African Development Bank and SA Taxi sign agreement to enhance transport sector
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Posted: 24 April 2020 | Sam Mehmet (Intelligent Transport)
The $100 million loan agreement aims to allow SA Taxi to empower taxi operators whilst boosting the sustainable industrialisation of the urban transport sector in South Africa.
Credit: African Development Bank
The African Development Bank and SA Taxi Development Finance Proprietary Limited, a wholly owned subsidiary SA Taxi, have signed a $100 million loan agreement to support the firm’s growing strategy to empower operators with limited access to finance from traditional financiers.
The loan agreement, which carries an eight-year tenor and includes a six-month grace period, was signed between the Bank’s Director of Infrastructure & Urban Development, Amadou Oumarou, and Lorenzo Cardoso, Chief Financial Officer and Director of SA Taxi.
“The funding transaction entered into with the African Development Bank is instrumental to SA Taxi’s medium- and long-term strategy. The tenor and size of the transaction will contribute towards the continued success of the Group to empower SMEs and create opportunities that ensure the sustainability of the minibus taxi industry,” Cardoso said. “We are proud to be an internationally recognised African business.”
The financial package, comprising a senior loan of $10 million and an associated facility of ZAR 1.4 billion ($97 million), aims to provide a boost to industrialisation through improved urban mobility for working class South Africans.
SA Taxi is a vertically integrated minibus platform utilising specialist capabilities, proprietary data and technology to provide developmental finance, insurance and other services to empower Small and Medium Enterprises (SMEs), designed to enable the sustainability of the minibus taxi industry.
In addition to minibus vehicle retail and financing services, SA Taxi also provides specialised minibus taxi insurance, vehicle tracking, maintenance, and refurbishment services to taxi operators through SA Taxi Auto Repairs and SA Taxi Protect, its wholly-owned subsidiaries.
While approximately 80 per cent of SA Taxi clients are unbanked and may not ordinarily qualify for the formal banking sector, under the Bank’s financing arrangement, approximately 25 per cent of direct beneficiaries will continue to be women and approximately 22 per cent will be youth under 35 years old. The Bank’s facility is expected to contribute a significant component of funding requirement over the next three years.
Oumarou described the signing as an exciting new chapter in the Bank’s partnership that would bring real and tangible benefits to the people of South Africa with the prospect of scaling up this model to other African countries that are facing significant urban public transportation challenges.
“The evolving public transportation systems with para-transit minibuses filling the market segment between private taxis and municipal bus transit is key to achieving South Africa’s economic success and social progress,” Oumarou said. “Therefore, the Bank is proud to be supporting the Group in its pioneering efforts to positively shape the ecosystem of public transportation services in South Africa.”
Business Models, Fleet Management & Maintenance, Public Transport
African Development Bank, SA Taxi
Amadou Oumarou, Lorenzo Cardoso