Taxi industry aims to be its own bank

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Taxi industry

Taxi owners who claim they are being ripped off by vehicle finance and insurance companies are looking for a parallel model to help the industry overcome financial problems.

Taxi owners brought major roads in Johannesburg to a standstill on Thursday demanding better financing terms for taxis.

The disgruntled owners and taxi associations say they are paying up to 28% interest on loans from some companies.

The industry has threatened a national shutdown if changes are not made to the existing financing model.

“Taxi Choice is the business wing of Santaco‚ so effectively we are the taxi industry’s business wing,” says Thulani Qwabe‚ chief operating officer of Taxi Choice, referring to the industry body, the South African National Taxi Council.

“The taxi industry’s ambition is to own its value chain, such as owning our finance companies. We want to have ownership in a vehicle‚ insurance and tracking device company.

“But to start our own companies is an extremely difficult thing to do‚ so the first step is to partner with people that are already doing it so that you can get better prices for taxi operators and build some capital to then establish your own over time.”

Qwabe says at the moment Taxi Choice lacks the financial capacity to lend to taxi operators but it has a keen interest in learning more about the lending industry.

“It is not Taxi Choice that has money and disperses it to the client‚ it’s the banks who are our partners that do that. We participate in the value chain but in a very small way‚” Qwabe says.

“In terms of finance‚ we don’t do it ourselves‚ but we work with companies and banks that finance taxis.

“We also package deals for taxi operators, such as filling in application forms and collecting all the required documents, and then send those documents to the banks, which then do the final sign-off and payout and manage the loan book.

“But what we are saying to SA Taxi Finance and the banks is that we are unhappy about the way they are doing business. We would like to see change for the man on the ground‚ as well as change for the taxi industry structures‚” he says.

Following the strike on Thursday, SA Taxi Finance‚ a major financial services provider for the industry‚ proposed a drop of three percentage points in interest rates. Taxi owners rejected this offer, and threatened a national strike on July 12.

A Quantum minibus taxi presently costs about R440‚000, double the R220‚000 paid in 2010.

According to Qwabe‚ most South African banks charge an average interest rate of 16%-18.5% to finance taxi purchases.

 

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