The Market: in taxi ranks and associations

The Western Cape Provincial Taxi Council has some 8 000 members who collectively own 16 000 taxis across the Western Cape. There are six members who each own 40 – 60 taxis but the average taxi owner has three vehicles in his company.

There are 180 000 taxis across the country. Since a taxi lasts anywhere from three to five years, they are worth about R 5 billion a year to the motor industry.

There are numerous models for the way a taxi business operates.

• Drivers can be paid a 25 - 30% commission on their day’s takings.
• They can work seven days a week, six of which they pay the owner R 100 - R 700 per day, and on Saturdays they work for themselves. Saturdays are the busiest days and a driver can earn anywhere from R 1 000 to R 1 500 for the day.
• Lastly, the owner can ask for all the money and pay the driver a fixed salary, usually about R 700 per week.

A driver paid R 100 per day can easily make an additional R 200 over the target he is set by overloading the vehicle. He will pocket this money. In this way a driver can earn R 4 000 a month. Incautious drivers can incur seven traffic violations a month costing themselves R 2 250. Some drivers who are facing massive outstanding fines simply abandon their vehicles at police roadblocks leaving the owner to have to recover their vehicle and pay the fines.

Vehicles are stored overnight at the owner’s home and are collected at 4 am by the drivers. They are then driven for 18 hours at speeds between 100 and 140 km/h. Every day. Maintenance costs are high requiring that vehicles are serviced once a week. Larger operators maintain their own panel beaters and workshops. The smaller operators work together to manage their maintenance.

In addition, owners pay R 40 a day for in fees to their rank and R 50 a day to their association who manage the routes and the safety and efficiency of the rank.

The costs for an owner can be tremendous: about R 450 000 over the lifetime of the vehicle. Over the same period the owner can earn about R 30 000 profit per year per vehicle. With three vehicles the owner is taking in the modest salary of R 8 000 per month.

As an industry, the cumulative economic impact is worth around R 21 billion a year.

It is the largest non-unionised industry in the country. Drivers aren’t particularly interested in a single fixed salary that unionisation and regulation would promise.

Look at the organisational structure required to maintain such a loose structure of vehicles, routes and drivers:

Taxi associations are determined to introduce technology; Electronic Monitoring Systems placed in taxis allow owners to know exactly how much is being earned. Where they have been installed owners have seen a three-fold increase in revenue. Taxis themselves are one of the most visible services on our roads - yet they have yet to organise large-scale insurance deals, spares and parts contracts, or even advertising on the outside of vehicles. How much do you think that this would bump up the value of the industry?

What opportunities can you see:

• Driver ratings and registration services
• Insurance and financial services aimed at the most ambitious and bankable owners
• Marketing and advertising deals both inside and outside taxis
• Distribution services for products going into the townships during quiet periods
• Service and parts deals on vehicle maintenance
• Technological micro-cash payment systems