Time for the Taxi Industry to Reinvent Itself

By Ebrahim-Khalil Hassen · 25 Mar 2009

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Picture: Ismail Farouk
Picture: Ismail Farouk

The 1980's  saw the mushrooming of the taxi industry. Informally it provided a better alternative to riding the train or using largely unreliable bus operators. Commuters voted with their feet, providing our burgeoning taxi industry with a solid customer base, as well as largely captive routes. 

The foundation of the taxi industry is rooted in apartheid local government's failure to provide a municipal bus service, notwithstanding the fact that bus boycotts were an important form of protest.

Nevertheless, the taxi industry has largely remained resistant to changes in public policy, arguably because government has not managed to develop proposals that have wide support in the industry. Still, the taxi industry has not done itself any favours either, often adopting strident positions, which ultimately do not serve even its own long term interests. The most recent strikes by taxi associations are a case in point. 

Several cities are adopting the Bus Rapid Transit (BRT) system. At its most basic, it will extend municipal transport to areas excluded under the apartheid system of local government. 

More than a decade after local government elections, the extension of a municipal bus service is a long overdue and important reform. In the long term, it will provide transport corridors potentially knitting together the inefficient creation, euphemistically known as the apartheid city.

In providing mobility to people on the peripheries of townships, the potential for linking transport and land use planning are significant from a developmental perspective. This would improve simple things like job searching, spending less time travelling, reducing traffic congestion, as well as link business activities to the planned trunk and feeder routes. 

With these supposed benefits to commuters, the response of the taxi industry is instructive. The scale of the protest indicates that the metropolitan council are planning a major shake up of the transport system. The scale and intent is seismic, creating both uncertainty and trepidation in the taxi industry. 

Arguably the taxi industry, heralded as entrepreneurial, should be able to respond to change. In fact, that taxi owners have managed to establish profitable routes, provide daily transport and often delay price increases must indicate that there are aspects of the taxi industry that work. 

Moreover, it is unnecessarily snobbish to paint all taxi drivers as menaces on the road. There are able examples of well run and maintained taxi’s across all cities. Innovatively, in many townships, taxi's have added circular routes inside the townships for residents to get from one part to another. In terms of branding, there are distinctions between taxi's in different areas, with the graffiti like paint jobs on Durban taxi’s as distinct as the taxi gathchi’s in Cape Town. 

Overall, the taxi industry remains largely stagnant in terms of its development and product offerings. Safety standards need improvements, the design of our roads need to accommodate taxi's and other public transport vehicles and service offerings need to be extended to accommodate families and the disabled. Arriving at these improvements is ironically linked to the success of the broader public transport system.

Nobel winning economist Joseph Stiglitz provides part of the answer. Stiglitz argues that private monopolies are as bad as public ones in that innovation and creativity remains stagnant. In effect, the taxi industry has a virtual monopoly in our urban areas, with privately run bus companies offering little competition. The introduction of the municipal bus service would create an incentive for taxi operators to compete both in terms of price and product offerings. Inevitably, commuters will vote with their feet. 

However, the planners of the BRT system have a significant refinement on this argument. In developing the new municipal bus system, they are attempting to integrate the taxi operators into establishing a successful public transport system. Rather than being driven by competition between public and private transport systems, the policy guidelines suggest creating an inclusive system of municipal transport, which assimilates the taxi industry. The active steps to inclusion would include taxi operators running feeder lines, the continuation of existing lines and even taxi operators becoming BRT operators.  In practice, it is possible for a multiplicity of transport modes to exist, resulting in continual improvement and growth of the transport industry. 

The protest by taxi owners is, however, amazingly normal for such an ambitious policy intervention. In every such case, opposition to a programme will lead to bold and dramatic action. Moreover, the taxi industry has every right to strengthen its bargaining position. Even if we disagree with the actions of taxi drivers, it is important to recognise it as part of the policy process.

Moreover, the taxi industry is wise enough to recognise that the protest action is but one tactic. Importantly, disruption and the closure of roads is not scalable, in that – unlike union or community action – it cannot be sustained.  Firstly, taxi operators need to be running to meet expenses; they lack any form of solidarity support. Secondly, the taxi industry comprises a complex set of institutions in which maintaining unity is extremely difficult. 

Viewing the actions of the taxi industry as part of a democratic process of engagement is vital to resolving this conflict. The danger, however, is that the voices of citizens get diluted. Neverthless, councils in metropolitan areas are responsible for the muted voices of commuters on this issue, as they have adopted technocratic policy processes in the development of their Integrated Development Plans.

In building support, local councils will find an active and fertile ground of commuters ready for change. In responding to the actions of taxi drivers, the process of deepening the debate on transport systems is the primary task of elected representatives. It is in this democratic space that taxi associations should be required to make their case and convince the public. 

There are, however, important questions that the council itself needs to answer. Public transport systems are costly. The motivation for the BRT is that bus systems are more cost effective than rail. Consequently, it meets the goals of shielding the municipality from long term debt and provides an efficient transport system. Yet, in the design, local councils have not explicitly linked BRT to existing municipal bus routes that run largely in areas that historically enjoyed municipal bus transport. One of the success factors for the BRT is having one ticket to access all municipal bus services, so integrating the various municipal services is crucial.

Moreover, in both the Johannesburg and Cape Town plans, it can be argued that there is too much emphasis linking transport systems to formal areas. This is reflected in the choice of bus stops, which are usually not stationed in or even near informal settlements. In stitching together our dysfunctional cities, the recognition of informal settlements is vital. It should start with directly linking these settlements into public transport plans. 

In the current dispute around the BRT system, the sheer magnitude of the change is important to remember. The taxi industry needs to find ways to become part of the transformation. The proposed BRT system is not only important to the taxi industry reinventing itself, but provides an important measure in telling all citizens that our cities belong to us all.

Hassen is the founder of Zapreneur and Proposal Desk, both websites aimed at answering the question, "Can the Internet help South African small business?"

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Debbie Budlender
29 Mar


It is interesting that most reports on the taxi issue do not distinguish between the owners and drivers. In some cases it seems that the drivers are standing alongside the owners, but in other cases it seems that it is the owner associations that are taking this stand.

I also wonder whether one can use the term 'monopoly' in an industry made up of thousands of independent operators.

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Ebrahim-Khalil Hassen
30 Mar

Reply to Debbie

Thanks for reading, and commenting on SACSIS. Much appreciated. I agree, there is a distinction between taxi operators and taxi drivers. And, yes I should have been more careful in making the distinction.

The term 'monopoly' I think is correctly used in the article. Monopoly meaning practically being able to control access, in this case routes, and set prices. I am howevever using the word in a sense different from having one single and dominant operator. This as far as I can gather, is an acceptable usage of the term. In this case, there are complex and sometimes hidden price setting and route determining systems at play. Of course, they do not work well, all the time - but in practice taxi's - certainly the one's I have used - function as virtual monopolies.

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