Absa, IDC to provide funding to taxi operators

1 October 2009
ABSA Vehicle and Asset Finance (AVAF) and the Industrial Development Corporation (IDC) signed an agreement yesterday, the first of its kind in SA, for the bank to provide up to R300m for new taxi operators and black entrepreneurs planning to enter the industry.
EDWARD WEST
For its part, the IDC agreed to underwrite up to 50% of any losses incurred by Absa, if clients financed under the scheme defaulted on their payments.
â??It is in line with our goal of doing all we can to support the taxi recapitalisation projectâ??s objective of putting compliant taxis on the roads. It will lower barriers and make it easier for operators to enter the market â?¦ the agreement will enhance the travel experience and safety of millions of commuters,â?? said AVAF managing executive Marcel de Klerk.
The scheme promoted black economic empowerment (BEE), small, medium and micro enterprises, entrepreneurial development and taxi recapitalisation, he said.
â??We've been a strategic partner of the IDC since 2006, so this joint initiative is a perfect fit for us. The IDC recognises the positive contribution this product will make to developing new transport entrepreneurs and the growth of the taxi industry in particular where the potential for creating new job opportunities is greater.â??
â??This is in line with the IDCâ??s leadership in development strategy where we seek to stimulate the creation of jobs by funding opportunities that promote entrepreneurship, BEE and SME development,â?? said Katinka Schumann, divisional executive for services sectors at the IDC.
â??It is yet another shining example of how government and the private sector can form partnerships that benefit and develop our country.â??
In terms of the agreement, AVAF will, in co-operation with the IDC, offer funding to new or established black taxi operators, black-owned companies and taxi associations.
The interest rate on loans granted would be capped at prime +4% and applicants needed a deposit of 15%-20% of the total loan-value.
Projected route income would be analysed by the bank.
weste@bdfm.co.za