Johannesburg - The black taxi industry
and black business in general were given a massive boost with the signing of
an agreement between Absa Vehicle and Asset Finance (AVAF) and the
Industrial Development Corporation (IDC) on Wednesday, said Absa and the
The new arrangement will also see millions of South African commuters
enjoy new standards of safety when thousands of new, legally compliant taxis
enter the market.
The deal, the first of its type in South Africa, sees the bank
undertaking to provide up to R300m in funding to emerging taxi
operators and black entrepreneurs wishing to enter the industry.
For its part, the IDC has agreed to underwrite up to 50% of any losses
incurred by Absa, if clients financed under the scheme default on their
"We've been a strategic partner of the IDC since 2006, so this joint
initiative is a perfect fit for us," said Marcel de Klerk, Managing
Executive of Absa Vehicle and Asset Finance (AVAF).
"It is in line with our goal of doing all we can to support the Taxi
Recapitalisation Project's objective of putting compliant taxis on the
roads. It will also lower barriers and make it easier for operators to enter
the market. In addition the agreement will enhance the travel experience and
safety of millions of commuters who daily make use of taxis.
"The finance scheme promotes BEE, SMMEs, entrepreneurial development and
taxi recapitalisation, all of which are principles to which we are
"The IDC recognises the positive contribution this product will make to
developing emerging transport entrepreneurs and the growth of the taxi
industry in particular where the potential for creating new job
opportunities is greater. This is in line with the IDC's 'Leadership in
Development' strategy where we seek to stimulate the creation of jobs by
funding opportunities that promote entrepreneurship, BEE and SME
development," said Katinka Schumann, Divisional Executive for Services
Sectors at the IDC.
"We are focused and dedicated to nurturing and supporting the
development of the South African taxi industry and to building partnerships
in aid of stimulating a competitive economy", concluded Schumann.
"It is yet another shining example of how government and the private
sector can form partnerships that benefit and develop our country."
In terms of the agreement, AVAF will, in cooperation with the IDC, offer
funding to emerging or established black taxi operators, black-owned
companies and taxi associations.
The interest-rate on loans granted will be capped at a maximum of Prime
+ 4% and applicants must have a deposit of between 15% and 20% of the total
"Before any loan is granted, we will undertake a detailed analysis, to
ensure the projected route income generated by the taxi to be financed will
be enough to cover the expenses of the taxi operator, as well as the monthly
loan repayments," said De Klerk.
Clients will be subject to normal AVAF credit-worthiness ratings and the
maximum finance term is a maximum 54 months, but AVAF may restructure the
agreement for a longer or shorter term.
"The black taxi industry is vital to the growth and prosperity of South
Africa's economy and it is therefore imperative that everything possible be
done to support it," said Schumann.
- I-Net Bridge