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NEF supports bus companies through R90m investment

24th March 2016

By: Anine Kilian

Contributing Editor Online

  

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The National Empowerment Fund (NEF) has invested a cumulative R90-million that has helped transform two disparate but critical segments of the bus transport sector.

A R45-million investment had helped bus company Africa People Mover (APM) expand and entrench itself in the semi-luxury, intercity bus transport sector.

The remaining R45-million investment had been used to fund AB 350, which offered a subsidised public transport service for an impoverished part of the Eastern Cape, including the former Transkei.

“Bus transport is critical for mass travel in South Africa,” said NEF divisional executive for venture capital and corporate finance Hlengiwe Makhathini.

APM was established in December 2014 as a partnership between Diducap and the Johann Ferreira Trust, the owners of luxury bus service Intercape.

The company had 17 buses, which operated 14 services on its routes spanning Johannesburg, Pretoria, Bloemfontein, Polokwane, Mthatha, Durban and Cape Town, as well as Kaalfontein to Nelspruit through Acornhoek. 

In March, APM launched new routes from Johannesburg to Mthatha through Queenstown; Johannesburg to East London through Bloemfontein; and Johannesburg to Port Elizabeth through Grahamstown.

APM held 32 route licences and employed 89 people, including 40 drivers.

Further, Makhathini noted that AB 350 had been established in response to a pressing social need. It was established through the award of a seven-year contract by the provincial government to provide public transport services on 166 routes in the former Transkei.

So far, 136 of the routes were operational. The formation of the company offered a standardised, reliable service to an area that was previously serviced by independent operators with varying quality of buses and standards of service.

The NEF advanced initial funding of R3.5-million to AB 350 in April 2007 to help establish the subsidised public transport service. In November 2009, the NEF provided a further R30-million as the company underwent expansion by launching the second phase of the service comprising 56 routes.

In September 2015, the NEF approved a further R12.6-million of funding to help build a bus repair facility in Mthatha to service the AB 350 fleet. The facility would also provide repair and maintenance services to other bus operators in the area.

“The successful participation of black players in this critical area of the transport industry is a proud achievement for the NEF and the entrepreneurs we have supported,” said  Makhathini.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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