BUSINESS MAVERICK: SA taxi industry: Lost in the boardroom?

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It’s time for a quantum leap more inspiring than state subsidies and powerless black empowerment deals in the taxi industry. The key is where the rubber hits the road.

A look through the minibus rearview mirror shows that the reverence of the South African taxi industry for large corporates ranks higher than what is conferred to government.

With such a sizeable shareholding, it is not unreasonable to expect Santaco to have a seat and/or a recognised voice on the board of SA Taxi, Executive Management and Credit Committees. This is where discussions and decisions around bad debts and vehicle seizures take place. Mbalula, through a special purpose vehicle, acquired a 25% stake in the share capital of SA Taxi. The deal, valued at R1.7-billion, was largely funded by Africa’s largest lender, Standard Bank, and FutureGrowth Asset Management, a member of Old Mutual Investment Group. About R1.2-billion came from the former and the latter, and was used to buy 15.7% of ordinary shares in SA Taxi. The remaining R500-million for the 9.

First, it drove the formalisation of the taxi industry to territory untraveled before, giving the financier a better grip on understanding and routing the sector, perhaps even in a much stronger manner than the government. Secondly, it made the sector a key stakeholder with skin in the game. The lingua franca is not spared, even in the presence of primary school-going children and white-collared priests. In a certain taxi rank in downtown Johannesburg, the carrier of the vulgar sonnets is often a chap with a round big belly protruding out of a tight black football club T-shirt.

A fortnight ago, the taxi industry made all sorts of demands and government humbly avoided being drawn into a blood-letting street fight. One of the complaints was the fact that taxi operators were limited to loading 70% of the minibus capacity. While any physical distancing matters during Covid-19, it is absurd to think that a limit of seven passengers in a 10-seater minibus can reduce infection.

As demonstrated by Mbalula, the ANC-led government has no appetite for a gun-fight with the taxi industry on the streets. Of course, the government would win, but it would be another bad spectacle and a political disaster. Due to demand, many minibuses forcefully operated without permits and were subjected to police harassment such as impounding of vehicles. To counter this, the traffic police also took bribes from operators. The then government was also sending mixed messages with the Competition Board calling for an unregulated industry. While permits were ultimately issued for 15-seaters to operate as minibuses, the policy confusion caused more chaos as many unregulated players entered the sector.

 

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