Government plans to subsidise taxis in South Africa

The South African government plans to move forward on its plan to formalise South Africa’s R50 billion taxi industry – including the introduction of subsidies, says transport minister Fikile Mbalula.

Addressing a South African National Taxi Council (Santaco) conference on Tuesday (10 May), Mbalula said this will include an element of self-regulation from drivers and owners.

“We remain on track to achieve formalization of the industry both in terms of entrenching democratic practice from association level to the national council and in terms of commercial activity.  We can no longer afford protracted conversations but should have a singular focus on implementation.

“The key commitment we have made in this regard is to enable partial self-regulation where Santaco plays a key role as a custodian of the standard constitution and code of conduct with a mandate to regulate conduct of members and associations.”

Mbalula added that regulating the industry remains an important cornerstone of the transformation process into a formal part of the economy.

“Unlocking economic opportunities and enabling the industry’s economic participation in the mainstream economy remains an important part of transforming the industry into a formidable economic player. We have been unequivocal in our commitment to introduce a subsidy policy that recognises the role of the taxi industry and benefits it as such.

“The process is at an advanced stage and Santaco must engage with the draft policy document before this is finalised for implementation. We anticipate placing before cabinet the draft policy in June 2022 for consultation.”

Subsidy 

Answering a written parliamentary Q&A in September, Mbalula said that before any subsidy is introduced, the wider taxi industry will need to take steps towards formalisation.

“The department is finalising the development of a public transport subsidy policy that seeks to locate subsidisation of the taxi industry within the wider, multimodal subsidy policy as part of the public transport funding reforms,” he said.

“A number of different subsidy models are being explored for the taxi industry. The draft policy discussion document is now being consulted with key stakeholders.”

“Globally, direct public transport subsidy applies exclusively to formalised public transport services. Therefore, subsidisation of the taxi industry is dependent on the formalisation of the sector, and this is proving to be a major challenge,” he said.

Data presented by Mbalula shows South Africa’s taxi industry now has approximately 200,000 vehicles employing in the region of 300,000 drivers and at least another 250,000 people, who play the role of either working as washers, vendors or taxi marshals within the industry.

“We estimate that this industry generates in excess of R50 billion in revenue annually, with a market share of over 68%, ensuring that commuters reach workplaces, institutions of learning, healthcare and centres of economic activity and social amenities.

Despite the enormous market presence of the taxi industry, it is yet to harness its economic prowess and positively contribute towards increasing the transport sector contribution to the country’s gross domestic product,” he said.


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Government plans to subsidise taxis in South Africa