Government to give South African taxis R1 billion in assistance

Transport minister Fikile Mbalula says that government will give the taxi industry a once-off R1 billion ‘ex gratia’ payment to help buffer the impact of the country’s coronavirus lockdown.

Speaking at a media briefing on Friday (19 June), Mbalula said that this is not compensation for loss of revenue due to lockdown restrictions, but rather forms part of general government assistance through available resources.

“This relief must be looked at through the long-term view of the opportunity created by Covid-19 pandemic to achieve (the) long-term sustainability of the industry through formalisation and ultimately subsidisation,” he said.

“We need to subsidise the taxi industry. With none of the rail services operational, all people are dependent on the taxi industry to get to work. We must understand subsidisation in this context.”

Mbalula said the relief will be available as follows:

  • Relief will be accessible to all taxi operators, irrespective of affiliation;
  • Relief will be focus on legal taxi operators with valid operating licences;
  • Relief will be based on each permit rather than ownership;
  • Support will cover owners, drivers, rank managers and other taxi association workers.

Mbalula added that government is debating changes to the country’s lockdown regulations to allow for 100% capacity in taxis.

However, he noted that this proved to be a controversial topic and that a decision will still only be made in the coming week.

According to SA Taxi owner Transaction Capital, approximately 69% of households used minibus taxis in 2019, up from 53% in 2003. This equates to around 15 million commuter trips daily, handled by over 250,000 vehicles.

Transaction Capital says that South Africa has 250,000 taxis operating nationally, primarily in Gauteng (30%), and KwaZulu-Natal (21%). Each minibus averages 6,000km per month, or 72,000km a year.

According to Transaction Capital’s report, the average price for a Toyota HiAce – most commonly used as minibus taxis in South Africa, making up 88% of all taxis – increased by 4.2% in 2019 to R451,600.

Fuel costs, meanwhile, have climbed 10% (for diesel), over the same period, while taxi fares have averaged only 7% higher in KwaZulu Natal, and 6% in the Eastern Cape (with no fare increases in other provinces).

Despite operating within this constrained environment, taxi operators remain resilient, the group said, taking home profits of more than R25,000 a month.

Over shorter-distance routes (like a 23km trip between Soweto and Johannesburg), operator profits are around R25,000 a month, while longer distance trips (like the 595km trip between Joburg and Durban) can lead to profits of around R37,000 per month, the group said.

The minimum monthly profit recorded by the group was R6,000 a month, as per its credit profiles on loans on book.

Read: E-tolls are costing South Africa in more ways than one: Mbalula

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Government to give South African taxis R1 billion in assistance