The South African taxi industry has a complex and often violent history, deeply intertwined with the country's socio-economic and political landscape. This multi-billion rand industry carries over 60% of South Africa's commuters, predominantly those from the lower economic class. Wealthier individuals tend to use their own cars for safety and convenience. The industry is largely composed of sixteen-seater Toyota Quantum buses, which are sometimes unsafe or not roadworthy.
Early Regulation and Apartheid
Prior to 1987, the South African taxi industry was highly regulated and controlled. The Motor Carrier Transportation Act of 1930 prohibited the transportation of goods and passengers by road for profit without a permit from the Local Road Transportation Board (LRTB). The South African transport industry was essentially a state monopoly held by the South African Transport Service (SATS). Black people were often refused permits under apartheid laws, and sixteen-seater minibuses were illegal to operate as taxis. Taxi owners operating outside the jurisdiction of the LRTB were considered to be operating illegally.
Along with growing political pressure, the 1976 Soweto Riots prompted the apartheid government to form a commission of inquiry into the transport industry. In 1977, the Van Breda Commission of Inquiry recommended freer competition and less regulation in the industry. In 1979, the first national association of black taxi drivers was established: the South African Black Taxi Association (SABTA). In the years to come, rival organisations, such as the South African Long Distance Taxi Association (SALDTA), would be formed. This body, along with other political bodies at the time, started putting pressure on the government to deregulate the industry.
Deregulation and its Consequences
The White Paper on Transport Policy, tabled in January 1987, in conjunction with the Transport Deregulation Act of 1988, effectively deregulated South Africa's entire taxi industry overnight, making minibus taxis legal. This change gave birth to the taxi industry as it exists in its current form. The permit-issuing process was rife with corruption; permits were essentially given away to favored applicants. For all intents and purposes, there was no control whatsoever. After 1987, the industry was rapidly deregulated, leading to an influx of new minibus taxi operators keen to make money from the high demand for their service.
In the absence of official controls, the now-growing taxi organizations began using their influence to make more money to intimidate competitors. As one of the first avenues for black capital accumulation, the taxi industry quickly became a contested terrain, swamped with operators hoping to become rich. While some were able to ‘strike it lucky’, for the most part, the industry was characterized by exploitation and aggressive competition between operators attempting to poach passengers and ply the same routes.
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Due to an effectively unregulated market and the fierceness of competition for passengers and lucrative routes, taxi operators banded together to form local and national associations. An almost immediate and far-reaching consequence of rapid deregulation was the rise of taxi associations, which have been directly associated with the violence that has shadowed the industry since 1987.
The economic triggers for the wars were intertwined with political unrest around the time of the abolition of apartheid in 1994. Commuters were often the target of political violence not necessarily related to the taxi industry itself. Often, the warring factions involved were from opposing political parties, such as the Inkatha Freedom Party and African National Congress.
Between 1987 and 1994 official efforts to deal with the taxi industry were almost non-existent. When violence erupted the government invariably became part of the problem instead of the solution. At best, police behavior during the late-apartheid period was negligent. At worst, the police used their positions of authority to promote rifts between associations and to destabilize black communities. In many areas, the police were implicated in attacks or were in other ways partisan.
However, contrary to many expectations, the cycles of taxi violence fomented during the late-apartheid period did not end with the demise of apartheid. Indeed, unlike other forms of political violence that diminished or disappeared after 1994, taxi violence actually escalated in the immediate post-1994 period.
In the years following the 1994 elections, the Human Rights Committee observed outbreaks of violent taxi wars around Johannesburg, Soweto, the East Rand and Pretoria in Gauteng, around Durban in KwaZulu Natal, in the Eastern Cape around Bisho and King Williams Town and Umtata, and in Limpopo and the North West Province. Although widespread and seemingly random, it was notable that the most persistent conflicts occurred between associations using long distance routes.
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Many of these conflicts were inter-provincial, involving long distance taxi associations such as the Lethlabile Taxi Organisation (LTO), the Federated Local and Long Distance Taxi Association (Felldta) and the South African Local and Long Distance Taxi Association (Salldta). Another defining feature of this increasingly sophisticated form of violence was the mutative nature of the associations and the tendency for smaller associations to change affiliates in favor of the more violent and financially stable ones.
Government Intervention and Recapitalization
The persistence of taxi wars after 1994 forced the post-apartheid government to intervene in the industry. In 1995, the government established the National Taxi Task Team (NTTT) to arrive at a solution to the violence. In 1996, the NTTT's first report recommended the immediate re-regulation of the taxi industry.
The South African government intended for The National Land Transport Transition Act, Act No 22 of 2000 to help formalize and re-regulate the now out-of-control taxi industry. Along with new legislation, the government instituted a four-year re-capitalization scheme that same year. The intention of this scheme was to replace the fifteen-seater minibuses with eighteen- and thirty-five-seater minibuses.
In essence, the recapitalization strategy aims to recreate the taxi industry from scratch, phasing out the 16-seater minibus taxis in favor of new 18- and 35-seaters, and introducing smart card technology to eliminate cash from commuter transactions. However, both processes have run into problems and, seven years later, recapitalization is still a pipedream.
There have been a number of delays in this process. Firstly, the government has been waiting for the taxi industry to form one cohesive association that can speak on behalf of taxi owners; secondly, there is a lot of disagreement from taxi owners as to the nature that the re-capitalization scheme should take. One major sticking point is the possibility of job losses caused by the uptake of the larger buses.
