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A Call for Innovation in South Africa’s Taxi Industry – IT News Africa

Simon Osuji by Simon Osuji
June 24, 2023
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A Call for Innovation in South Africa’s Taxi Industry – IT News Africa
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Mbavhalelo Mabogo, Quickloc8 founder & CEO
Mbavhalelo Mabogo,

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Being a taxi owner in South Africa is no longer a profitable business. Contrary to popular opinion, the taxi industry is still the most reliable and preferred mode of transport for 60% of commuters. The reason for this preference stems from the simple fact that a taxi goes to more places, more often and is cheaper. For this reason, South Africans love them. Statistically speaking, a taxi is still a much safer mode of transport than buses or trains and the number one preferred mode of transport for women and children.

The industry has been dealt several severe dents in the few decades, from rising costs of buying taxis (R560,000 for a carcass), the rising cost of petrol, high-interest rates (as high as 28%), and commuter levels eroded by new market entrants such as e-hailing, employees working from home, the Bus Rapid Transport (such as Rea Vaya, My Citi, etc). The challenges facing the taxi industry in South Africa are complex, and calls for technological innovation.

Real Time Technology

Real-time technology can assist taxi owners in monitoring the return on assets (ROA) or return on movement by plotting daily taxi performance in a way that is easy to understand. The same data can be used to monitor and enforce route compliance, the source of most conflicts and animosity in the industry. This tool of accountability can assist taxi owners in acting quickly when a driver is off route or driving at unsafe speeds that endanger commuters and the taxi.

Not only can real-time technology be used at the taxi owner level, but also at the route office and at the association level, where it provides a bird’s-eye view of the performance of all the taxis at the association level. The daily data gathered by the associations can be used to assess supply and demand, analyze movements during peak/off-peak times, total kilometers driven, and monitor drivers’ performance. This technology approach to managing day-to-day operations can be used to pick up inefficiencies, wastage (petrol, tires, and maintenance), and identify opportunities for the associations. Besides improving operations, associations can use the data to negotiate for more permits from regulatory bodies and provincial departments. It can also help them legalize their members and reduce the costs of impoundments that taxi owners often face.

Artificial Intelligence to Monitor Activity

The adoption of cutting-edge technologies, such as artificial intelligence (AI) cameras in taxis, is crucial. This technological advancement brings numerous benefits to taxi owners, drivers, and passengers alike.  These advanced cameras have made significant progress and can analyze the influx and outflow of commuters, providing owners with daily reports on taxi performance, including the number of commuters transported and revenue generated.

Digital Record Keeping

Currently, taxi owners are paying interest rates as high as 28% on their loan capital for their taxis, resulting in average monthly repayments of around R18,000 per month. Keeping detailed and digitized data records of the taxi’s revenue is crucial as this data can be used together with other machine learning-enabled credit scoring algorithms that companies such as Creditais are currently developing to replace or supplement the often-biased legacy lending metrics.

Finally, by using technology, the taxi industry can reduce waste and inefficiencies and change the negative “high-risk” perceptions that result in unfavorable payment and financing terms. The industry needs to turn things around, and as things stand, the quickest way to address these immediate and pressing issues is the adoption of technology from the bottom up.  Adopting technology can help rebrand the industry and draw them back, and their return comes with additional revenue. This industrial technological shift can offer taxi owners a lifeline and runway while they wait for the government to make up its mind and provide them with meaningful assistance.

By Mbavhalelo Mabogo, Quickloc8 founder & CEO

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