The South African taxi industry: A story of entrepreneurship

The story of the South African taxi industry is one of entrepreneurship and grit – and closely tied to the history of apartheid. Despite a turbulent history characterised by conflict – with a Nationalist government, between competing owners, and more recently with the current government over subsidies – the taxi industry now plays an essential role in fuelling economic activity.

Over two-thirds of South Africans rely on minibuses as their primary mode of transport. Minibus taxis get the majority of South Africans to and from work, to schools and universities, to shops and to social activities. The industry supports the growth of black entrepreneurs while providing hundreds of thousands of jobs.

From as early as the 1930s, black entrepreneurs responded to the need for transport created by the apartheid government’s efforts to locate black people on the outskirts of towns and cities, far from jobs, shops and other economic activity. The industry has grown in a haphazard, highly informal and sometimes illegal way, yet has proved surprisingly efficient and responsive to commuter needs.

The vibrant minibus taxi industry is indeed “a black entrepreneurial powerhouse inadvertently catalysed by South Africa’s racist and repressive apartheid state” (James, 2018).

A hundred years of grit and strife 

Almost a hundred years ago, the legal transportation of black South Africans by black people was made almost impossible. The 1930 Motor Carrier Transportation Act made it illegal to transport goods or passengers for profit without a permit – and for a black person in South Africa at the time, it was virtually impossible to acquire such a permit.

This hostile environment continued for over 50 years under National Party rule, as the government imposed laws restricting black economic activity. Despite the discriminatory conditions, the minibus taxi industry was set in motion in response to the demand of black South Africans for public transport.

After the industry was legalised and deregulated in the late 1980s, it grew rapidly to become the heart of South Africa’s public transport system. An efficient public transport system is a core enabler of a country’s economy and is critical to development.

The backbone of South Africa’s transport industry

Given its largely informal nature, it is difficult to estimate the size of the minibus taxi sector. According to statistics from the Department of Transport, around 130 996 taxis had formal operating licences in 2018. In 2017, the South African National Taxi Council said there were more than 200 000 minibus taxis doing business in South Africa, with an estimated R90 billion in annual revenue.

The majority of commuters using public transport rely on minibuses. An average of 5.4 million public transport trips were made daily in 2013, of which two-thirds (3.65 million) were on minibus taxis. A fifth of public transport trips were on buses and a tenth on trains, according to the Institute of Race Relations. This accords with various estimates that the industry accounts for around 70% of all public transport trips in South Africa, making it the backbone of South Africa’s public transport system.

Generating jobs, fuelling the economy

While providing a vital service to millions of South Africans, the minibus taxi industry also provides a large number of jobs. Besides affording the opportunity for entrepreneurs to establish their own businesses, the industry is responsible for an estimated 960 000 jobs – three direct jobs per taxi and ten indirect jobs per vehicle, according to the Department of Transport.

The hustle and bustle of around 2 600 taxi ranks across the country provides jobs for queue marshals and hawkers, food stands and other informal retail businesses. Some areas have fare collectors who travel in the vehicles – known as gaatjies in Cape Town. Mechanics, vehicle parts suppliers, maintenance, finance houses, bookkeepers and car washers all form part of the minibus taxi industry’s value chain. Taxi operators are said to buy over 800 million litres of petrol and five million tyres per year.

South Africa’s minibus taxi industry is part of the “informal economy” and operates on a cash-only basis. Despite providing the majority of South Africans with public transport, the sector receives no government subsidy.

Most operators have formal licences, although there are still some that operate outside the formal industry. Taxi operators belong to taxi associations which control the fixed routes that they are allowed to drive. Taxis don’t operate according to a schedule, but tend to begin their routes at taxi ranks and stop to drop off or collect passengers wherever and whenever along their route.

Minibus taxis often feed into formal public transport services such as the rail and bus networks, to transport passengers the “first and last mile”. The fares they charge are set by the regional taxi councils.

Employment provider and income generator

The taxi industry is a valuable national asset, providing transport to millions of South Africans and jobs to a large majority of people. Born out of a need created by an oppressive apartheid regime, the taxi industry has grown into a public transport powerhouse, providing a flexible, inexpensive transport service. During the apartheid years, the industry gave black entrepreneurs one of the few opportunities available to earn a livelihood and build their own businesses. This was in some cases the springboard entrepreneurs needed to acquire capital to venture out into other enterprises.

In this book, we showcase the stories of some of the women and men who have earned a living and built businesses from minibus taxis. They have lived through the turbulent history of the industry, relied on taxis to feed their families and fund their studies, and in some cases, passed on the operation to their children. For many, starting as a driver was the stepping stone to creating a viable business that transformed them from employees to employers.

In the pages to follow, we will meet relative newcomers to the industry, postgraduate student Cabangile Mdluli and teacher Thabiso Goitirwang – both of whom have invested in taxis as a side hustle to supplement their income. After decades in the taxi industry, 82 year old Morriat Tsentse and 80 year old Boni Hlumbane are set to retire, having lived through some of the taxi industry’s most turbulent and difficult times. They have fond memories, however, as they recall how the taxi community used to care for and support each other through hard times.

Nau Phaswana relives the exhilaration of driving tourists around Johannesburg when South Africa hosted the World Cup in 2010. Magai Hendrik Williams thrives on the daily interactions with passengers as he drives between Philippolis and Colesberg. Elias Mbete, despite being shot twice, has continued to earn a living from his taxis and build a future for his wife and two children.

These are the men and women who have built the taxi industry into the heart of South Africa’s public transport network.