Impact of the taxi recapitalisation strategy on the expenditure patterns and poverty levels of taxi-mode commuters in the Vaal / by Daphney Nontuthuzelo Dlamini-Mokhele

• Main Author: Mokhele, Daphney Nontuthuzelo
• Published: North-West University 2009
• Subjects: Measures; Impact; Taxi; Recapitalisation; Strategy; Expenditure patterns; Poverty levels; Commuters; Vaal; Regulation; Industry
• Online Access: http://hdl.handle.net/10394/2288

The minibus taxi industry serves approximately 68% of the South Africans using public transport. It is credited with supporting black South African communities by providing a more accessible alternative to the public transportation. It has also been a primary activity for black entrepreneurship since the early 1970s up to the present. It also provides a strong example of enterprise serving as a platform for creating employment and for fighting poverty. However, its growth and prosperity is hindered by a number of challenges, some of which emanated from the past apartheid laws that restricted black economic policies. Some are related to the industry, such as continuing problems of persistent violence, at times resulting in death and safety concerns. In an effort to address these challenges, the National Department of Transport published a Taxi Recapitalisation Strategy (TRS). The TRS is not only about the replacement of old vehicles with new and safe vehicles, but presents the government with an opportunity to transform, empower and regulate the industry. The key pillars of the TRS are the scrapping of old taxi vehicles, the introduction of new and safe vehicles, effective regulations, empowerment of the taxi industry and law enforcement. This study measures the impact of the TRS on poverty levels and expenditure patterns of the taxi-mode commuters of the Vaal, situated south of Gauteng. It focuses mainly on the few townships identified; where the taxis are the most frequently used mode of transport. It has been shown that regulation of the taxi industry through the implementation of the TRS would lead to a rise in taxi fares and other consequences for the owners and users (passengers). Subsequently, this would result in increased levels of poverty and a change in expenditure patterns of most of the Vaal households. Although the levels of poverty have decreased in the townships of the Vaal as compared to 2003, the severity of poverty still remains in some households. Using the Household Subsistence Level (HSL) as the household's respective poverty line, 45.4% of the households have an income that is less than 50% of their HSL amount, indicating severe poverty. The headcount index was determined at 0.59 in 2006, indicating that 59% of households live below their poverty lines. The poverty gap index was determined at 0.45, reflecting that households lack on average 45% of income to attain a level equal to their poverty line. The impact of increases in taxi fares would then directly have a negative effect on the average standard of living of the Vaal households. To measure the impact of the TRS on expenditure patterns, affordability levels of the households of the Vaal were considered. The three scenarios used (taxi fares increase by 10%, 15%, and 20%) showed that the average monthly transport costs would rise by 9.9%, 10.3% and 10.6% respectively, following the implementation of the TRS. If user-targeted subsidies could be offered that would result in the taxi fare reduction, it could have an impact on expenditure patterns and poverty levels of the Vaal households. Applying the impact assessment model to households living below their poverty lines in the Vaal, increased government subsidy would supplement the existing incomes of these households. For instance, if a subsidy of 20% on taxi fares is offered, that is to make the taxi fare lower than the current fare, the poverty gap would decrease from 0.45 to 0.31 and the headcount index would be reduced from 0.59 to 0.48. This would reflect that households lacking income to attain a level equal to their poverty line is reduced by 14%.This suggests that the recapitalisation of the taxi fleet which is supported by a taxi fare subsidy is critical to ensure the provision of safe, affordable and efficient minibus taxis. In the case of even higher government subsidies, reduction in the cost of transport through government subsidies may supplement the existing income of households to such an extent that the headcount indexes for the population decreases even more. The study therefore concludes that poverty alleviation and improved standards of living among the Vaal households can only be achieved if appropriate subsidies which may lead to the reduction in the taxi fares can be provided. === Thesis (Ph.D. (Economics))--North-West University, Vaal Triangle Campus, 2008.