Briefing by SANTACO on Taxi Recapitalisation; Vision & Strategies

NCOP Public Services

25 June 2002
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Meeting Summary

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Meeting report


25 June 2002

Chairpersons: Ms P Majodina (ANC)

Documents handed out:
Taxi Recapitalisation Objectives: Summary Presentation
The Vision, Strategies and Challenges facing South African National Taxi Council (SANTACO) (Appendix)

The President of SANTACO gave a broad overview of the vision, strategies and challenges facing his organization. He also indicated their commitment to the taxi recapitalisation process proposed by government. The Committee expressed its satisfaction on progress made by SANTACO in moving the process forward and pledged its support for any endeavors in this regard. SANTACO argued that the taxi recapitalisation process is a tool which could restore the credibility of the industry. However the organisation requires an operational budget to consolidate its activities process.

The Chairperson welcomed the executive members of SANTACO. She then expressed the Committee's interest in the taxi recapitalisation process and gave the opportunity to Mr Tom Moufhe, President of SANTACO, to begin the presentation.

Briefing by SANTACO President
Mr Moufhe pointed out that the organisation is appreciative of government's active role at its Durban conference during 2001. He also extended an invited to all provinces to second additional members to the executive committee, as required by SANTACO's constitution. Prior to 1994, the taxi industry was lucrative business. But the apartheid government made a deliberate effort to destabilise the industry by an oversupply of permits. He also noted their concern over the continuing trend of providing their competitors, like buses, with permits. The organisation held the view that this trend led to overcrowding within the public transport sector.

It was stated that certain people who were previously involved with the industry wanted to assist with transformation process. He said this would help in providing necessary training to their members for an efficient service to the commuters. Many regulatory bodies like the permit board and provincial taxi organisations were hamstringing the regulatory role of the organisation. Therefore the need for a formalised regulatory body becomes even greater.

SANTACO was dissatisfied with certain press statements made by the Portfolio Committee on Transport. He said that such statements created an impression that SANTACO wanted to be referee and player in respect of the Electronic Management System (EMS). The organisation merely wanted to engage into constructive dialogue with government on this issue. He dismissed the rumours that the EMS device is meant to benefit few to the exclusion of the majority, especially executive members. On the contrary, the device will create economic benefits for its membership, including their employees. Whilst there is a moratorium on issuing of permits in some provinces, the competitors of the organisation continue to acquire licenses. This situation needs to be addressed as it may undermine the economic potential of the taxi recapitalisation strategy.

In summing up, Mr Moufhe reaffirmed the organisation's commitment to the process and urged members to continue supporting their initiatives.

Overview of the taxi recapitalisation process
He then allowed Mr M Ramano to give an overview on the taxi recapitalisation process. Mr Ramano reiterated the organisation's view that the government response to the crisis within the broad taxi industry has been lukewarm. He cautioned that government needed to reconsider its response and rise up to the challenge of transforming the industry. The taxi recapitalisation process is a tool which could restore the credibility of the industry. However the organisation requires an operational budget to consolidate its activities process. He lamented over a lack of funding to ensure speedy progress with transformation of the taxi industry.

The EMS is surely a management tool that seeks to improve service delivery for the commuters, he asserted. The current debacle between government and SANTACO on ownership of the EMS system needs to be resolved through constructive dialogue. However it was doubtless that EMS mechanism is a core business of the organisation.

Objectives of recapitalisation
Mr Rob Gerhard then went on to expand on the objectives of the recapitalisation process.

Mr Gerhard highlighted the current state of affairs within the taxi industry. He remarked that the oversupply of permits continues to exacerbate the crisis within the industry. The fuel prices are skyrocketing, rendering the market less profitable. He noted that the industry serves over 3,7 million commuters every morning. Therefore the taxi recapitalisation strategy is an economic imperative if such problems are to be addressed. However, the key concern for SANTACO is the significant delays in implementing the strategy in question.

It is the view of the organisation that the government's proposed EMS contains certain fundamental flaws. Although the new taxi vehicle (NTV) and EMS are both different strategies, they are linked. The NTV remains an avenue for producing safe and reliable taxi vehicles. The EMS system is purely a collection device. It follows that the collection of revenue through EMS remains the core business of the taxi industry. The approach of government to EMS presumes outsourcing of the industry's core business. The organisation is of the view that such an approach disempowers the taxi owners. The taxi industry is currently collecting the fares and the proposed EMS needs to take this into account. He argued this must be offered to an IT company which can provide the EMS device. The organisation is willing to form partnerships with banks and IT companies which will provide the EMS device. Whereas the NTV process involves government subsidy, the EMS system was largely an issue for SANTACO and its members.