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Between 1997 and 1999 some of the worst conflicts took place at the Rietgat Taxi Rank in Soshanguve and at the nearby Mapobane station. However, by the time of the finalization of the NTTT process in 1998, it was apparent that powerful interests had become vested in the mafia-like use of violence as a means of suppressing competition.
Many taxi associations actively opposed the government’s attempts at re-regulation, sparking an escalation in taxi related violence between 1998 and 1999. Mindful of the apparent failure of its re-regulation plans, in 1999 government changed its focus to restructuring the industry through the recapitalization process.
From the government’s perspective, two issues continue to dog the proposed recapitalization strategy. First, there is the question of who represents the taxi industry. Second, there are concerns over the cost implications of recapitalization.
Santaco, which was formed in August 1998 as an industry-driven response to the government’s failed attempts to resolve taxi violence, has a democratically elected council and claims to represent the industry as a whole. However, shortly after it was formed, a rival association, the National Taxi Alliance (NTA), set up office and it, too, claimed to be the mouthpiece of the taxi industry. Tensions between the two bodies erupted almost immediately and conflicts over representation continue to cause problems for the recapitalization process. The existence of two associations both claiming to represent and speak on behalf of the taxi industry significantly complicates government’s efforts to consult with and enter into binding agreements with the industry.
Arguably of more concern to government are the cost implications of the recapitalization process. As currently envisaged, to off-set the higher cost of the larger vehicles and to ‘sell’ recapitalization to operators, government will contribute 20% of the cost of each new vehicle as a ‘scrapping allowance’ for trading in or scrapping an existing taxi. Government has set aside R4 billion for this purpose, but the taxi industry is not satisfied with this amount, proposing instead that government should provide a 20% up-front subsidy as well as a 30% scrapping allowance.
From the industry’s point of view, the proposed scrapping allowance is not enough incentive to convert to the new system. At a cost of more than R300,000 for a new taxi, meaning maintenance leases of around R15,000 per month per vehicle, operators are demanding an equitable subsidy system, which they calculate should amount to around R10 billion per year. Santaco is also opposed to the larger 35-seater vehicles being proposed by government, preferring a maximum number of 29 seats per taxi, and it does not see the need for every vehicle to have disabled access.
| Aspect | Government | Taxi Industry |
|---|---|---|
| Representation | Seeking one cohesive association | Multiple associations (SANTACO, NTA) |
| Recapitalization Cost | Budgeted R4 billion | Demanding R10 billion per year |
| Vehicle Size | Proposing 35-seater vehicles | Preferring maximum 29-seater vehicles |
| Subsidy System | 20% scrapping allowance | 20% up-front subsidy + 30% scrapping allowance |
South Africa’s taxi industry has come a long way since its inception as a result of deregulation in 1987. The contributions of the taxi industry to employment and to South Africa’s economy are substantial and should be acknowledged by adequate government investment. At present, bus companies get an annual subsidy of R2,1 billion from the department of transport, and rail companies receive R2,4 billion. Yet taxis, which command at least 60% of the total commuter market, receive no subsidy at all.
Recapitalisation has the potential to stimulate further economic activity in the transport sector as well as in the “web of survivalist activity” that surrounds taxi operations, and to create the basis for a stable, safe industry that could stimulate new sources of government revenue as the industry is formalised and brought into the tax net.
A new process of consultation with taxi operators and their representatives, along the lines of the NTTT, is necessary to determine who represents the industry and what their needs are. Government should acknowledge its vital role through adequate investment and by realizing a comprehensive and participatory recapitalisation programme.
Shortly before this publication was printed, government announced that the long delayed taxi recapitalisation programme will be implemented from the beginning of the 2005/6 financial year. This is a significant step and will hopefully assist to create a profitable, reliable and safe industry.
Recent Challenges and Violence
In Cape Town, taxi operators have been linked to a number of arson attacks on passenger rail services and buses, acts of extortion, murder, and violent conflicts between operators. In July 2021, a spike in taxi violence occurred as Conflict between minibus taxi operators CATA and CODETA for control over the B97 taxi route between Bellville and Paarl resulting in the 2021 Cape Town taxi conflict.
A number of attacks on long-distance bus operators in the Eastern Cape, Western Cape and Gauteng by minibus taxi associations were reported in 2022.
One major issue is the industry’s informal nature. Politics also plays a role. Economic concerns add another layer. As a result, billions in potential tax revenue remain uncollected. She also criticised impoundments, saying taxis are sometimes seized for issues beyond the owner’s control.
For businesses that follow the rules, this creates an uneven playing field. The ride-hailing industry is a prime example. In 2022, Uber launched UberGo, a cheaper service, to compete with taxis. Logistics companies face similar struggles.
Meanwhile, minibus taxis operate informally, avoiding taxes and regulations. Yet, while taxi operators benefit, drivers are barely getting by. They also deal with high daily rental fees, fluctuating fuel prices, and zero employment benefits.
SARS can close the tax gap in the minibus taxi industry, but it won’t happen overnight. International examples show the risks of rushing policy. A gradual approach could work better for South Africa. Enforcement alone won’t work.
Offering fuel tax rebates or vehicle financing support could encourage compliance. If done right, this could generate much-needed tax revenue while keeping the transport sector stable.
