Taxi pro­test­ers tar­get more than 30 en­ti­ties

The Star Early Edition - - BUSINESS REPORT - Roy Cokayne

THE MASS Taxi In­dus­try Protest Ac­tion Com­mit­tee, the taxi in­dus­try splin­ter group that brought pro­duc­tion to a halt this week at Toy­ota South Africa Mo­tors’ man­u­fac­tur­ing plant in Dur­ban, has a list of more than 30 en­ti­ties it plans to tar­get.

The protest at Toy­ota sig­nalled the com­mence­ment of the group’s on­go­ing rolling protest ac­tion to high­light the taxi in­dus­try’s to­tal ex­clu­sion from the in­dus­try’s value chain and bring tar­geted en­ti­ties to the ne­go­ti­at­ing ta­ble.

MP Fil­tane, a spokesper­son for Mass Taxi In­dus­try Protest Ac­tion Com­mit­tee, con­firmed to Busi­ness Re­port that fur­ther en­ti­ties on the list would be tar­geted for protest ac­tion this month.

The tar­gets in­clude ve­hi­cle man­u­fac­tur­ers, banks, in­surance and fuel com­pa­nies and gov­ern­ment en­ti­ties.

Fil­tane con­firmed SA Taxi, part of listed Trans­ac­tion Cap­i­tal, was one of the tar­gets.

The list also con­tains four gov­ern­ment en­ti­ties, the na­tional trans­port and trade and in­dus­try de­part­ments, the In­dus­trial Devel­op­ment Cor­po­ra­tion and Pub­lic In­vest­ment Cor­po­ra­tion.

Fil­tane said SA Taxi had a mar­ket share of about 50 per­cent of the taxi ve­hi­cle fi­nanc­ing mar­ket and was by far the largest fi­nancier of ve­hi­cles for the taxi in­dus­try in the coun­try.

He claimed SA Taxi had the big­gest re­fur­bish­ment cen­tre in the coun­try and its fi­nanc­ing model was based on the ex­pec­ta­tion that taxi oper­a­tors would not pay off their ve­hi­cles but de­fault on their re­pay­ments, re­sult­ing in the ve­hi­cle be­ing re­pos­sessed, re­fur­bished and resold.

Fil­tane said there were also in­stances where SA Taxi charged taxi oper­a­tors prime plus 18 per­cent on ve­hi­cle fi­nanc­ing deals.

Mark Her­skovits, ex­ec­u­tive di­rec­tor of Trans­ac­tion Cap­i­tal, said there were an es­ti­mated 200 000 minibus taxis in South Africa and at end-March this year SA Taxi fi­nances was fi­nanc­ing 27 142 ve­hi­cles, which equated to a 13.5 per­cent mar­ket share and gross loans and ad­vances of R7.8 bil­lion.

Her­skovits added that SA Taxi was a de­vel­op­men­tal credit provider, which in terms of the Na­tional Credit Act pre­scribed a max­i­mum in­ter­est rate of 34 per­cent.

He stressed SA Taxi’s pric­ing was risk based, re­sult­ing in in­ter­est rates rang­ing from 18 per­cent to 28.5 per­cent.

“SA Taxi’s weighted av­er­age in­ter­est rate at orig­i­na­tion as at March 31, 2017, is 24.9 per­cent,” he said.

Her­skovits said that the claim that SA Taxi’s model was based on re­pos­sess­ing, re­fur­bish­ing and re­selling the ve­hi­cle as “un­founded and com­mer­cially un­in­formed. No busi­ness would be sus­tain­able if it lends money merely to re­pos­sess the ar­ti­cle,” he said.

Her­skovits said SA Taxi cur­rently ex­pected a de­fault rate of about 11.5 per­cent, which meant 88.5 per­cent of SA Taxi’s book was an­tic­i­pated to go to full term.

He said SA Taxi’s in­vest­ment in re­fur­bish­ment in­fra­struc­ture helped it mit­i­gate credit losses.

By in­vest­ing in re­fur­bish­ing ve­hi­cles, SA Taxi was able to re­cover higher amounts on de­faulted ac­counts to the ben­e­fit of both SA Taxi and the client.

The re­fur­bish­ment cen­tre also served as re­pair work­shops for clients that were in­sured with the com­pany, he said.

Her­skovits added that par­tic­i­pants within the minibus taxi in­dus­try were char­ac­terised as un­der­served small and medium enterprise taxi own­ers, with SA Taxi fill­ing a crit­i­cal fund­ing gap and pro­vid­ing credit to en­trepreneurs who were typ­i­cally con­sid­ered high risk and would oth­er­wise be ex­cluded from the for­mal econ­omy given their credit pro­files.

“It is es­ti­mated 90 per­cent of SA Taxi’s client base is con­sid­ered un­likely to be able to gain ac­cess to tra­di­tional fi­nance. roy.cokayne@inl.co.za

PHOTO: REUTERS

Minibus taxis, mostly Toy­ota-made, at Barag­wanath, the big­gest taxi rank in Soweto. Protest ac­tion will con­tinue.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.