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South Africa, SA Taxi

Supporting the drive for a safer, more efficient minibus taxi service

South Africa SA Taxi

Context
Minibus taxis service around 67% of all travel in South Africa. The minibus taxi industry is dominated by small, medium and micro enterprise owner-operators with limited access to formal bank lending. Many rely upon unregulated, high cost borrowing to maintain their  livelihoods. The Government of South Africa has launched a taxi recapitalisation programme aimed at improving the operation and regulation of the previously chaotic industry. If the government is to achieve its ambition to improve the quality and safety of the country’s minibus taxi fleet, securing appropriate finance for owner-operators is crucial.

Project
GuarantCo’s donors supported this investment in SA Taxi as it has a significant impact on some of the poorest people in the country. The majority of minibus taxi passengers and owner-operators are from low income groups and often have a chequered credit history. Having supported an earlier DFI-led programme for SA Taxi, GuarantCo was then able to crowd in one of the main commercial banks in South Africa, Absa Bank. Absa invested ZAR 235m (US$23.5m), the first time it had invested in the company, enabling SA Taxi to continue delivering affordable loans to minibus taxi operators.

Impact
Loans provided by SA Taxi will improve access to safer, more environmentally efficient transport for around 350,000 passengers. By providing affordable, dedicated finance for minibus taxi drivers, the project will reduce dependency on unregulated, high cost lending. The initiative will improve the quality of South Africa’s minibus taxi fleet and secure stable livelihoods for around 1,165 operators. SA Taxi will contribute to the new asset finance requirements of the government’s taxi recapitalisation programme. GuarantCo’s involvement has established an important precedent for the involvement of commercial banks in similar deals.