According to SANTACO, the recapitalisation strategy must yield direct benefit to end-users. Therefore the organisation would like to urge the government to reposition its stance on this crucial issue. The objectives of the recapitalisation process cannot be achieved through current position. In addition, Mr Ramano remarked that government needs to refrain from its patronising attitude and engage constructively with SANTACO. The organisation proposes a different model that will ensure capacity-building and better management of the industry. The EMS device will ensure that benefits accrue not only to executive members, but also workers.

A Member commended the organisation for its presentation and commitment to carry the transformation of the taxi industry forward. However, he suggested that Members be afforded the opportunity to digest and interact with the presentation. The organisation was encouraged to liaison with local government and provincial structures in order to formulate an integrated approach.

Mr Raju (DP) expressed his appreciation for the organisation's seriousness in taking this process forward. However he was saddened by the rivalry within the taxi industry which leads to violence and killings in Kwa-Dukuza area of Kwa-Zulu-Natal.

Mr Moufhe replied that the organisation is confused by events in that area but condemns any form of violence. He warned that there are elements within provincial government in KZN, who are fuelling the violence as some are stakeholders in the taxi business. Therefore the events and activities of provinces have to be co-ordinated. He also raised concern at members of the permit board in KwaZulu-Natal who from old order and continue to oversupply permits.

Rev. Moatshe(ANC) said that the efforts of the organisation are commendable and requires support from government. However, he warned that complacency should be avoided as enemies of democracy are everywhere and must be isolated.

Ms Thompson (ANC) said that she was impressed by the organisation for having brought its delegation to Parliament and pledged her support for them.

The Chairperson of the Portfolio Committee on Transport, Mr J Cronin (ANC), appealed to Members, especially ANC Members, not to be defensive and admit that there is a crisis within the taxi industry. He also supported the idea of joint sittings between the Departments of Transport, Trade and Industry and Public Services. The Department of Transport was fully behind SANTACO 's efforts to restructure the industry. However he raised concern over the budget of the Department of Trade and Industry, which does not reflect any allocations for taxi recapitalisation process. He suggested that DTI be approached to explain this situation.

The Chairperson thanked the organisation and extended an invitation to them to brief another joint meeting during the next session of Parliament. She expressed her disappointment that the organisation does not have an operating budget but promised to follow this up with the relevant Departments.

The meeting was adjourned.


Presentation made by the President of SANTACO
On behalf of SANTACO, to the select Committee on Public Services
On the 25th of June 2002 in Cape Town

1. Introductory Remarks

The Chairperson Ms. Majodina, Honourable members of Parliament, Comrades, Colleagues and Ladies and Gentlemen, it gives me great pleasure to be here with my colleagues and members of the executive, to share with you the vision we have for our industry, the strategies we are putting in place to realize this vision and some of the challenges we face as we seek to transform our industry into an even more significant player in the economy of our country and the region.

Transport as we all know plays a very important part in the economy of any country. It is a link between producers and consumers and also a link between people. It facilitates trade, it promotes tourism, it provides mobility and promotes social contact between people and communities. It is in this context that the Reconstruction and Development plan considers transport as a basic need and a right that is essential in improving the quality of life for all the people of the country. The mini-bus taxi industry plays a major part in this process.

It is a story on the one hand of a people's determination to resolve for themselves and their communities the lack of adequate provision of transport for black people by the pre-1994 apartheid based government and their deliberate plan to settle black people far away from the cities in which they work. On the other hand it also became a cause of much pain for many people because of the violence and killings that ensued as many operators and players sought to resolve problems of routes and over supply of capacity. It also became a nightmare for town and urban planners because no adequate planning had been made for terminals in the cities. For other road users the mini-bus taxi became a symbol of reckless and unsafe driving on the road and a nuisance to be avoided where possible.

After a lengthy process of consultation, the industry and government finally gave birth in September 2001 to the South African National Taxi - Council (SANTACO). This new council brought together under one roof all taxi bodies including all the nine provincial taxi councils. These councils and taxi body represents about 170 000 taxi-operators and owners. I am glad to tell you today that SANTACO is the only recognized mini-bus taxi organization in the country.

