SA Taxi signs loan deal of R1.9bn with African Development Bank
The funding will support SA Taxi’s strategy of enabling taxi operators to replace old vehicles with newer, safer and lower-emission minibuses
SA Taxi, the country’s taxi financier has signed a $100m (about R1.9bn) loan agreement with African Development Bank (AfDB), in a move to strengthen the unregulated taxi industry and boost industrialisation.
The parties announced the agreement on Wednesday evening, saying the funding would support SA Taxi’s continued investment in the taxi industry and its strategy of enabling taxi operators to replace old vehicles with newer, safer and lower -emission minibus taxis.
SA Taxi is a subsidiary of JSE-listed group Transaction Capital, and provides finance and insurance to minibus taxi operators, who would otherwise not have access to finance from traditional financiers.
About 80% of the SA Taxi clients are unbanked and may not ordinarily qualify for the formal banking sector services. A 25% stake of SA Taxi is owned by the SA National Taxi Council (Santaco), SA’s largest taxi organisation, which it bought for R1.7bn in 2018.
SA Taxi CFO and director Lorenzo Cardoso said the loan, which carries an eight-year tenor and includes a six-month grace period, will be instrumental to their medium and long-term strategy. A tenor is the length of time until a loan is due.
“The tenor and size of the transaction will contribute towards the continued success of SA Taxi to empower SMEs and create opportunities that ensure the sustainability of the minibus taxi industry,” said Cardoso. “We are proud to be an internationally recognised African business.”
AfDB director of infrastructure and urban development Amadou Oumarou said they were proud to be supporting SA Taxi in its “pioneering efforts to positively shape the ecosystem of public transportation services in SA”.
According to the loan agreement, about 25% of direct beneficiaries will continue to be women, while 22% will be youth under 35 years old.
SA Taxi says it finances 31,543 of the estimated 250,000 minibus taxis on SA roads and that up to 90% of vehicles it finances are manufactured in the country, a move it describes as a “powerful boost to industrialisation”.
The minibus taxi industry is one of the sectors severely affected by the Covid-19 outbreak that has infected 3,635 and killed 65 in SA.
According to the lockdown regulations, the minibus taxis are only permitted to transport essential service workers from 5am to 10am and again from 4pm to 9pm. They have also been ordered to reduce the number of maximum passengers to 70% of their licensed capacity.
This prompted Santaco to launch a R3.5bn fund on April 7 to cushion the blow of the Covid-19 pandemic on the industry, which transports 16.5-million passengers a day.
Santaco has appointed auditing company SkX and two law firms, Ncube and De Klerk Mandelstam, to manage the SA Taxi Industry Coronavirus Relief Fund.
The fund is aimed at helping 100,000 queue marshals; 150,000 taxi drivers; and the taxi associations’ support staff who work in their offices, “whose livelihoods have been seriously threatened by this virus”.
Santaco president Phillip Taaibosch referred questions to Themba Mazibuko, CEO of TaxiChoice, Santaco’s business wing, who refused to comment.