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See taxi operators as entrepreneurs - expert

Johannesburg - When a minibus taxi operator realises that he's not just operating a taxi, he's running a small business, his horizons widen and he begins to accumulate the means to expand, says Bonisile Makubalo, director of corporate affairs at SA Taxi, a gateway financier of minibus taxis.

"Savings is where the first and second economies meet," explained Makubalo. He believes the debate about developing a savings mentality among South Africans should include the role played by the impulse for expansion among grass roots entrepreneurs.

"We see it clearly in the minibus taxi industry, where an operator steadily graduates from borrowing money in order to fund his first vehicle to saving enough money to expand his micro business into something that goes beyond a hand to mouth existence."

"His ability to save is made possible by the application of developed economy finance in funding his first vehicle. But his will to save is instinctively entrepreneurial."

By means of this kind of approach he can move relatively quickly from a position of debt into sustainable profitability, with early savings being the means by which he transitions out of debt, according to Makubalo.

An example is an SA Taxi customer who borrowed money to buy his first minibus taxi, but stayed in his own job as a university librarian in order to save his taxi operation profits. He then used these profits to set up his own construction business.

In other cases, operators have opened spaza shops or expanded into the small businesses that surround and serve taxi ranks. Some operators choose to expand their taxi fleets.

"Whatever the operator's method of extending his business interests, there is invariably a point at which he puts away money and, thereby, becomes an acceptable risk to conventional financial institutions," said Makubalo.

"He then matures into having access to funding for a business rather than simply funding for a vehicle."

Makubalo regards each taxi operator as a micro business that contributes to the functioning of the entire economy. By getting 15 million people to work every day, taxi operators are key to the way the formal economy operates.

"They are also the heartbeat of the second economy, putting food on the table for their own families and generating income for the thousands of informal businesses depending on taxi ranks," said Makubalo.

"However, while most operators are astute managers of cash flow in a cash based industry, gaining an ability to understand an income statement and other business fundamentals, gives them the tools with which to measure and, therefore, improve their success as business people."

Once taxi operators expand into additional revenue generation, they migrate into the first economy.

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