South Africa’s mass transit sector secures US$ 10 million and ZAR 1.4 billion African Development Bank loans

SOUTH AFRICA
African Development Bank Group (AfDB)
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The African Development Bank (www.AfDB.org) has approved 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.  

Approved by the Bank’s board on Thursday, 18 October, the 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.

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.  

“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 Industrialization.

In addition to minibus vehicle retail and financing services, the SA Taxi group also provides specialized minibus taxi insurance, tracking, maintenance, and refurbishment services to taxi operators through Taximart and SA Taxi Protect, its wholly-owned subsidiaries.

The facility to the South African firm is consistent with the Bank’s Ten-Year Strategy (2013 – 2022) and Country Strategy Paper for South Africa 2018-2022, under its promoting industrialization pillar. Up to 90 percent of vehicles financed by SA Taxi are manufactured in South Africa, a powerful boost to industrialization.

The facility is also aligned to the Bank’s High 5 priorities, including Improving the Quality of Life for the People of Africa through improved safety and roadworthiness for commuters. It is in line with the Bank’s Private Sector Development Strategy, SME support agenda and the Green Growth Initiative.

Distributed by APO Group on behalf of African Development Bank Group (AfDB).
Technical Contact: 
Fernando Balderrama 
Investment Officer Infrastructure Finance

Media Contact: 
Chawki Chahed 
Chief Communications Officer 
C.Chahed@AfDB.org

About the African Development Bank Group:
The African Development Bank Group (AfDB) (www.AfDB.org) is Africa’s premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). On the ground in 34 African countries with an external office in Japan, the AfDB contributes to the economic development and the social progress of its 54 regional member states. For more information: j.mp/AfDB_Media