The African Development Bank has approved over US$100 million in loans to SA Taxi Development Finance Limited a business platform that provides a comprehensive financial and allied services offering to minibus taxi operators.
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 financial package comprises of a senior loan of US$10 million and an associated facility of R1.4 billion 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.
Mass public transport key to SA economic system
Mass public transport is key to South Africa’s social and economic system. The demand for commuter transit minibuses is strong, as approximately 69% of public transport commuters opt for this transport mode. SA Taxi is an important service provider to South Africa’s minibus commuter transit segment.
SA Taxi currently has 30 000 customers who have financed on average 1.2 minibuses. While approximately 90% of SA Taxi clients are unbanked and may not ordinarily qualify for the formal banking sector.
Supporting the ecosystem of taxi transportation services
Under the African Development Bank-led financing arrangement, approximately 20% of direct beneficiaries will continue to be women and approximately 16% youth under 35 years old. The Bank’s facility is expected to contribute a significant component of SA Taxi’s funding requirement over the next three years.
“The evolution of SA Taxi and its operational structure is really an interesting case study. The company has grown into a remarkable enterprise that is supporting the ecosystem of taxi transportation services in South Africa,” said Pierre Guislain, African Development Bank Vice President for Private Sector, Infrastructure and Industrialisation.