SA Taxi says it has secured R300 million in funding from Futuregrowth Asset Management, to provide financing to the company’s Zebra Cabs owner-driver scheme.
SA Taxi, South Africa’s largest financier of minibus taxis, acquired Zebra Cabs metered taxis in 2015 as the certified developmental credit provider sought to expand its business activities into relevant adjacent markets.
Zebra Cabs opened its doors in early 2011 and quickly grew to 180 cabs, while adding an app to its payment channel earlier this year.
Mark Herskovits, SA Taxi capital markets director, said that the company has been looking for opportunities to leverage its business model and underlying operational efficiencies.
“We have developed a business model tailored to the unique characteristics of an industry often perceived as higher risk,” said Herskovits, adding that SA Taxi considers credit extension to owner-drivers, or operators, as a small business loan rather than a personal loan.
“This differentiates us from the vanilla financing options offered through banks, which focus mainly on the creditworthiness of the individual. This often precludes these previously disadvantaged individuals from accessing the finance needed to build a profitable small business.”
SA Taxi said it will leverage its minibus taxi business model to revive the “floundering metered taxi cab industry”.
“In South Africa, the industry is a characterised by an old, poorly maintained fleet of vehicles and a lack of trust and transparency in pricing. We therefore feel that there is an opportunity to revolutionise the industry and also offer a suitable alternative to Uber, which is doing a great job at disrupting this sector,” said Herskovits.
SA Taxi, in conjunction with Futuregrowth, will offer owner-driver entrepreneurs who don’t want to operate mini buses and who may not have a credit record that enables them to access vehicle financing, the means to purchase a metered taxi, along with additional support in running their small business.
SA Taxi said that research showed that the average age of the metered taxi fleet in South Africa is five years, which impacts profitability of metered taxi operators.
“However, SA Taxi has upgraded the Zebra Cabs fleet with just under 300 Toyota Corollas, all equipped with GPS, Bluetooth, leather seats and external cameras.”
The company said that customers have a choice of mechanisms to book a taxi, either through the traditional call centre or hailing options, or via an app or web portal. Various payment methods are also available, including cash, cards or mobile e-wallet transactions.
“This differentiates the operation from Uber,” said Herskovits, who added that the company has also partnered with numerous corporates in Johannesburg to meet their transport needs on a contract basis, securing a presence in a big market within which Uber can’t compete.
The initial funding is earmarked for expansion over a two-year period, with a primary focus on operations in Johannesburg. “We will consider seeking additional funding sooner if required, but we first want to build scale in the key area of Johannesburg to achieve critical mass, before expanding operations to Cape Town and Durban. Our long-term goal is to have 3,000 Zebra Cabs on the road by 2020,” said Herskovits.