The South African taxi industry has experienced large-scale growth in the nineteen nineties and increased its share of the passenger transport market to a majority. However, it tends to suffer from various problems and has been subject to interventions from various quarters, the most recent being the Central Government's recapitalization scheme. The aim of this research was to investigate the perceptions of taxi-owners vis-a-vis the Government's Recapitalization Scheme. More specifically, the objectives were: • To critically appraise the government's recapitalization scheme with a view to assessing its impact on the taxi industry • To establish the economic problems that are faced by the taxi industry in achieving development, thereby empowering the industry and • To identify the capacity-building needs of the taxi-owners. Consequently, while recognizing the notion that 'poor understanding of taxi-owners towards the government's recapitalization scheme has led to resistance on their side'; this research maintains that the taxi-owners' main expectation of the government's recapitalization scheme relates to black economic empowerment. Hence, the view that the government should assist the taxi industry to face the current development challenges. Using both qualitative and quantitative methods, the study focused on short distance taxi-owners under Umsunduzi one municipality in Pietermaritzburg. The main focus of this research was on their perceptions towards the proposed government's recapitalization scheme. Of the 137 taxi-owners, representing 21 Associations, in Pietermaritzburg, the majority of the respondents have positive perceptions towards the scheme. One other concern raised was that the proposed vehicles are too big and that the scheme would impact negatively on some owners who operate on routes where there is only a small number of commuters, as a result the new vehicle will take time to fill with the required number of passengers. The other concern was that some of the drivers and conductors, who are sometimes bread-winners in their homes, were going to lose their jobs. However, they felt that to run their businesses effectively, they would benefit from the government assistance in terms of business skills, education and training. The taxi-owners interviewed, felt that the government is taking too long to implement the scheme and they suggested that the government speed up the process. In addition to the recapitalization scheme, the taxi-owners felt that the government should provide the infrastructure for the scheme, for example taxi ranks with facilities. The taxi-owners believe that conflict within the industry is a threat to their business and they felt that the government should assist them in solving this problem. Findings show that taxi-owners in Pietermaritzburg support the proposed recapitalization scheme. However, some of the taxi-owners are still not clear about the whole process of the recapitalization scheme. The taxi-owners suggested therefore, that the government should communicate more with the taxi-owners in order to implement the scheme successfully. Furthermore, government intervention is required so as to capacitate the taxi-owners by providing them with relevant skills. Infrastructure improvement is required so as to make the taxi business viable. / Thesis (M.A.)-University of Natal, Pietermaritzburg, 2003.