South Africa’s minibus taxi industry will, most likely, see a reduction in fare revenue of between R100-million to R200-million a month, or R300 to R600 per taxi a month, owing to the Covid-19 lockdown, says senior strategist and economist Alistair Maxwell, who works with the Ubunye Group.

“We’ll see a smaller volume of people [using taxis], driven by the number of people that could be out of work.”

Potential job losses owing to the pandemic are estimated at around one-million in South Africa.

Taxis are also not allowed to travel at full occupancy.

In addition to this, Maxwell also estimates reduced fleet repayments on taxi loans of around R46-million during this period.

However, with fuel as the industry’s main cost driver, it is also possible for the industry to spend an estimated R2-billion to R3-billion less on fuel this year, notes Maxwell, especially as the petrol price will, in May, be at its lowest level since January 2016.

“So even if fare rates and the number of trips are reduced, we expect that on a per taxi basis, we could see a vehicle being R200 to R800 better off than prior to Covid-19. So it’s not all doom and gloom.”

Maxwell says this provides the minibus taxi industry with the opportunity to possibly reduce fares.

He adds that the South African economy is likely to contract by between 3% to 10%, “depending on who you speak to”.

The South African economy is currently losing R12-billion to R16-billion a day owing to the lockdown.

Around 20% of companies have started lay-offs, with the remained “starting to reduce wages, I imagine”, notes Maxwell.

Rand-exchange rates are also “the worst they have ever been”.

Looking ahead, Maxwell says he expects tough economic conditions over the next 18 months, with no-one really sure what to expect after that.

Because of the high percentage of small businesses closing down, resulting in a number of job losses, there will be increased pressure on government to deliver services going forward, as a reduced tax base means reduced tax revenue, adds Maxwell.

He also doubts whether the corporate market will be able to absorb any new labour in the medium term.

There is also the potential for large increases in inflation, interest rates and the petrol price in the short term, once the global economy recovers.

Some positives are that inflation is at its lowest point since 2005, with the oil price at its lowest point in the last 21 years. The repo rate has also been cut substantially, with another decrease expected later this year.

Maxwell believes the Covid-19 pandemic could provide the opportunity for South Africa to become export focused.

He adds that the necessity to earn an income may drive local innovation, with a number of new “businesses popping up”.

He says the minibus taxi industry could, for example, also speed up the move to uberisation.

* Maxwell spoke during a Transport Forum webinar.