Transaction Capital’s results a sobering window into SA’s economic plight

The ultra-poor have become poorer; the rest are on the rebound
Image: Karel Prinsloo, AFP via GettyImages

We learn from Transaction Capital’s results for the year to September 2020 that 77% of unsecured loans across the economy are overdue, as are 23% of vehicle and mortgage loans.

These should be frightening figures to anyone paying attention, and show the devastation caused by the lockdown. With SA’s unsecured lending valued at just over R300 billion, and mortgage and vehicle loans at R1.4 trillion, that’s a sizeable proportion of financial sector assets now in some level of distress. Part of this would be accounted for by the repayment holidays extended by the banks at the start of the lockdown in March this year.

What’s also alarming is the plight of the ultra-poor, defined as those households living on less than R8 000 a month.

Figures from University of Cape Town’s Liberty Institute of Strategic Marketing show the number of ultra-poor adults has climbed to 77% from 56% of the population in just over three years.

Transaction Capital’s business – focused around financing and servicing minibus taxis, debt collection and more recently the used car business, following the acquisition of 49.9% of WeBuyCars – withstood the Covid lockdown with some dignity. For the five years to September 2019, the company delivered blistering compound annual growth of 23%. That trend was interrupted by the events of the last few months with a 66% drop in core headline earnings per share.

Read: Transaction Capital swoops on WeBuyCars

Though the poor have been hardest hit by Covid, they are also least likely to qualify for credit.

Non-performing loans may increase

Transaction Capital’s CEO David Hurwitz says collection rates on non-performing loans are back to roughly 90% of pre-Covid levels. “At the start of the lockdown, the banks were primarily focused on providing debt relief to customers. We saw very little evidence of customers being handed over to their legal departments, but we expect to see an increase in non-performing loans coming out of the banking sector.

“Our experience is that there has been a rather sharp recovery in customers’ ability to service outstanding loans.”

There are 27 million credit-active consumers in SA, of which almost 40% or 10 million had impaired credit records in June 2020.

Transaction Capital’s Consumer Credit Rehabilitation Index (CCRI), which measures South African consumers’ propensity to repay debt, had deteriorated 3.4% at September 2020 compared with the prior year. This was the largest annual decline since the CCRI’s inception in June 2017.

“The 2.2 million jobs lost in the second quarter of 2020 alone, will escalate economic strain in the consumer sector with concomitant reductions in credit extension and retail sales,” says the Transaction Capital results statement.

The economic outlook for the coming years gives little cause for optimism.

SA Taxi, WeBuyCars

“The recovery of South Africa’s fragile economy is in any event likely to lag that of the global economy, with GDP only expected to reach 2019 levels by 2024, says the results commentary for the 2020 financial year. “Although SA Taxi, (Transaction Capital Risk Services (debt collection) and WeBuyCars are well placed to return to their long-term track records for growth, further sharp downturns in socioeconomic conditions in South Africa remain the primary downside risk to our expectations for growth and returns in the years ahead.”

Transaction Capital is arguably the largest taxi-focused business in the country, providing finance, insurance, auto repairs and loyalty programmes to taxi operators. Hurwitz told Moneyweb the R1.8 billion purchase of a half-share in WeBuyCars was executed with speed when it became clear that South Africans faced with lower disposable incomes would switch from purchasing new to used cars.

This was a prescient move: WeBuyCars increased monthly sales to more than 6 250 in the last three months, up from 5 900 at the start of the year.

This will make a substantial contribution to profits going forward.

The SA Taxi division offered repayment holidays to taxi owners at the start of the lockdown, and longer relief measures to some 3 000 taxi clients engaged in long-distance travel, which had been prohibited from operating in the early months of the lockdown. The cost of this relief was about R400 million.

Listen: CEO David Hurwitz on Transaction Capital’s results, and the R400m payment relief to taxi clients

Here are some of the highlight from the results:

  • SA Taxi’s gross loans and advances book grew 14% to R12.2 billion, comprising 32 890 loans. The number of loans originated was 27% lower than last year.
  • Debt collection revenue in SA and Australia grew 14%. Collection levels in the second half of the year were only 15% lower than the pre-Covid benchmark.
  • Impairment of loans and advances increased to R836 million for the year (from R322 million the prior year).
  • Profit for the year was R203 million (down from R787 million for the prior year).
  • Core headline earnings per share declined 66% to 44.3 cents.
  • Core pre-provision profit increased 10% to R1.8 billion
  • The group expects to return to double-digit growth in the coming financial year.



