SA Taxi on Wednesday, signed a R100-million financing agreement with the Small Enterprise Funding Agency (Sefa) in a bid to support small business entrepreneurs running minibus taxi operations.
SA Taxi, one of the country’s few developmental credit providers, said this initiative was expected to result in development and funding of 250 black enterprises and the creation of about 450 jobs.
Mark Herskovits, SA Taxi capital markets director, said in a statement that the agreement with Sefa marked the first time a South African state-owned entity partnered with them directly.
Herskovits said this was particularly critical in light of the industry being a founding pillar of South Africa’s public transport sector and, therefore, to the functioning of the economy.
“It is an indication of the value we offer to small business owners in the minibus taxi industry and our close alignment with government’s approach to improving land transport in this country to the benefit of all stakeholders,” Herskovits said.
“It also acknowledges the importance of the role we play in supporting the recapitalisation and sustainability of the industry.
SA Taxi currently finances over 26 000 of the estimated 200 000 minibus taxis operating in South Africa and has empowered over 42 000 SMEs. It is funded both locally and internationally by a diversified pool of debt investors.
Without the minibus taxi industry most people could not get to their places of work, schools or clinics.
Sefa is a wholly owned subsidiary of the Industrial Development Corporation (IDC) and reports to the Department of Small Business Development.
Sefa chief executive, Thakhani Makhuvha, said many people in the taxi industry were classified as unbankable and had very limited funding channels through which to access capital.
Makhuvha said most banks were reluctant to participate in the minibus industry due to perceived associated risks and limited industry experience.
“SA Taxi fills a critical funding gap by providing credit to entrepreneurs who would otherwise be excluded from the formal economy, given their credit profiles,” Makhuvha said.
“The strategic public private partnership we have entered into with SA Taxi will therefore focus on developing and supporting black entrepreneurs using SA Taxi’s existing tried and tested funding platform.”