The Federal Transport Authority (FTA) has registered 2,700 cab owners in Addis Abeba within two months, since it issued the directive calling cab owners in the city to form share companies and import duty free vehicles that will replace the blue & white taxis.
The authority said the directive is not mandatory, but open for all who want to take part voluntarily.
Since the directive was issued on May 18, 2015, the authority has been announcing the arrangement and the original deadline which was on Wednesday, July 29, 2015, through public media. Following that, 54 companies have been formed to import specific models of vehicles duty free, according to Eskindir Yimer, coordinator of the registration of the companies and Ethics and Complaints Process manager at the FTA.
“Although the deadline passed on Wednesday, we have been registering until Friday,” he said. “We will also register the companies indefinitely until the authority sets another deadline.”
The top priority of the government in this case is solving public transport problems in the city, and the reason for the requirement of establishment of companies is to have a clear follow up procedure and to facilitate the sector’s growth, said Kassahun Hailemariam, director general of the FTA.
To buy the duty free vehicles the companies formed by the cab owners need to get legal personality and deposit money in blocked accounts.
The ‘when’ question regarding importation has not yet been answered. However, the specifications of the vehicles, which will be imported, have already been approved together with the directive.
Accordingly, the vehicles that are to be imported need to have global positioning systems (GPS), odometres, radio communication systems, and will be controlled from a central station by an area network. The vehicles should also have more than 1300cc engine and four to seven seats, and their models have to be 2015 and later.
Some cab owners around the American Embassy told Fortune that they have finalised preparations to form a company. One of them, Fekadu Kumsa, said that he did not even know anything until a friend brought the information to his attention.
“I do not think that they will let us out of the market if we do not form companies,” he said. “We did not have the information to form the companies until recently.”
But Eskindir, the coordinator of the scheme at FTA, said the information was transmitted through radio, TV and newspapers.
Although the new 2015 model cars will be in the market in the current 2015/16 fiscal year, the existing ‘blue-ladas’ will also be on the roads of Addis Abeba after being required to install odometers which is an instrument that indicates distance travelled by a vehicle and cost.
“There will not be double standards in the operation of the cabs,” Eskindir says. “We will set tariff per kilometre, and all taxis will need to install odometers.”
But as the new vehicles will be preferable, there is a high chance of the existing ‘blue-ladas’ being pushed out of the market, according to Kassahun.
Yitayal Belay, a cab owner who has formed a company with 49 other taxi owners, said mobilising money for the blocked accounts will be difficult because the owners of the vehicles spend their money on a daily basis.
At this point the Authority has given a duty-free scheme only for 1,000 vehicles for all 54 companies. Upon arrival the Authority will inspect the vehicles to make sure that the specifications are in accordance with the standards the authority set.
The authority had also issued a directive on May 19, 2015 for the city’s minibus, midi bus and bus owners to form share companies and to import duty free buses with loans from banks. The new directive does not extend any loan arrangement for the cab drivers’ companies.
The directive for the importation of these vehicles was announced the same time when minibus, Higer midibus and Alliance Buses were allowed to import mass transport vehicles with a 70pc loan arrangement.
“There is nothing that forbids the existing ones to join the market if they meet the standards,” said Kassahun, who also indicated that registered taxi companies will be able to raise the funds they need to import the vehicles. Priority to form the companies has been given to those already in the taxi business.
The directives for the formation of metre taxi and mass transport companies are intended to push the traditional taxi transport out of the market and replace them with mass transport vehicles and metre taxis with four to seven seats.
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