The paratransit sector as a partner in change

By Nico Mc Lachlan

The biggest challenge faced by the paratransit sector in the cities of the global south is the self- reinforcing view of the public and those in positions of authority of a sector built on lawlessness, exploitation, overtrading, criminality and a propensity to resort to violence as a means of dealing with competition.

Eduardo de Vasconcellos

Until such time as a more virtuous cycle of positive experiences can be established, the potential of the paratransit sector to be accepted as a leading player in the urban mobility systems of the future, remains doubtful.

The paratransit sector is the dominant mode of transport in most cities of the developing world, but we are not breaking the commonly held negative views about the sector- to do that the owners, drivers, conductors and support staff involved in the sector will have to find ways of improving their value offer, behaviour and the image of the industry, and will have to learn how to work with those in positions of authority. At the same time the professionals and decision -makers responsible for public transport planning, regulation and contracting will have to adopt open minds about the potential of the paratransit sector to reform and to assume its rightful place in the urban mobility systems of the future.

In South Africa the impact of COVID – 19 on travel demand and Minibus Taxi revenues have retained the spotlight on the industry. We however still need to be convinced that the current discourse between government and industry is correctly framed and it would be useful to continue exploring alternatives to the rather limiting operating subsidy focus of the current discourse.

Building blocks for enabling partnerships between government and the paratransit sector

Partnerships work because of the notion of complementarity – the exploration of complementarity in turn leads to the building of trust. 

It is important to consider the roles and responsibilities the government should assume in pursuing and enabling partnership with the minibus taxi (MBT) industry in SA and more generally with the paratransit sector in Africa?

Supporting Infrastructure

Government should provide the MBT industry with supporting Infrastructure. The MBT industry and the passengers that it serves require decent rank and interchange facilities that meet passenger safety, security and comfort requirements as well as operator efficiency requirements. In addition to decent passenger facilities the MBT industry also requires depot and overnight staging facilities. Over the past decade we have seen the construction of world class depot and staging facilities for BRT buses that today serve a fraction of the demand that the MBT industry serves, yet the unstated policy position appears to be that government has no responsibility in respect of supporting infrastructure for the mode that carries the bulk of public transport users.

Regulation and contracting

Government has a principal responsibility to regulate supply in the public transport arena and to set and apply barriers to entry. Chronic conditions of over- supply are neither in the interest of the passenger, nor in the interest of the operator or the authorities. South Africa has one the most advanced regulatory systems in the developing world, yet we appear unable to maintain a proper balance between supply and demand and our failure in this regard feeds a doom loop of destructive and often violent competition. The time has come for a new deal to be brokered between the government and the MBT industry, a deal in which the industry assumes co-responsibility for the regulation of growth in supply as well as regulation of competition.

Under stable market conditions, the government should encourage business improvement and formalisation processes and consider the contracting of compliant MBT entities as a means of integrating the taxi industry into public transport improvement programs.             

Reducing the cost of capital

A pilot TOC formation project undertaken in Cape Town highlights the fact that the cost of capital (re- fleeting) is the single biggest factor impacting the sustainability of a well- run taxi operation. In a context where the Government wishes to see greater compliance, participatory approaches to regulation and better service delivery from the taxi industry, government and its financing partners will have to consider their role in alleviating the pressure brought onto the industry by the high cost of capital.

Access to technology

The MBT industry like any other transport operator should be enabled to tap into the efficiency gains to be derived from access to modern technology. There are at least three areas in which the government could guide and assist the industry when it comes to choices about and approaches to the acquisition of technology, namely cashless fare systems, fleet management systems and passenger information systems. The introduction of technology in these three areas hold enormous potential for the transformation of the industry and the government should consider the appropriate roles it could play in this regard.     

Access to meaningful elements of the value chain

Attempts at providing access to the public transport value chain to date appear to have either yielded limited results or to have been captured by the influential and connected few in the industry. Access to value chain opportunities should be driven in a ground – up rather than top- down manner and should start with aspects of the demand and supply model that both (local) government and the industry have control over. The provisioning of facilities management services (FMS) at major public transport facilities comes to mind and with the inevitable shift to cashless fare systems, the monetisation of data should be explored as worthwhile elements of the value chain.      

Building of operations, general management and good governance capacity

Government has a duty to build the capacity of the MBT industry. In this regard I would like to highlight three focus areas, namely the building of operations management capacity, general management capacity, with specific reference to business planning, financial management and human resource management, and finally good governance – the ability to run a business that is economically, socially and environmentally sustainable and accountable to both its shareholders and its broader stakeholder community is an essential part of building a credible taxi industry.             

In the spirit of partnership formation, it is also important to consider the roles and responsibilities the MBT industry should assume. Allow me to, in conclusion, put forward the following changes the taxi industry will have to face up to:

  • Willingness to change dated and inhibiting practices and in this regard start by looking at the limitations of the owner target system and the fill -and -go operating model.
  • Barriers to entry – the industry will have to assume responsibility for its role in the better balancing of supply and demand, and in doing so will have to break with those elements of the political economy of the industry that feeds the ‘’oversupply machine”;     
  • Breaking with patronage systems that benefit only a few – if the presentative structures of the industry start serving as the gateway to value chain patronage systems, they no longer serve the purpose for which they were designed.  At a time when government is sending strong signals about breaking systemic corruption, the MBT industry should follow suit and break the vicious cycle of jockeying for position only to secure a place at the feeding trough;     
  • Exploring the benefits of scale and corporatisation – the atomised and individualistic nature of the industry is one of its structural weaknesses. The industry needs to learn how to capitalise on the benefits of scale and establish the legal capacity to contract and be contracted;   
  • Finally the MBT industry cannot operate as if there is no tomorrow, the industry must invest in the building of internal capacity and the development of succession models at the ownership, management and operational levels of the industry.          

Article adapted from keynote address for the Southern African Transport Conference 2021



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