Quantum leap for taxi body as it finally gears up for business
No government support required as SA National Taxi Council acquires a stake in minibus financier SA Taxi
The agreement between the SA National Taxi Council (Santaco) and Transaction Capital’s subsidiary SA Taxi, which will see the council acquire a 25% stake in the minibus taxi financier, is groundbreaking for a number of reasons.
The minibus taxi industry is a dominant player in the public transport system and it has managed to scale up without government subsidies and little support from traditional financial services players. SA Taxi estimates that about 80% of its clients will probably struggle to get bank finance.
Santaco has tried to expand its participation in the transport value chain before without much success. Its low cost airline which was first touted in 2011 never got off the ground. But this transaction will hopefully provide some encouragement.
Another important takeaway is that by using their buying power, people can build something meaningful without relying on government support.
That said, there is lot of debate about who stands to benefit from the Santaco-SA Taxi transaction. After all, SA Taxi is the same company that Santaco members took to the street about last year, protesting about the interest rate the financier charged on purchases of Toyota Quantums.
The question now is will Santaco continue to fight for lower rates when it becomes a shareholder or will its interests be more aligned with SA Taxi rather than individual drivers?
The repayment of the R1.7bn price tag through dividend flows – 90% of future dividend flows will go towards reducing the debt – also means that Santaco will not reap significant financial benefits right away. But it is a start for an entirely black-owned industry to participate in more than just one level of the value chain.