“You can’t start a business with a contract,” observed B.T. Gumede, the driving force behind the Sihlangene Bus Company. “You need money for tires, diesel, buses. The bank said, ‘Hey guys, we don’t trust you, but we have someone we can trust overnight’” Mr. Gumede turned to the Shared Interest and Thembani visitors, saying, “Thank you. Without you we couldn’t start our business…And we look forward to going ahead.”
With a R10,000,000 Shared Interest guarantee, and some collateral of their own, B.T. and Florence Gumede spearheaded the formation of a new bus company, with a five-year loan of R26,800,000 from ABSA Bank. The new company was awarded a contract for a route previously served by a white-owned company – enabling the Department of Transportation to take a step toward transforming the sector.
The directors registered the enterprise as “Sihlangene” (in Zulu— “We have come together”). The company is the combination, arranged by the Department of Transportation, of two existing taxi cooperatives (Nhlambani and Mbonambi) and a bus company (Trans-Tugela) to serve the marginalized rural area in KwaZulu-Natal in which they all operate.
The “coming together” of taxi associations is a second dimension of the industry’s transformation initiative. After discriminatory laws dating back to 1930 made it nearly impossible for blacks to own and operate taxis, 90 percent of taxi owners could only operate illegally. Nonetheless, operators of color in the informal economy took initiative and risk to respond to township and rural areas’ urgent need for transportation. By the 1970’s, the government-owned busses and trains (a near-monopoly of public transportation) failed to serve large numbers of black would-be commuters. With the growing demand for service, black-owned taxis soon became a multi-billion rand industry that today transports an estimated 68 percent of South African commuters.
Facing extremely difficult conditions, lack of capital and fierce competition, the industry grew into a rough and tumble network of operators who struggled to compete with state- and white-owned bus companies, and each other. These conflicts, often fueled by local police, pitted driver against driver, owner against owner, in “taxi wars” in many parts of the country – particularly on long-distance routes. In 1987, with “deregulation,” black-owned taxis could operate legally, but the sector remained divided, dangerous and under-capitalized. After 1994, government introduced a number of programs to enhance taxi safety and efficiency.
Despite continuing tensions and safety concerns, a number of government and community initiatives are showing success– particularly when combined with access to capital. In an effort to reduce conflict, and share the benefits of a government-subsidized bus company, Sihlangene was structured as an equal three-way partnership between the Gumedes’ Trans-Tugela Bus Company and the two taxi cooperatives. The collaboration has been successful, particularly since most of the taxi owners know each other, and come from the same communities – and often the same families. “When we have disputes,” explained Mbongeleni Ntenga, “they end in talking, not fighting. We sit and engage on issues. We solve problems.”
Initially, the cooperatives’ members thought that the government contract would come with finance. “Only the paper came,” recalled Mr. Ntenga. And so the new owners then began to look for funds to launch the business. “Even banks are scared of taxis,” remarked Mr. Gumede. “It is not easy to get a loan. The bank does not find it easy to trust you. I asked my banker whether it was because of my color. ‘Yes,’ he answered, ‘But don’t say that.’”
In November 2016, with a 40 percent - guaranteed loan, Sihlangene was able to purchase 24 buses and a new automated ticketing system to boost efficiency and controls. No sooner did Sihlangene begin operating from its base in Richards Bay, than community members requested more service. The buses are a lifeline for these sparsely populated areas – especially for workers and students who struggle on a daily basis to secure safe, reliable transportation. Sihlangene went with them to the Department of Transportation and obtained an agreement to rent four additional buses. During its first three months the company grew rapidly, increasing its full-time employees from 41 to 55.
The company’s success is further bolstered by a government subsidy of R2,150,000 a month—from which penalty fees may be deducted While other bus companies operate locally, Mr. Gumede noted, “Only we have bought our own buses.” In five years, he envisions doubling Sihlangene’s fleet to 50 vehicles. Mr. Ntenga added, the community’s response was “very positive… They saw people from their area owning and driving the buses.”
Women Take the Wheel
A third dimension of Sihlangene’s transformation is its increasing gender diversity. The two cooperatives have a total of 60 member taxi-owners, 35 of whom are women. Owning and operating a taxi is not typically a woman’s occupation in South Africa. But the women members of the two coops are participating with strength. Some inherited their taxis from husbands who died. Others have purchased them themselves. Looking to the future, Florence Gumede smiled as she affirmed, “Women are power.”