Johannesburg – Developmental credit provider SA Taxi has inked a R100 million financing agreement.
In a statement issued on Wednesday, the firm, part of the Transaction Capital group of companies, said it had signed the deal with the Small Enterprise Funding Agency (SEFA), which is wholly-owned by the Industrial Development Corporation.
The injection is expected to result in development and funding of 250 black enterprises and the creation of about 450 jobs.
SA Taxi will use the injection to further its business model, which sees it providing financing to people who want to buy or upgrade a taxi, but would typically not meet traditional banks’ criteria in terms of collateral.
SA Taxi’s business model includes the financing of industry-specific vehicles, provision of bespoke taxi insurance that helps operators protect their income-generating asset and optimise cash flow, a Taximart division that restores pre-owned vehicles to a virtually new condition, and a dealership network through which both new and pre-owned minibus taxis are sold directly to taxi operators.
It is funded both locally and internationally by a diversified pool of debt investors and argues it plays an essential role in linking institutional funding to local South African small and medium enterprises (SMEs).
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“It is an indication of the value we offer to small business owners in the minibus taxi industry and our close alignment with government’s approach to improving land transport in this country to the benefit of all stakeholders.”
Herskovits also says the deal “acknowledges the importance of the role we play in supporting the recapitalisation and sustainability of the industry”.
SA Taxi currently finances over 26 000 of the estimated 200 000 minibus taxis operating in South Africa and has empowered over 42 000 SMEs.
SEFA CEO Thakhani Makhuvha notes ““SA Taxi fills a critical funding gap by providing credit to entrepreneurs who would otherwise be excluded from the formal economy, given their credit profiles. The strategic public private partnership we have entered into with SA Taxi will therefore focus on developing and supporting black entrepreneurs using SA Taxi’s existing tried and tested funding platform.”
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