2. Vision for the Industry

What is therefore our vision? Our vision is to transform the mini-bus taxi industry from operating in the periphery of the transport industry into a major provider of accessible, affordable, safe and secure transport services and products in an integrated manner.

In doing so we will seek to co-operate with other providers of transport services and products to bring in all the modes of transport as part of a common seamless network. We would seek to explore multimodal terminals to make our services more accessible,

In this context Santaco has four primary roles viz. :

2.1 Representative and Administrative role.

In this instance the role of Santaco would be to act as the voice of the mini-bus taxi industry in order to protect and promote the interests of its members. Specific functions would include:

Consultation and lobbying with government at all levels
Co-ordination of the views of its members in the industry and representing its members interest at local, provincial, national, regional and international bodies
Provision of an efficient accountable, transparent and professional administration service 1:0 its members
Registration of taxi members, operators, and taxi associations.

2.2 Regulatory Role

In this instance Santaco will, together with others participate the development of the policy and regulatory framework within which its members have to operate. Furthermore Santaco would cooperate with enforcement agencies in ensuring that its members comply with these requirements. Some specific functions are:

Developing and establishing minimum membership admission requirements
Disciplining members who do not comply with both admission criteria and industry norms and regulations
Participating in the development of policy regarding control of service provision, safety standards, suitability of vehicles, standards of maintenance and qualifications of operators and staff
Participation in authorities which etc.
the committees of the issues permits with respect
2.3 Business and Economic Transformation Role
licensing or routes

In this instance Santaco would like to contribute to the transformation of the mm-bus taxi industry on the one hand and on the other hand the transformation of the transport industry as a whole. Specific functions in this regard include:

-Promoting black economic empowerment in the transport industry
-Changing the perceptions taxi owners and operators and many opportunities in be explored
-Promoting cooperation and multimodalism among the different modes of transport and mindset of the mini-bus to realize that there are other the transport industry that can

2.4 Social Role

In this instance Santaco realizes that its activities affect positively or negatively, present and future generations of people in the societies in which its members operate. Specific functions in this context are:

-Encouraging the manufacturing and use of more environmentally friendly equipment in the provision of transport services which would result in less noise, better utilization of natural resources and less air and water pollution
-Ensuring that its members realize and understand that they are involved in the provision a public service that has significant public interest implications and must therefore act in a responsible manner.
-Educating the public about safety matters
-Providing an ombudsman to deal with complaints about service provision in the industry.

3. Current and Future Programme of Activities

Since the Taxi Summit of September 2001, the Santaco officials have been engaging in the following activities:

3.1 Consolidating the gains made at the Taxi Summit. Meetings are held continuously with various taxi councils and associations regarding matters of common interest.

3.2 Finalization of the constitution of Santaco. Various discussions have been held between the Santaco officials and consultants contracted to help in this matter. A draft constitution has been produced.

3.3 Consultation with key players and stakeholders in the industry. Since September, Santaco has been interacting with various stakeholders to understand what they do and to develop Joint strategies for the future. Meetings have been held with Ministers, MEC's, Transport Agencies, Banks and other role players.

3.4 Finalisation of the Taxi recapitalization programme. The recapitalization is the single most important project that the industry and the government have been engaged in, in the last 3 years. The programme was designed to accomplish a number of Goals viz.:

3.4.1 To replace whilst simultaneously reducing the number of the current fleet of about 200 000 mini-bus taxi's with a more robust and safer vehicle. In order to provide the new taxi vehicle, government invited manufacture to tender for the manufacturing of these vehicles. Three companies have been shortlisted.

3.4.2 To provide incentives to current fleet owners in the form of subsidies and scrap allowance and thereby accomplish two objectives viz. Incentivizing the current fleet to owners to replace the old and less safe vehicles and to bring the mini-bus taxi industry to be on par with the Bus operators who receive subsidies for providing a similar service to commuters. Discussions on the quantum involved are ongoing with the Department of Trade and Industry on the above and with the Department of Minerals and Energy regarding the pricing of diesel.

3.4.3 To create a more robust and effective regulatory regime with respect to all aspects of the mini-bus taxi industry. Discussions are ongoing with the Department of Transport.

