The African Development Bank (Afdb) and South African Taxi Development Finance have signed a $100 million loan agreement in a bid to finance taxi operators with limited access to finance from traditional financiers.
The loan agreement carries an eight-year tenor and includes a six-month grace period mid-March.
The bank’s funding will 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.
Lorenzo Cardoso, CFO and director of SA Taxi, says this funding is instrumental to its medium- and long-term strategy.
“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,” says Cardoso.
The Bank says the approximately R1.9 billion and an associated facility of R 1.4 billion (about $97 million), will boost industrialisation through improved urban mobility for working-class South Africans.
SA Taxi, part of the Transaction Capital group of companies, finances entrepreneurs who operate minibus taxis that may not otherwise have access to traditional credit. Besides minibus vehicle retail and financing services, SA Taxi provides specialised minibus taxi insurance, vehicle tracking, maintenance, and refurbishment services to taxi operators through SA Taxi Auto Repairs and SA Taxi Protect, its wholly-owned subsidiaries.
While approximately 80% of SA Taxi clients are unbanked and may not ordinarily qualify for the formal banking sector, under the bank’s financing arrangement, “approximately 25% of direct beneficiaries will continue to be women and approximately 22 % will be youth under 35 years old,” according to an AfDB statement.
AFDB’s director of infrastructure and urban development Amadou Oumarou says the bank’s facility is expected to contribute a significant component of SA Taxi’s funding requirements over the next three years.
“The evolving public transportation systems with para-transit minibuses filling the market segment between private taxis and municipal bus transit, is key to achieving South Africa’s economic success and social progress,” Oumarou, said.