Minibus taxis during lockdown – new data shows how they’ve been operating
SA Taxi owner, Transaction Capital has published data showing how minibus taxis have been able to operate as an essential service over lockdown in South Africa.
The group on Wednesday (13 May) published results for the half year ended March 2020, showing a decline in earnings as a result of the onset of the Covid-19 pandemic.
It said that prior to the effects of Covid-19, it was on track to deliver earnings growth in line with past performance. Core headline earnings from continuing operations grew by 19% to R402 million, with core headline earnings per share up 18% to 65.4 cents.
This was before the adjustments made to SA Taxi’s credit provisioning model and the valuation model for non-performing consumer loan portfolios (NPL Portfolios) owned by TCRS, in anticipation of the future impact of Covid-19.
The Covid-19 adjustments saw its financial performance deviate from historical earnings growth trend, with the group’s core headline earnings from continuing operations post Covid-19 adjustments down 17% to R281 million, and core headline earnings per share from continuing operations post Covid-19 adjustments also 17% lower at 45.8 cents.
The group said that after extensive deliberation and in view of the uncertainty around the full impact of Covid-19, its board has opted to retain capital and not to pay a dividend for the half year.
Covid-19 impact on mobility
The first case of Covid-19 in South Africa was reported on 5 March 2020, and the escalation in cases led to a nationwide lockdown from 27 March 2020.
“The last week of any month typically accounts for a disproportionately large volume of business activity,” Transaction Capital said.
With SA Taxi Direct, other vehicle dealerships and the vehicle licencing department closed for the lockdown, SA Taxi recorded lower vehicle sales in its dealership and originated fewer new loans and insurance policies for March 2020.
As an essential service, Transaction Capital noted that the taxi industry operated under national guidelines during the lockdown with only the transportation of essential service workers and other citizens requiring essential travel permitted at certain times.
Sharply lower commuter mobility and restricted minibus taxi operations due to the nationwide lockdown intensified economic strain on the sector, it said.
SA Taxi’s telematics data reflects that on average only 68% of its clients operated their vehicles, working only 58% of their normal hours, and travelling approximately 47% of their normal distance between 27 March 2020 and 30 April 2020.
The gazetted guidelines limited the number of passengers per trip to 70% of normal loads, which further affected minibus taxi profitability negatively during this period.
Easing of restrictions
From 1 May, the government began easing lockdown restrictions. For the minibus taxi industry, at the current level 4 restrictions, the limits on operating hours have been relaxed enabling activity between 05h00 and 19h00 – however, constraints on passengers per trip and long-distance travel continue to apply, Transaction Capital said.
Activity in the sector is poised to be stimulated as restrictions on other industries are eased, increasing the number of commuters requiring public transport, it said.
Transaction Capital’s chief executive officer, David Hurwitz said: “Over the past few weeks, the Covid-19 pandemic has highlighted the indispensable nature of the minibus taxi industry as the dominant form of public transport in South Africa.
“This, together with the minibus taxi industry’s defensive character, will assist in its quick recovery and smooth transition to normalised operating activities. Demand for minibus taxi services will be first to benefit as the phased easing of the lockdown progresses and the South African economy re-opens.”
To minimise the economic consequences of Covid-19 on its clients, SA Taxi introduced a loan repayment and insurance premium relief programme for qualifying clients, for April 2020.
“We will continue to track the emerging risks related to Covid-19, the phased easing of restrictions and the related impact on the minibus taxi sector, our clients and commuters. Covid-19 restrictions will contain minibus taxi activity in the short term, impinging on clients’ ability to make their loan instalment and insurance premium repayments.
“Lower vehicle supply and operational closures will also impact the sale, financing and insuring of minibus taxis. These factors will influence SA Taxi’s performance during the second half of this year,” said Hurwitz.
He said that an important growth initiative for SA Taxi will be to establish a transactional business that combines its telematics capabilities, rewards programmes, client data and finance offerings into a single transactional account relevant to South Africa’s 250,000 minibus taxi operators.
Read: This is how much money the average taxi operator makes in South Africa
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