The scene is changing on Cairo's streets. Under a multi-million-dollar project which started in 2009, the city's rickety old black-and-white taxis are being replaced with new models.
Ageing Lada and Fiat cars are being exchanged with either recent models of the same companies or with other cars such as Hyundai and Speranza — the name under which Chinese manufacturer Cherry markets its vehicles in the country. The new cars are mushrooming on the capital's streets.
However, the taxi replacement project, which has continued since the Egyptian revolution, has not been as successful so far as was hoped because of the stagnation in many sectors of Egypt's economy — mainly tourism — in the aftermath of the revolution.
"I believe the project could have been much more successful if we had a good tourism season," said Hoda Ragheb, an Egyptian economics professor.
"What happened after the revolution was a [economic] stagnation, and the taxi drivers, instead of going out into the streets, stayed at home due to the high price of petrol," she told Gulf News. "They are not making the profits they are supposed to make in good tourist seasons."
The Egyptian government announced this month that the project to replace the existing taxi cars with modern vehicles was continuing. The announcement was a response to rumours of a possible suspension of the project because of the "pressures" the finance ministry is under and the economic impact of the situation in the aftermath of the January 25 revolution.
Protests and curfews for several weeks after the revolution have greatly affected the nation's financial situation.
According to estimates by Egypt's Central Agency for Public Mobilisation and Statistics, the economic losses incurred when the crowds thronged Tahrir Square in January for nearly three weeks were about $1.7 billion (Dh6.24 billion).
"Add to that the subsequent losses in export earnings and tourism revenue… Then comes the cost of the ongoing disruption due to strikes and the enforced return of more than a million migrant workers fleeing war-torn Libya," wrote a report published earlier in June in Newsweek magazine.
"The big story, however, is capital flight. Egyptian businessmen complain of soaring crime in the cities, the difficulty of carrying out normal transactions, and, above all, nerve-wracking political uncertainty," the report added.
Other press reports said the country's foreign exchange reserves fell by as much as a third in the first three months of the year. According to some estimates, nearly $30 billion has left Egypt since the onset of the Arab Spring. The difficult financial situation has led the finance ministry to seek forbearance for taxi drivers from Egyptian financial companies for three months during the first half of the year.
"The reaction to the delay was very good," said a source at the Finance Ministry. "Anybody could feel it when they used the ‘white' taxi."
New taxis in Cairo are dubbed "white" taxis, while old ones are called "black" taxis because of the dominant colour of the cabs. Old ones are mainly black cars with white marks, while new cabs are mainly white with black stripes.
Replacement deal
So far, nearly 35,000 taxi cars have been replaced in Cairo, Finance Ministry officials said.
In the Greater Cairo area, which comprises Cairo and its suburbs, there are 47,773 taxis older than 20 years and 34,370 older than 30 years, official reports have pointed out.
Presently, according to Egyptian laws and regulations, any car older than 20 years will not be issued registration papers and owners of old taxi cars were given time to replace their cars according to the taxi replacement plan.
The project, which began in April 2009, is part of a UN-encouraged environment-friendly action plan.
According to the "deal" offered by the Finance Ministry, owners of old taxis can hand over their cars to the ministry for 5,000 Egyptian pounds (Dh3081.5) The amount will be considered as a down payment for a new car. A piece of land was designated as a wrecking yard, and a factory was built to recycle the parts of the old cars.
Dr. Nabil Rashdan, former adviser at the Finance Ministry, explained that the ministry is the party that is carrying the financial burden of the incentives given to taxi drivers — estimated at the beginning of the project at $236 million.
Buyers are exempt from sales tax and customs fees — both are estimated at 12,000 Egyptian pounds per car. Taxi drivers will also get spare parts at less than 40 per cent of market prices, and will be given priority when they send their cars for servicing at the participating companies' service centres.
Several car companies that assemble cars in Egypt are taking part in the project, as well as several Egyptian banks. The Finance Ministry has reached a deal with the banks to give loans to taxi owners at an interest of six per cent, with a repayment period of five, six of seven years. The interest rates are considerably lower than the norm in Egypt, which ranges between nine and 12 per cent.
While the project started in Cairo, it is expected to be implemented in other major Egyptian cities, like Alexandria and Ismailia.
Until the project goes beyond the greater Cairo area, taxi can travel to other major cities without obtaining prior approval from the traffic department, as was the case in the past with "black taxis".
New taxi cabs can travel to any city across Egypt, officials said. This fact, they added, is among the most advantageous of the new system. Tourists can hire a taxi with its driver for several days of travelling among the cities of Egypt.
"The new cars are more comfortable, better and cleaner," said Ali Mohammad, a 52-year-old driver of a Hyundai taxi. Mohammad has replaced his old Fiat with a new Hyundai and is paying a monthly instalment of 1,400 Egyptian pounds over a period of five years.
Another advantage of the new cabs is the meters installed in them, which takes away the need to haggle over the fare. Many Egyptians said there was "no reason" for passengers now to fight with drivers over the cost of trips. The "greed" of some drivers was blamed for many disputes between them and their customers. People recalled accidents which took place when passengers were engaged on the streets in fights over the amount of money they had to pay for a taxi ride.
Meter rules
"Now the (new) taxi driver has to turn on the meter. If he doesn't, the customer can easily complain to the police," said a source at the Finance Ministry about the positive characteristics of the project.
Other elements include the insurance on the new cars where in case of accidents, drivers are eligible to get new vehicles. The instalments for the insurance policies were set between 30 and 50 Egyptian pounds a month after the Finance Ministry reached an agreement with the insurance companies.
However, taxi drivers complain that among the main disadvantages of the project is the fact that the ministry has the right to confiscate the car.
Melad Izzat, a driver in his fifties, still feels "a void at the loss of his old car, a 1982 Fiat that was replaced with a 2010 car from [Chinese manufacturer] BYD".
For so many years, "the Fiat put food on our table", he told Gulf News. "We needed no one because of it."
While Izzat, nevertheless, feels happy with his new vehicle, he is continuously troubled by the thought of not being able to repay the monthly instalment of 1,368 Egyptian pounds of the loan for 60 months.
Sabri Mohammad, another taxi driver, shares the same concerns. Today, he is paying 500 Egyptian pounds for his 2010 Lada. But "in the past, no one would ask me to pay anything". Previously, Mohammad owned a 1976 Fiat.
"It gave us what we needed, and I made it [like a] full-option car," he said with a twinge of regret.
In response to the drivers' complains, officials at the Finance Ministry explained that banks were reluctant at the beginning to offer a low interest rate to the drivers out of fear of defaults.
"Let us assume that 15,000 drivers [half the number of the new cabs] couldn't pay the instalments. This is a huge amount of money that will affect the banking sector as a whole," an official said.
"The Finance Ministry entered the project as a guarantor to both the banks and cars companies. It played the major role in the negotiations and later posed as the guarantor party in case any problems arose," he added. Nearly two years after the project started being implemented, officials feel satisfied with the impact it has had.
This impact has started becoming visible several months after the project was put in place.
Pollution in Cairo's streets has decreased by 22 per cent; the percentage of traffic accidents attributed to mechanical flaws has also dropped by 6.5 per cent; and the number of drivers fined for blocking traffic has fallen by four per cent, official reports show.
Financially speaking, Hoda said the project of replacing the taxis has not been profitable for the state. After all, "it is a project with a service motive, and usually any project of such a nature doesn't have high returns".