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Transaction Capital’s business finances SA’s biggest killer and most unregulated industry, theminibus taxis industry.

The entire sector needs to be investigated,Covid-19 woes notwithstanding.

People are enslaved by debt, more debt is not the solution!
UBI is the Solution with a Ban on Debt.

Remove all taxes, replace with a Single Transaction Tax of 18+1% (5% for government administration, 7% for law and order, 6% for Maintenance and Development and 1% for debt forgiveness with a ban on all new debts)

Remove all welfare programs and subsidies including Housing; Electricity; Water; Healthcare; Schooling;

Replace all of this with Universal Basic Income of R6,200.00 person over the age of 16

Privatise all State Owned Enterprises.


Good all round points & thumbs up from me!

(Debt means people live above their means. One can forgive having debt on a house or business, as appreciating assets….but debt on anything else which are depreciating assets, is a big no-no)

And yes, simply taxes into a consumption tax, which is more fair.

“..ban on debt”

Admirable but how? The UBI will never be enough for most as anything free is never appreciated

@Leah there is a difference between debt and loans. Whist I believe that debt should be prohibited I knowledge that Loans are critical for a modern economic model.

Only a person/entity who can present equity or an asset should be entitled to a Loan to the maximum of that value. The lender would use their own discretion to value the persons assets.

Agreed with @Michael, those living expenses debts are unnecessary. This would put an end to that, someone will think twice before they use their car as collateral for a credit card or personal loan.

The debt forgiveness program would be needed and start with the most vulnerable people in society then work it’s way up.

Globally we are sitting on a $60 Trillion debt bubble and just passing it on to future generations.

@ PurgeCoin :

R 6200.00 per person above age 16 would create a massive breeding frenzy.
Otherwise some of your thoughts are interesting.


What is does it mean to be free and what is the price tag of freedom?

In year 1750 the total cost of a slave over a 40 year period would set the slave owner back $205,000.00 in today’s money.

Economy does not refer to money flowing through a society as some might think, Rather it is the transfer and Storage of Energy.

Freedom is being able to participate in an economy equal to and or more than the value of a slave, nobody wants to be worse of than a slave for that is enslavement to nothing where at least the slave had a purpose in live be it a painful suffering life with shackles. After all What are Rights without Freedom?

205,000.00 divide by 40 years divide by 12 months = US$427 x R14.51 R6,200 (the IMF states that US1.90 per day = poverty – slaves wage is = $14.03 per day )

The Welfare State has put more people in poverty and created a poverty cycle for generations with all its Free healthcare, Free Housing, Free Utilities and free food stamps.

People need to pay their way and be treated like adults, holding people accountable can only be done when they have something to lose. Someone that has nothing lose will destroy and pillage because if they cannot have it why should others.

R6,200 will not create a breeding frenzy any more than Welfare Systems which enables people to get free Healthcare and Free R400 per kid hence. In fact a UBI and cancelation of Welfare will allow people to participate in activities which interest them and not put them in the global average 85% of people who hate their day jobs.

Many TV will be purchased and not stolen, crime will drop what is the point of stealing when you have or will get the value to attain it, if you steal you lose your UBI. It cost the government R6.5b to incarcerate the 168,740 prisoners which is equal to R38,520.0 per person.

Kudos for your thinking out of the box 🙂

(Yes, The R6K will now used to be pay for stuff that now falls away with grants & freebies. Accountability takes hold….)

I look at Transaction Capital as a bit of a tax kick-back investment. Our taxes will inevitably pay for the debt problems that need to be fixed or carried here the the company is selling. Some of the profits made through capital gains on the share and dividends is really there to offset (a little bit) that tax burden. Good investment. I’ve had it for a long time.

Just note that the government grants (that are currently unsustainable), including the special additional COVID grants, UIF payments, has to come to an end, one way or another.

It is quiet deceiving to compare debt recoveries (now) compared to pre-COVID.

We haven’t really seen post COVID-19 credit experience, yet, in the lower to middle income markets.

Based on ESG criteria I don’t know how a single fund manager can invest in a business that funds the daily slaughter of innocent citizens at the hands of a vicious, violent, and lawless taxi industry.

Good point. It’s the person (or rather “idiot”) behind the wheel that kills other people by reckless driving. Not the vehicle (as a tool).

Same argument: firearms do NOT kill people….people do. Yet govt wants to demonize firearms.

A small % of taxi drivers drive like hooligans – the vast majority provide an excellent, affordable service to 11 million people every day.

What dreamland do you live in? You take the exception and make it the rule.

End of comments.




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