Issued by: Department of Transport
24 November 1999
OVERVIEW:
Developments in the public transport sector encapsulate many of the positive energies that abound in development in KwaZulu-Natal at present. Today, the Department of Transport faces a public transport scenario that is streets ahead of the chaotic, unregulated public transport sector we inherited in the province in 1994.
Since the early 1990's, public transport (taxis, busses and rail) have been responsible for the daily movement of 80% of people in the province. There was little government regulation and control of public transport. Consequently, low profit margins, coupled with weak institutional capacity to provide support to the sector had resulted in violence and low standards of service for commuters.
Between 1994 and 1999, KZN-DOT instituted a public transport programme that single-handedly addressed the following:
The cornerstone of the highly successful economic development process for the taxi industry is found in the Department of Transport's commitment to establishing taxi co-operatives in our major urban centres.
Taxi co-operatives combine the financial clout of geographically clustered taxi associations into powerful bargaining bodies that access social and economic investment. Coupled with this was the development of an education and training programme targeted at both taxi operators and drivers. 800 Taxi operators have gone through the programme, with 1200 drivers receiving advanced driver training. This programme is going to be ongoing with government support for the next three years. The private sector will gradually be drawn in through their social investment and promotional campaigns.
While the Department of Transport has managed to root out violent conflicts within the provincial taxi industry, there are still isolated incidents of violence that are being dealt with in two ways:
All of this is intended to address the following strategic objectives faced by all government department's in the province, namely:
These factors take into account government's challenge of finding ways to grow the provincial economy through real economic empowerment for those who were the most disadvantaged by apartheid. We in KZN-DOT are addressing this challenge through the involvement of taxi operators and emerging entrepreneurs in the subsidised commuter service industry.
EMPOWERMENT:
It is well known that the separate development policies of apartheid lead to segregated living and working spaces for the majority of our population. The apartheid economy depended heavily on state subsidised public transport, and taxi operators and bus drivers became the most disadvantaged players in this system. It is for this reason that KZN-DOT has targeted these groups as the main beneficiaries of its empowerment programme. The key elements of this programme are:
Joint ventures have been set up with established bus companies
Examples of this are Clermont and Ikhwezi. In both cases, the taxi industry and workers have positioned themselvesas major partners in the process of re-tendering for existing bus contracts.
In effect, this amounts to a multi-million rand cash injection to the historically-marginalised sectors, which were totally denied the benefits of subsidy in the past.
Large contracts have been broken up for SMME development
Large contracts that were up for review have been broken up and sub-contracted to workers from the bus industry. Examples include KZT workers in Pietermaritzburg and Ladysmith, and Washesha Bus Service workers. The department has a programme that will build sufficient capacity in these groups so that they can go on their own as established bus companies, tendering for contracts in the normal way.
PUBLIC / PRIVATE PARTNERSHIPS:
It is KZN-DOT's view that state owned bus companies should incorporate massive empowerment in their privatisation processes. The Department of Transport has therefore supported the provincial taxi industry as it has positioned itself to become a major player in the public transport industry through the establishment of the Umthombo Investment Company.
Umthombo is a powerful financial holding company with the taxi industry as its majority shareholder. The company is a vehicle facilitated by the department as part of the restructuring of the taxi industry. Its objectives are the following:
It is a structure created for the taxi industry and driven by them but facilitated by us as the department. Its success will advance our public policy objectives. The interim Board of Directors of the Company consists of 10 members. Seven of this come from the taxi industry. Two represents the technical team which helped structure the business and one from the department.
This Board is playing a caretaker role until a permanent Board has been appointed. The permanent Board will consist of representatives from the 14 Taxi Co-operatives presently registered in the province and the various business partners. Our role as the department will be discussed and determined at that stage.
Over the past three years government has spent R13.8 million on minibus taxi projects. This has involved mainly facilitating the building of technical and management capacity within the taxi industry.
Five sectors for investment by the company have been identified. These will enhance its capacity to be a major player within the public transport sector. In each of these sectors, Umthombo has launched and set up a company with strategic partners form the private sector. These are:
In addition to this, a transportation division has been set up which will facilitate the integration of taxis within the bus sector through the provision of financial and technical solutions.
INDUSTRY RECAPITALISATION:
All the above strategies have informed a national programme for the economic restructuring of the taxi industry.
The challenge, as stated earlier on, was to find a national solution that could address the problem of shrinking profitability and the ageing taxi fleet. To respond to this, the national Departments of Transport, Trade and Industry, Mineral and Energy Affairs and Finance designed a programme to recapitalise the taxi industry. key aspects of this programme include:
With this programme it became immediately obvious that synergy existed between what we have packaged in the province over the last two years and the national recapitalisation programme.
We have therefore been involved every step of the way and Umthombo is recognised as part of the solution in practically realising the recapitalisation programme.
This is an important boost for our provincial initiative and will contribute immensely to the growth of the provincial economy and the growth of the provincial transportation sector.
DEMOCRATISATION OF THE INDUSTRY:
Part of the restructuring process of the taxi industry in the province is the creation of democratic associations, accountable to their members and the communities that they serve. This will ensure that decisions taken at a local and regional taxi association level enjoy the support of all operators in the province.
KZN-DOT has therefore initiated a programme of reconstituting associations through an election process. We have lead discussions with the leadership of the taxi industry to finalise a democratisation plan. This plan will be formally announced in due course. The Department of Transport has already finalised a standard constitution, which each association will adopt and will be the basis for the re-election of constituent structures within the industry. We want to complete the democratisation process by the end of February 2000. Part of the plan will be an intensive consultative process with the operators on the ground. Five roadshows will be conducted during the month of January 2000.