Paving a road for the taxi industry
31 August 2017
In the past few months, the taxi industry has been making headlines for disputes over the high cost of vehicle finance (interest rates as high as 28.5%) and blacklisting of taxi owners due to some monthly instalments that are as high as R15 000 over 72 months. Bearing in mind that 15 million South Africans rely on this form of public transport on a daily basis, and the fact that this industry employs more than half a million drivers, with an annual revenue of almost R40 billion, Absa has always been an active finance solutions provider to this sector .
We spoke to Nelisiwe Baloyi, head of Absa Vehicle and Asset Finance (AVAF), about Absa’s commitment to making an impactful contribution to the local taxi industry. This is being done through annual funding of more than R600 million to operators across the industry and allowing a flexible financing structure that promotes responsible lending practices.
“The intention is to make a difference and, as a bank, we help people achieve their ambitions,” Baloyi explained. “We don’t want to simply fund the industry and add no further value. We want to empower people and help build a sustainable taxi industry to benefit the entire country. This ties in with our shared growth objectives,” she added.
On top of this, the amended National Credit Act (NCA) requires a new, more stringent credit risk assessment, an affordability calculation and income verification for all new applications. All processes that might impact the approval status, credit limit and risk-based-pricing of potential or current taxi operators. “This is why Absa offers a competitive pricing structure, with lending rates ranging from 10.5% to 17%, and monthly instalments of below R10 000, depending on the customer’s credit profile. This not only benefits the operator, but also prevents any shock impacts on instalments due to interest rate fluctuations,” Baloyi said. “Our repayment terms are also limited to 60 months, to ensure that the operator takes ownership sooner, rather than later.”
Furthermore, required deposits are as low as R20 000 on a Toyota Quantum and Nissan NV350, against the industry norm of over R60 000. So, if you like what you’re reading and you’d like to get involved, the great news is that you can. According to Baloyi, Absa is currently in talks with various role players in the industry to identify areas where there is a great need, and where they can collaborate to add value.
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.