3.4.4 To find a more reasonable method of financing the new taxi vehicle. The current structure of financing taxi vehicles is very prohibitive with finance charges as high as 30% and insurance cost somewhere in the region of 20% of the cost of the vehicle far in excess of the average charge of about 6%. Here too Santaco has been in discussions with financial institutions to find an industry solution, which will be mutually beneficial, to all involved.

3.4.5 To bring the mini-bus Taxi Industry into the tax net. In order to do this government issued another tender for the provision of an electronic management system (EMS). Government's intention was that the EMS would not only introduce a more efficient and transparent fare payment system but would also be used to track down each taxi by location at any given time for regulatory purposes. Here too government has shortlisted 4 tenders. Santaco's view, after consulting experts in the field, is that the EMS would only be capable at this present time of providing a more efficient method of fare collection. Pilot projects undertaken by Santaco members showed that revenues could improve quite dramatically if an EMS system is introduced.

Santaco does not believe that the EMS is a suitable means of regulating the taxi industry. It believes that the EMS is an efficient management tool and should therefore be left to the industry to decide who should provide the technology. Santaco would like to use the EMS as means of kick starting its business activities. Who is more suitable than Santaco to provide this service to its members? Discussions are also underway with the relevant government departments to resolve this matter.

3.4.6 In summary Santaco is in favour of the recapitalization programme. The recapitalization programme has enormous benefits for the taxi-owner, the commuters, the public, the government, the vehicle and component manufacturers, the financial institutions, the taxman and the economy of the country as a whole. There are some issues as we have highlighted which have to be addressed before the programme can be implemented.

3.5. Establishment of the Santaco Secretariat. Santaco has also in the past months developed a business plan which amongst other things calls for the establishment of a permanent secretariat which will provide administrative services to Santaco, develop and implement Driver Skills, Safety and Customer Care Programmes as well as programmes designed to change the perceptions of the public towards the mini-bus taxi industry.

3.6. Establishment of the Santaco Business arm. Several workshops have been held to debate and define how Santaco should develop its capacity to be able to generate resources to support its representative, regulatory, administrative, economic transformation and social roles. Santaco has now developed a model, which it believes will be able to help it generate sustainable revenues for its own sustenance, for its members, employees of Santaco and its members and for those who choose to provide it with funds in support of its activities.

This business arm of Santaco is structured in a manner and a way that is transparent and will seek to ensure that the benefit accrue to Santaco as a whole and not just to a few individuals clandestinely selected without the knowledge of Santaco.

4. Challenges and issues facing Santaco into the future

4.1 Maintaining the unity of the industry and as a consequence the peace that currently prevails.

4.2 Implementation of the Taxi-recapitalization programme and the resolution of the EMS, regulatory framework, the scrap allowance and the subsidies.

4.3 Rationalization of the transport agencies at provincial and national government levels (the permit boards, registrar's offices, Cross Border Road Agency etc).

4.4 Dealing with corruption in the issuing of licences and permits. It is Santaco's view that this has resulted in too many licences and permits being issued. Santaco would like to call on government to establish a commission to investigate this matter, to establish how many licences and permits have been issued to date and to recommend a more appropriate system of issuing permits and licences in the future. As Santaco we strongly recommend that there should be a moratorium placed on the issuing of mini-bus taxi licences and permits until this matter has been properly investigated.

4.5 Stopping the implementation of the cooperatives concept as this has failed to deliver benefits to the taxi industry. The only beneficiaries have been the consultants that charge exhortitant fees. The taxi industry has had the unfortunate experience of dealing with consultants who have treated the industry with a condescending know-it-all attitude to the total disregard of the inputs of the industry. This is an issue Santaco want to bring out into the open.

4.6 Government's commitment to Santaco and a unified Taxi Industry. Currently the message coming from government with regard to this industry is confusing. This industry carries between 60% and 70% of black commuters in the country and yet government's response in a number of instances is at best lukewarm. A clearer position from government in this regard is needed.

4.7 Improving Santaco's resources and revenue generating capacity.

4.8 Maintaining a strong and credible leadership of Santaco particularly at this early stage of Santaco's development.

4.9 Transforming the image of the industry into one that is seen by the public and commuters as one that provides safe, secure, accessible and affordable transport services.

4.10 Developing an efficient and professional secretariat.


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