The great taxi industry turnaround is here
EC leads the way as sector plans its own bank and financer
SA’S taxi industry is often viewed as a war zone with the various bodies gunning, literally, for each other.
Drivers, passengers and bystanders are killed in route conflicts. But the common belief that the industry is ungovernable will change, and it has started in the province, according to the Eastern Cape Transport Tertiary Co-operative (ECTTC).
ECTTC, founded in 2014, announced at a launch in East London earlier this week that it had signed a Memorandum of Agreement (MOA) with the major taxi operators in the province, which will integrate them into the mainstream of the transport industry.
Dr Nokuthula Mbebe, CEO and a founder member of ECTTC, said that the co-operative had agreed on steps to transform the organisation. It has 195 primary and secondary branches, and over 2,000 members.
Aside from the MOA, the most urgent need was establishing a bank, which would harness the financial clout of the EC public transport sector, offering financial solutions that were not afforded to individuals or small companies.
Mbebe said that in 2020 the ECTTC had embarked on the journey to establish the co-operative’s own financial institution. Among the many goals was the vision of mitigating the challenges that taxi and bus owners faced when trying to access financing.
The aim of the ECTTC CFI (Co-operative Financial Institution) is to offer the financial solutions and ease of entry that has eluded many participants of this formerly informal industry. She said the vision was to transform the public transport industry via a bank owned by and serving the interest of its members.
It would immediately ensure that the interest rate of vehicle purchases was slashed from the traditional banks’ 16% to 18% offer, to far more affordable levels, reflecting current rates paid by most people. She said the CFI and ECTTC are 100% black-owned and run.
The bank is set to make history and to revolutionise the way transport finance has been done historically and the benefits will trickle down to the consumers, the passengers.
The CFI will soon announce another first for the taxi industry, but Mbebe was not at liberty to discuss the details.
Launch delegates, speaking strictly off the record, said the plan was to move the industry into a cashless realm, both for drivers and passengers, whereby payment would be through a device, probably a cell phone.
This would cover trips and all payments for vehicle repairs, services, tyres, licences, fuel, insurance, tracker devices and sundries. Expenditure and VAT would be easily traceable. Owners could purchase new vehicles through the CFI, which would handle the financing.
According to delegates at the launch SA’S taxi industry is huge: 200,000 minibus taxis (licensed and unlicensed), 300,000 drivers, 100,000 taxi marshals. In addition over many thousands of car washers and food vendors depend on trade at ranks.
However, of the 200,000 vehicles, at least half are illegal. Estimates are that the industry gets R90bn revenue annually, spends R39bn on fuel and R2bn on insurance, and that each vehicle earns annual revenue of R450,000. ECTTC’S timing was fortuitous, coming on the same day that transport minister Fikile Mbalula announced plans to scrap 63,000 taxis by 2124.
This was included as part of the taxi recapitalisation programme. If and when it happens it will create a huge opportunity for CFI to finance the new replacements.
Mbalula’s ambitions are not new. In 2000, late transport minister Dullah Omar championed the taxi regulation and recapitalisation project, which included issues such as registration, specifications, increasing vehicle local content by 60% and curbing taxi violence.
A key goal was investigating ways in which taxi commuters could benefit from travel subsidies.
Omar ’ s vision stalled on the starting grid. Unlike the government’s previous attempts to assist the industry, mainly through regulation and subsidies, ECTTC said it was already on the road, with most of the EC sector paid up and on board.