How the minibus industry collided with SA's financial sector

Around 250,000 minibus taxis are on South Africa's roads, providing transport for an estimated 15 million commuters a day, but taxi operators are struggling to repay their debts. (Picture Alliance/Getty Images)

SA Taxi, the minibus financing arm of JSE-listed Transaction Capital, may need to be “socialized” to avoid collapse under a R16.7 billion debt burden, but this will have serious implications for the wider economy. This is a possible scenario.

As it stands, SA Taxi's revenue streams are insufficient to service its debt, so the company has begun negotiations with its lenders to restructure at least R5.3 billion of debt, a process that will be completed by June 2024. It is expected that it should be completed by February. There is insufficient funds to continue lending to minibus operators. SA Taxi's very existence could be in jeopardy if restructuring talks break down, but it is now exposed to the remaining R11.4 billion in debt hidden in special purpose vehicles (SPVs) held by some companies. This could have serious implications for lenders. South Africa's largest financial institution.

Daniel King, head of fixed income at Merchant West, said: “Eventually SA Taxi may need to be merged or merged into another business with a much lower cost of capital. “There is no commercial case within Transaction Capital to save the business.” News24 talked about the investment. “As far as we know, the value of the SA Taxi portion of Transaction Capital is nil. It is not a commercially viable business at this time and if we want SA Taxi to survive we need to explore non-commercial options. Essentially, you'd need relief from a third-party public authority to either socialize that business in some way or bail it out on non-commercial terms. ”