Commuters are relying even more on taxis – as government pushes mass transit options

Business Insider SA
Taxi commuter travelling in the rain in Johannesbu
  • The Department of Transport wants more South Africans to use trains and buses as their mode of transport, but commuters are relying even more on the minibus taxi industry.
  • Bus use has declined by 28% since 2013 and train use by 64%, while taxi use has increased by 16%.
  • The department has ambitions to overhaul the country’s passenger rail system and expand the bus rapid transit network.
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Despite the government’s push for the public to utilise alternative transport options, South African commuters are increasingly relying on the minibus taxi industry for transport.

Taxi financier, Transaction Capital, which reported its six-monthly results to end-March on Wednesday, said the Covid-19 pandemic had helped the taxi industry to remain relevant. In contrast, other modes of transport, most notably busses and trains, struggled.

The company said more commuters were using taxis at levels exceeding pre-Covid numbers.

"With bus and rail services floundering during the Covid-19 pandemic, this shift is likely to continue," the company told investors.

Over the past eight years, commuter use of bus and rail services has shown a sharp decline, with more people choosing to use taxis because of convenience and accessibility, according to data published by StatsSA in the National Household Travel Survey.

Over the period, bus use has declined 28% and trains by 64%. Taxi use has increased 16% during the same period.

The company’s SA Taxi Division, which funds and insures the taxi industry, grew gross loans and advances by 16% to R13.2 billion amid strong demand for new and pre-owned vehicles. The demand from taxi operators was in line with pre-pandemic levels and was higher than supply, the company said.

Transaction Capital said the pandemic proved and highlighted that the taxi industry, which provides 15 million trips a day, is indispensable.

The government is trying to change that and has been working on interventions to increase other public modes of transport.

Its major plans include expanding the bus rapid transit (BRT) network and overhauling the rail system.

One plan is to shift more passengers from road to rail. It is looking at reforming South Africa’s rail system and making it more effective, efficient, and competitive.

In February, transport minister Fikile Mbalula said the department is working on a new rail policy and legislation to support and facilitate investment in rail infrastructure, modernisation, and technology. It is also working on safety and economic regulation and wants to facilitate private sector participation.

The department also implemented a "re-imagined taxi recapitalisation programme" that will focus on taxis and buses. Part of its plan is to expand its integrated public transport networks in 10 cities, expected to be expedited within the "context of the revised technical norms and standards for the bus rapid transit (BRT) system," Mbalula said.

"National Treasury and the Department of Transport, through the Cities Support Programme, is working closely with cities to improve implementation capacity," he said at the time. 

In its financial results, Transaction Capital projected that the industry is likely to feel pressure as a result of increasing fuel prices, this may spur operators to push up taxi fare for passengers.

The industry, which only pays R5 million in corporate tax, may also soon be compelled to comply to a new tax regime.

Finance minister Tito Mboweni in a written response to question said Treasury is concerned by tax avoidance by the taxi industry.

“SARS has commenced a process of developing a compliance plan for the taxi industry to encourage voluntary compliance and potentially propose the appropriate tax regime specifically for the industry. This work will be concluded in the 2021/22 financial year,” he said.    

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