Taxing Alternatives: Poverty Alleviation and the South African Taxi/Minibus Industry

Mercatus Policy Series, Policy Comment No. 3

40 Pages Posted: 3 Nov 2007

Date Written: February 2006

Abstract

The taxi/minibus industry in South Africa serves approximately 65% of the South Africans using public transportation and has been a wellspring of black entrepreneurial activity. Yet, this industry suffers from a legacy of illegality - thanks to apartheid-era laws that restricted economic opportunities for black South Africans. It also suffers from continuing problems of violence and from safety concerns.

In order to address these problems, the South African government created the Taxi Recapitalization Programme (TRP). The TRP requires taxi/minibus operators to trade in 16-seat minibuses and purchase larger, new vehicles. However, this policy will not address the underlying problems that continue to provoke taxi violence.

In order for policies that address taxi violence to be as effective as possible, they must focus on official corruption and establishing mechanisms that determine the access to taxi routes and ranks. This can be achieved by creating secure, defendable, and tradable property rights over routes and ranks. Unless these policies are implemented, violence is likely to continue.

Keywords: Africa, South Africa, cartel, regulation, entrepreneurship

Suggested Citation

Boudreaux, Karol, Taxing Alternatives: Poverty Alleviation and the South African Taxi/Minibus Industry (February 2006). Mercatus Policy Series, Policy Comment No. 3, Available at SSRN: https://ssrn.com/abstract=1027017 or http://dx.doi.org/10.2139/ssrn.1027017

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