan for transport, and at the budget debate in February, he confirmed that a new transport funding model that includes the taxi industry will be introduced in the new financial year. 

Asked to comment on these developments, the department’s spokesperson said: “There is a lot of work being undertaken by the department, working with National Treasury to finalise the new public transport funding model that will include the taxi industry benefiting from the subsidy regime. We will make pronouncements on the matter in due course.”

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