The payment relief programme to assist minibus taxi owners with vehicle repayments through the Covid-19 lockdown period has just come to an end, says Absa Vehicle and Asset Finance (AVAF) head of dealer relationships for the Gauteng and Limpopo region, Fulufhelo Mandane, with Absa now considering how to assist those owners who may no longer qualify to buy new vehicles, or replace their existing vehicle(s).
The Christmas season is typically the busiest period for the minibus taxi industry, with high demand for local, interprovincial and cross-border services, and, therefore, new vehicles, he notes.
However, the Covid-19 lockdown may have negatively affected many operators’ credit standing, leaving them unable to secure finance for new vehicles.
“We may see a lot of individuals impacted by Covid-19, with taxi associations likely to work with finance houses to ensure that these operators are not left behind during the busiest period of the year, where there is potentially lots of money to be made,” says Mandane.
The payment relief programme followed an offer to taxi operators of a three-month payment holiday during the initial lockdown period.
The payment relief programme allowed operators to pay 50% of their vehicle instalment in month 1, followed by 60% in month 2 and 70% in month 3, with normal scheduled payments to continue in month 4.
Mandane says not all taxi operators took up these offers, as various sectors of the industry were impacted differently.
Crossborder operators, travelling to Zimbabwe and Zambia, for example, were heavily impacted as borders were closed during the initial lockdown. Interprovincial operators also struggled, as people movement was restricted in-country, while local operators could still eke out a living.
Overall, there have not been many defaults in the AVAF minibus-taxi book compared with pre-Covid-19, says Mandane.
Absa is the third biggest minibus taxi financier in the country among the traditional big banks, he adds.
“Our taxi book is at more than R3.2-billion.”
Apart from the current demands of dealing with Covid-19, the biggest challenge in the local industry is the financing of poor quality vehicles, which fail to last the repayment period, as well as insufficient financial skills among some taxi operators, says Mandane.
“Operators need to buy a quality asset. The vehicle manufacturers which really succeed in this industry are those who regularly consult the industry.
“A minibus taxi is sometimes just as good as the handle on the sliding door.”
Mandane says it is also important for operators to increase their financial literacy as they grow in the industry.
“There is a low level of banking in the sector, so credit scores can be a problem.
“If an operator has five vehicles he can register a company, which will allow him a credit line for his business. This means he doesn’t have to apply for personal vehicle finance every time he wants to buy a vehicle.
“We need to expand operators’ financial horizons beyond the idea of getting R2 000 a day and spending that.
“We have seen numerous success stories in the taxi industry, with some operators now owning petrol stations and developing property, so it is possible.”