Commercial Culture Is Needed In South Africa

The best way to foster a commercial culture and accommodate commerce is to allow the trade of services, such as e-hailing, to operate as freely as possible...

Before implementing the policy positions necessary for a prosperous state – such as free markets and private property protections – the culture of that society must first change. Without this cultural transformation, the prospects for successful change become increasingly dim.

The recent controversy involving e-hailing operators and minibus taxi drivers highlights the importance of cultural awareness and its role in shaping policy responses. Across the country, some minibus taxi operators have made public areas – such as taxi ranks and parking spaces near malls – inaccessible to e-hailing drivers. This tension culminated in the murder of an e-hailing driver in Soweto, with the community suspecting the perpetrator to be a taxi driver.

E-hailing is a method of requesting a ride or taxi, typically through a smartphone application. It has rapidly gained popularity worldwide, disrupting traditional transportation models such as metered taxis in Europe and minibus taxis locally. This disruption, coupled with decreased profitability for the older models, has led to instances of force and violence in South Africa as a response to this market shift.

E-hailing services are in demand by citizens and are voluntarily used. Therefore, preventing service providers from operating in certain areas arbitrarily designated by minibus taxi operators and their associations constitutes a serious injustice to society at large. It unjustifiably restricts the natural freedom of choice afforded to every individual.

The state’s response to the use of force and violence by minibus taxi operators has been lackluster, to say the least. Demonstrating a clear misunderstanding of its responsibilities, the state has failed to impose any sanctions on the minibus taxi industry, which has perpetuated the violence. Instead, it has focused on drafting regulations for the e-hailing industry.

Under the authority of the National Land Transport Act, the minister, pursuant to Section 8, has the power to enact regulations necessary for the implementation of the Act. This authority served as the basis for the introduction of new regulations for e-hailing drivers.

The Ministry of Transport has gazetted new regulations that include requirements such as specific markings on e-hailing vehicles, obtaining an operator’s permit or certification, geographic restrictions on drivers like the routes found in the minibus taxi industry, and the installation of panic buttons, among other compliance measures.

The new regulations aim to align the e-hailing industry more closely with other modes of public transport. However, the state fails to recognise that e-hailing has gained popularity in South African townships with relatively low incomes precisely because the other public transport systems regulated by the state are dysfunctional. By imposing regulations, the state is undermining the one form of transportation that the market has willingly supported and chosen independently, making it less efficient and more like the other, less effective modes of transport.

The unregulated or loosely regulated nature of e-hailing is often viewed negatively and seen as an issue that the state must address. However, this perspective overlooks the fact that e-hailing’s effectiveness in meeting market demand stems from its freedom from burdensome regulations.

This does not consider the fact that, economically, as demonstrated by the Economic Freedom of the World Index, fewer regulations generally lead to a stronger economy. Therefore, the South African government should consider reducing regulations on other public transportation systems, such as e-hailing, to allow these systems the opportunity to innovate without excessive state interference.

Regulations that limit the geographic area in which an e-hailing driver is allowed to operate are not only misguided but also potentially harmful due to their economic impact. The e-hailing model is incompatible with the specific route-based regulatory framework used by our state. This approach is untenable at a theoretical level, even before considering the practical challenges of implementation.

These regulations were enacted after communities complained about the taxi industry terrorising them. One must wonder why the state considered the victims of terror among e-hailing drivers to be the ones deserving of state attention, while the industry – supposedly regulated by the state – is known to disregard the rule of law in other instances beyond the e-hailing issue.

This seemingly confused response to the problem stems primarily from a lack of commercial culture in certain segments of our society. This is why the businessmen who run the taxi industry see nothing wrong with using violence to settle market disputes, and why our state enacts the regulations it does.

Our state, along with the voters who elect its leaders, fails to recognise the long-term and collective harm caused by transforming a profession that once only required a serviced car to enter one that now mandates owning a car, installing a panic button, and paying for registration fees. Additionally, these regulations restrict industry operations, thereby negatively impacting profitability.

Beyond the effects of regulations and the intentions behind them, the e-hailing issue should reveal how misguided our leaders – those elected by us – truly are. Commerce, the free exchange of goods and services, is what drives prosperity. For it to flourish, the culture of a people, as reflected in voting patterns and civic engagement, must be supportive of it.

The best way to foster a commercial culture and accommodate commerce is to allow the trade of services, such as e-hailing, to operate as freely as possible, like the status quo before regulations were introduced. At the same time, it is essential to protect these service providers from violence or coercion by other members of society.

Until South Africans internalise this mindset to some extent, incidents involving the use of force in industries such as e-hailing or the construction mafia will continue. Meanwhile, the country’s economic prospects remain bleak, further pushing us down the path of serfdom we are already on.

Zakhele Mthembu, BA Law LLB (Wits), is Policy Officer at the Free Market Foundation.