South Africa has started gaining from its well structured mass transit system from international development agencies.
Business Hilights gathered that the multimillion financing will support the Company’s growth plans and initiatives to support Small and Medium Enterprises (SMEs) in the country’s mass transit segment
Latest grant is coming from the African Development Bank as it approves over US$100 million in loans to SA Taxi Development Finance Limited, a wholly owned subsidiary of SA Taxi Finance Holdings Proprietary Limited, a vertically integrated business platform that provides a comprehensive financial and allied services offering to minibus taxi operators.
The minibus taxi system accounts for about 69 percent of all public transport trips in South Africa. The financing will support the Company’s growth plans and initiatives to support Small and Medium Enterprises (SMEs) in the country’s mass transit segment.
The approved financial package comprises of a senior loan of US$10 million and an associated facility of ZAR 1.4 billion (about US$$97 million) with an 8-year tenor, including 6-month grace period. In addition, the board also cleared the proposal to undertake a syndicated loan with commercial banks through the Bank’s A/B loan structure. The asset-backed financing operation is expected to attract funding interest from international commercial banks for the benefit of South Africa’s mass transit sector.
Just like many African countries, mass public transportation is key to South Africa’s social and economic system. The demand for commuter transit minibuses is strong, as approximately 69 percent of public transport commuters opt for this transport mode (compared to 20 percent for bus and 11 percent for train). The country’s 16-seater minibus taxis do approximately 15 million commuter trips per day, which services nearly 40 percent of the population. SA Taxi is an important service provider to South Africa’s minibus commuter transit segment, which is commonly referred to as its “taxi” industry.
SA Taxi currently has 30,000 customers who have financed on average 1.2 minibuses. While approximately 90 percent of SA Taxi clients are unbanked and may not ordinarily qualify for the formal banking sector, under the African Development Bank-led financing arrangement, approximately 20 percent of direct beneficiaries will continue to be women and approximately 16 percent youth under 35 years old. The financing to the mass transit financial solutions provider supports the Government’s Green Transport Strategy. The Bank’s facility is expected to contribute a significant component of SA Taxi’s funding requirement over the next three years.
Since 2008, SA Taxi’s financing activities have supported the creation of an estimated 72,000 SMEs, and more than 130,000 direct and 220,000 indirect jobs in a country with an unemployment rate of nearly 27 percent, according to Statistics South Africa. The Bank’s funding will ultimately support SA Taxi’s continued investment in the taxi industry and its strategy of enabling taxi operators to replace old vehicles with new, safer and lower emission minibus taxis improving this critically important component of South Africa’s integrated public transport network.
