South Africa - Commuter Transit-Asset-Backed Structured Finance


Project Summary

Approval Date 18 Oct 2018
Signature Date 16 Mar 2020
Sovereign / Non-Sovereign Non Sovereign
Sector Transport
DAC Sector Code 21012
Commitment U.A 66,031,228.76
Status Implementation

Project General Description

The Project entails funding of SA Taxi Development Finance Proprietary Limited (SATDF), a South Africa’s mass transit financial solutions provider, that onlends to small and medium enterprises (SMEs) that may otherwise not be able to access financing. The financial package comprises of a senior loan of US$10 million and an associated facility of ZAR 1.4 billion (about US$$97 million) with an 8-year tenor, including 6-month grace period. SA Taxi is an important service provider to South Africa’s minibus commuter transit segment, which is commonly referred to as its “taxi” industry. The demand for commuter transit minibuses is strong, as approximately 69 percent of public transport commuters opt for this transport mode (compared to 20 percent for bus and 11 percent for train). The country’s 16-seater minibus taxis do approximately 15 million commuter trips per day, which services nearly 40 percent of the population. SA Taxi currently has 30,000 customers who have financed on average 1.2 minibuses. However, 90% of SA Taxi clients do not qualify for the formal banking sector. With the funding, SMEs will acquire fuel efficient, environmentally-friendly, quality vehicles (minibus taxis) to be used for mass transit across South Africa. The Project will catalyze funding for approximately 8,000 commuter transit vehicles, or nearly 7% of the current need in the country, thereby supporting nearly 600,000 safer daily trips. The asset-backed financing operation is expected to attract funding interest from international commercial banks for the benefit of South Africa’s mass transit sector.

Project Objectives

The Project involves funding one of South Africa’s primary financial solutions providers to the commuter transit sector to enable on-lending to Small and Medium Enterprises (SMEs). With the funding, SMEs will finance and acquire minibus vehicles to provide commuter transit services across South Africa’s main urban centers. The Bank’s facility is expected to contribute a significant component of SA Taxi’s funding requirement over the next three years.

Beneficiaries

Nearly 6,700 SMEs will benefit from improved access to finance and higher profitability. 20% of direct beneficiaries are women and 16% are youth (under 35 y/o). 57,000 direct jobs will be created or sustained at the SME-beneficiary level. Daily commuters will benefit from improved conditions including safety. The Project will result in lower carbon emissions and other environmental benefits. Government revenues –through VAT and income tax—are expected to surpass the USD 200m mark. The operation supports sustainable urbanization and is distinctly pro-poor.

Participating Organization

Funding
African Development Bank

Information

IATI identifier 46002-P-ZA-D00-004
Last Update 18 Oct 2020

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Contact Details

Email private-sector@afdb.org

Geographic Location

Country South Africa