JOHANNESBURG - Africa People Mover (APM) founder and chief executive Tumisang Kgaboesele says his bus company is in the business of serving Black people with dignity.
He says they are the first service provider and new entrant to use luxury coaches to service the lower end of the market worth R2.5 billion.
Kgaboesele, from Pretoria, started the 100 percent black-owned bus company in 2014, with the first trip on December 12, 2014, between Johannesburg and Durban, made possible by four coaches leased from Intercape.
“It was a proud moment for us because people were saying this is mission impossible and that it can’t be done,” says Kgaboesele.
He had to raise R30m in startup costs and says their aim is to have 60 coaches within five years. They have since grown to 30 coaches, each costing R4.5 million, and have a staff complement of 220 employees which include drivers and other support staff.
In an interview with Kgaboesele at the APM headquarters in Pretoria this week, the entrepreneur, who studied law at Wits University, says APM is now hovering above 10 percent of the market share.
He says the country’s biggest bus companies Intercape, Autopax and Unitrans hold 70 percent of the market share.
“The ambition is to grow our market share to over 20 percent in the next three years,” says Kgaboesele.
“Our business model is very simple: We concentrate on the high density corridors. If the route doesn’t make business sense, we cancel it and move to another one.”
Kgaboesele has worked for law firm Bowmans, previously Bowman Gilfillan, in Sandton, and spent two years in the United Kingdom working at the London headquarters of multinational law firm Clifford Chance.
He also worked as a banker for British multinational banking and financial services company Barclays, before being recruited by former Passenger Rail Agency of SA chief executive Lucky Montana in late 2006.
He was a special advisor in Montana’s office and played a crucial role in setting up and running the Metrorail and South African Rail Commuter Corporation (SARCC), following the unbundling of Transnet to allow it to concentrate on its core business of freight transport and logistics.
“That entity (SARCC) was my responsibility,” says Kgaboesele, who spent seven years at Prasa, holding executive positions including heading the facilities management, property investment, and bus divisions.
His last executive role at Prasa was heading Autopax Passenger Services, which operates Translux and City-to-City buses.
“I left Autopax after a fall out with the board over governance issues. The board was interfering too much on internal matters. There was a pushback, I submitted my resignation in December 2013.”
The lawyer turned entrepreneur reached a settlement with Prasa which saw the parastatal footing the bill for Kgaboesele’s advanced management programme at the Harvard Business School in 2014.
On his return to South Africa he says he had a chance encounter with Intercape chief executive Johann Ferreira, who told him that Intercape was looking for someone to help them penetrate the lower segment of the market.
At this time, Kgaboesele was already working towards starting his own bus company APM.
Ferreira offered Kgaboesele infrastructure support for APM and in exchange he took a 49 percent interest in APM in June 2014. However, he sold all his shares in APM in 2016.
APM’s management team is made up of officials who used to be in Autopax, who were not happy with how the parastatal was run, according to Kgaboesele.
Running the business, he admits, has its own challenges. For instance, he reveals that they are only profitable in three months. “The other nine months you are trying to break even to cover your costs. The worst months in our industry are February and May.”
The long distance bus industry is highly capital intensive and cyclical. “Travel only happens during month end and holidays. Most of the time there is no travelling. Therefore, to be in business you need to be agile.”
He says one of the biggest problems of the industry is its lack of under regulation, which among other things, lead to authorities issuing operating licenses with scant regard to circulation in the market.
“The Durban route is over traded, that’s why there’s tension between minibus taxis and coaches,” says Kgaboesele, adding that their Limpopo and Mpumalanga routes have been suspended due to taxi violence.
APM recently hosted a team of students from Harvard Business School in Johannesburg/Pretoria for one week as part of a required first-year course at Harvard Business School called the FIELD Global Immersion.
The bus company runs an artisan programme for young people from townships around Pretoria who go on to become workshop assistants, while others get jobs in the company’s customer services department.
Kgaboesele says the biggest advantage of having studied law and finance is the ability to think out of the box.
- BUSINESS REPORT