South African Uber competitor Zebra Cabs has just secured R300 million in funding from Futuregrowth Asset Management as the battle of the internet hailing apps hots up.
SA Taxi, which owns the Zebra Cabs owner-driver scheme, said on Tuesday that it will use the R300 million to expand the operation, mainly in the key city of Johannesburg.
SA Taxi, a certified developmental credit provider, is South Africa’s largest financier of minibus taxis. It acquired the Zebra Cabs metered taxi business in 2015 as it sought to expand its business activities into adjacent markets.
The company’s capital markets director, Mark Herskovits, said there is an “opportunity to revolutionise the [metered taxi] industry and also to offer a suitable alternative to Uber, which is doing a great job at disrupting this sector”.
Herskovits said SA Taxi will use its successful minibus taxi business model to “revive the floundering metered taxi cab industry” in South Africa.
“The industry is a characterised by an old, poorly maintained fleet of vehicles and a lack of trust and transparency in pricing.
SA Taxi, in conjunction with Futuregrowth, plans to offer owner-driver entrepreneurs who may not have a credit record that allows them to access vehicle financing the means to purchase a metered taxi, along with additional support in running their small businesses.
The company considers credit extension to owner-drivers, or operators, as a small business loan rather than a personal loan. “This differentiates us from the vanilla financing options offered through banks, which focus mainly on the creditworthiness of the individual. This often precludes previously disadvantaged individuals from accessing the finance needed to build a profitable small business.”
Customers now also have a choice of mechanisms to book a taxi, either through the traditional call centre or kerb-side hailing, or via an app or web portal. Payment methods include cash, card or mobile e-wallet. “This differentiates the operation from Uber,” said Herskovits. He said the company has a number of big companies in Johannesburg as clients. This, he said, secures a presence in a big market within which Uber can’t compete.
The R300 million Futuregrowth investment has been earmarked for expansion over a two-year period, with the main focus on operations in Johannesburg. “We will consider seeking additional funding sooner if required, but we first want to build scale in the key area of Johannesburg to achieve critical mass before expanding operations to Cape Town and Durban. Our long-term goal is to have 3 000 Zebra Cabs on the road by 2020,” said Herskovits.
Uber adds perks
Uber, meanwhile, has announced that it working with Old Mututal and KaeloXelus to provide money management courses and occupational health products to partner-drivers.
KaeloXelus will provide partner-drivers with access to Myhealth Plus, one of its packages, for R73/week. This will give them comprehensive private primary care through a national network of professional, private healthcare providers, including doctors, dentists, optometrists and pharmacists, Uber said.
Old Mutual will offer free workshops on money management to drivers. The course is designed to help people to understand basic money principles, develop healthy savings habits and create financial wellbeing.
Partner-drivers can access these two offerings directly through Uber’s marketplace platform, called Uber Momentum.
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