Interest on taxi loans slashed to 26.5% for the future
Economy / 22 November 2017, 4:00pm / Sandile Mchunu
JOHANNESBURG - In an effort to retain stability in the taxi industry, Transactional Capital reduced its highest interest rate on future loans to 26.5percent, down from 28.5percent.
The group, through its SA Taxi business, agreed to assist its clients by lowering the interest rate after some factions in the minibus tax industry embarked on mass protest action in June.
This comes after the taxi operators complained to the government for the lack of subsidies and funding, original equipment manufacturers (OEMs) for vehicle price increases, financial institutions for insufficient or costly finance and insurance products, fuel companies, and retail malls for inadequate infrastructure to accommodate minibus taxi ranks.
Chief executive David Hurwitz said they were cognisant of their role in supporting the overall sustainability of an industry that drove entrepreneurship and job creation.
“Encouragingly, a direct outcome of the protest action has seen deeper collaboration between industry leadership and SA Taxi, who are working together to achieve sustainable benefits for the industry.
“Initiatives include discussions with OEMs to procure larger quantities of vehicles to be sold directly through SA Taxi’s dealership, which will enable it to hold retail prices as low as possible,” Hurwitz said.
He added that SA Taxi and industry leadership were also lobbying the government to channel funding into the minibus taxi industry, which would support the favourable recapitalisation of the national fleet.
SA Taxi is one of two divisions in Transaction Capital. It has invested more than R18.6billion in the minibus taxi industry in the past nine years, created almost 65000 black-owned small and medium-sized enterprises and more than 116000 direct jobs.
In the results for the year to the end of September, SA Taxi reported 22percent growth in headline earnings to R303million. The loan portfolio currently comprises almost 29000 vehicles, and the group said SA Taxi finances and insures one in every three of the financed national minibus taxi fleet.
The group’s other division, Transaction Capital Risk Services (TCRS), is a technology-led, data-driven provider of customer management solutions in South Africa and Australia.
TCRS grew core headline earnings to R233m, representing growth of 39percent on the prior year, excluding R22m once-off acquisition costs.
The overall results saw the group’s core headline earnings increase 26percent to R577m, while core headline earnings per share rose 20percent to 96.4cents. The group has strong cash on hand in excess of R650m. It declared a 33percent increase in dividends to 40c a share.
Looking ahead, Hurwitz said the robust organic growth of the group’s high quality earnings, blended with the returns of the acquired businesses, would position Transaction Capital to continue to increase earnings and dividends.
Transaction Capital deployed more than R500m to acquire three businesses during the year. The acquisitions included 100percent of Recoveries Corporation in Australia, 75percent of Road Cover and 51percent of The Beancounter locally.