Sometime in June, in the year 2017, around the time I started writing this article, I had been following events about a taxi strike that had happened. If you’re wondering why a taxi strike in South Africa would be a big deal, the short answer is: A taxi strike has the potential to bring the whole country to a standstill. 70% to 80% of South Africa’s population is dependent on public transport, more than 60% of which, is dependent on the taxi industry. This equates to over 15 million daily commuters  and an annual turnover of more than R40bn.

This strike was based on:

  1. The price of the minibus taxis used in their order of business which has more than doubled over that past 10 years and
  2. The high cost of finance/interest rates they are charged when purchasing these vehicles

With the exception of really good negotiation or, at the very extreme, just not purchasing the vehicles, I’m having a hard time thinking of something that can be done about the first item in the short term. I have, however thought long and hard about how aspects of item number 2 can be resolved in just a year.

Mass action is definitely a requirement in resolving this issue. A strike makes a statement. When we don’t move people and lock down roads, a lot of people don’t make it to work, everybody feels the pain so they have to listen to us.

I believe however that, in this case, a strike, is exactly the form of mass action that makes a difference but very little impact and long lasting change.

At the end of it all, taxi owners are still paying very high interest rates (20% plus), taxi owners are still paying over 5 years, the equivalent of 2 taxis, the profits coming out of all of this are still made by shareholders who are only interested in making profits.

The mistake here is thinking that the taxi industry needs another entity to finance them.  This is a dependency that should not exist. if we shift the perspective from “we need this entity to finance us” to “how do we finance ourselves”, this problem is half solved.

Now, heres the thing that will make the thing go away. If all taxi’s contribute towards funding a taxi finance wing in the association, they can determine their own interest rates and they can use volumes to negotiate prices for the taxis they finance. the cherry on top, is that they will control one of the most important parts of their value chain.

Done with the theory, now lets run some numbers:

  • Let’s assume there are 100 000 taxi’s belonging to the taxi association in South Africa.
  • If each taxi contributes R10 each day they are at a rank towards the fund, we would collect R1M every day,
  • Assuming a taxi costs R500K, enough to finance at least 2 taxi’s a day.
  • If this goes on for a week, we would have collected 7 M worth of finance capital, enough to finance at least 14 taxi’s.
  • If this goes on for a year, we would have collected more than R350 M, and enough to finance over 700 taxi’s.
  • All things being equal, without injecting any more capital, the number of taxi’s financed and the proceeds from financing could grow exponentially.

Because this is all our money, we use it in our best interests. A low interest rate, puts money back in our pockets as individuals and paying interest on borrowed capital allows us to further finance ourselves, in turn, growing our business. More money in our pockets means we can pay off loans quicker or, that we can buy more vehicles. Buying more vehicles increases a demand in finance. More finance business, means more money off interest to again grow the business.

Soon enough, it all becomes a cyclic flow of money !

Now, my fellow comrades, doesn’t the above completely change the narrative of the entire taxi industry? Doesn’t it present another option to solving the problems that exist but shouldn’t? Should we not be applying the same pattern of thought to re-imagine the world and create new narratives in all spheres of life?

I dare you to!

In case you are wondering where the figures in my opening paragraph came from:

  1. The Minibus Taxi and Bus Services Industry in South Africa 2016
  2. The SA taxi market context

Categorised in: A whole new world, Social