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The Taxi Tumult

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It’s a business that has seen blood and conflict. It’s an industry that’s blocked the streets in anger. Yet, with more than 15 million customers a day, it can make you a fortune. That’s why people in South Africa are fighting over the taxi industry.

In Johannesburg, known as the City of Gold, the taxi business can mean gold for the grandchildren… or can it? As South Africa goes through tough economic times, the owners of this industry are also feeling the pinch. Conflict is brewing. Most drivers are angry with the threat of a strike looming nearer each day.

The customers aren’t happy either. Every day, millions of South Africans move through the thousands of taxi ranks around the country. They may struggle to do so in future. Many are struggling as the cost of using taxis keeps increasing.

“If you’re looking from one where I’m from, it’s already R18 ($1.35), so that makes it R36 ($2.70) a day just to get to Johannesburg. Sometimes I catch two taxis, so we’re talking plus minus R60 ($4.50), R70 ($5.30) a day,” says a commuter at the Noord Taxi Rank, one of South Africa’s busiest.

“If the taxi fare were to go up I would cry because that means everything will go up as well,” says another.

A Ride From A Taxi Driver To Legal Eagle

The numbers tell the story: 40% of 56 million South Africans use public transport.

Nine million people take buses, two million use trains, and the taxis get the lion’s share, with over 15 million customers a day. Sixty nine percent of all homes use minibus taxis. That’s almost a staggering 5.5 billion taxi trips every year.

In an office far from the honking horns of the streets, Sihle Mkhize is fighting for his fellow taxi drivers. Mkhize owns six taxis and is the face of the biggest taxi association in the country, Faraday Taxi Association.

“I can’t give you the exact number but we have over 3,000 taxis, because we have 114 taxi ranks and routes. Because of the capacity of the routes we have, we are the biggest association in South Africa,” says Mkhize.

Toyota Quantum taxis drive through Johannesburg. (Photo by Motlabana Monnakgotla)

The Toyota Quantum is a four-wheeled fly in the ointment. It came to South Africa from Japan in 2006 with its price tag around R220,000 ($16,700). The government encouraged everyone to buy them to modernize the industry. By 2008, it escalated to R300,000 ($22,800), which was a worry for drivers.

“There was a complaint that because the Quantum is too expensive at R300,000, Toyota should rather build them from scratch here in South Africa. They agreed and there was a six-month period where the Quantums were out of the market. They then came back in November 2015 at a heftier price tag of R360,000 ($27,400). At the beginning of this year, in January, it was R400,000 ($30,400),” says Mkhize.

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It’s even worse now. The Toyota Quantum is now manufactured in Durban, with its price around R500,000 ($38,000). Not too far shy of the price of a house.

“There’s no difference now, whether they assemble it here or not. We wanted Toyota to build it here so it can be cheaper; instead it’s more expensive now. It’s a burden because it now wants a R15,000 ($1,150) instalment. In our line of work, it’s difficult to increase taxi fare because we understand that the commuters using our taxis get paid next to nothing where they work,” says Mkhize.

The organization that fields these complaints in the taxi industry is the South African National Taxi Council (SANTACO). It represents more than 100 taxi associations in the Gauteng region alone, and is the biggest taxi union in the country. Ralph Jones, its Chairman in Johannesburg, is threatening to strike.

“Let us have a strike which will target SA Taxi Finance, where they were charging a lot of interest rates at 28%. Their repayments were over six years, at R15,000 ($1,150), so when you calculate that it’s an amount over R1 million ($76,000). How can you buy an asset that costs around R500,000 for over R1 million?” says Jones.

The man whose job it is to try to help people afford these taxis is David Hurwitz, the CEO of Transaction Capital, which provides financing for the taxi industry.

“Our cost of funding to our clients is higher, our offering is higher than a bank’s. Our finance would be at about 24.9%, that would be the interest rate. We are about 6% higher than a bank,” says Hurwitz.

Taxis in Johannesburg.
(Photo by Motlabana Monnakgotla)

Hurwitz says this is due to financing people who banks wouldn’t fund, which makes the risk higher. In negotiations, lower rates will come at a cost.

“What we’ve said to the taxi industry is that we will drop our rates slightly. Unfortunately what that means is that a certain segment of our customer base that typically would be able to qualify for funding, now won’t,” says Hurwitz.

Boom! Come Out Fighting

Then there’s government. Many claim that all of this is merely government trying to phase out taxis by the backdoor.

“At the forefront of all of these issues, we are certain that this is another way that government is trying to phase out taxis. They want us to struggle paying for these cars so they can be repossessed. In order for us to be able to afford them, we have to increase prices for our passengers, who will then run away from us and go on buses, the very buses government is introducing,” says Mkhize.

“We carry the same passengers, same as buses. But because government wants to see us defeated, it puts us together with private cars on the roads and we face heavy traffic, while buses have designated lanes. All this to take away passengers from us and send them to buses, another way of phasing us out because no passenger wants to be late to work,” says Mkhize.

FORBES AFRICA made repeated attempts to get the government’s side of the story, but unfortunately these attempts proved fruitless.

It’s the biggest mover of people in South Africa, and across the continent. Millions depend on it for transport to and from work. It could be heading for chaos and conflict. A taxi strike could halt business in South Africa, losing the country billions. If not faced head-on, the industry that moves most African people could be remembered as the industry that caused all the trouble.

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