Creating Entrepreneurs in The Taxi Industry

Posted on May 29th, 2014
Funding
Blank notepad over laptop and coffee cup on office wooden table
Blank notepad over laptop and coffee cup on office wooden table

South Africa’s taxi industry – has a rather unfortunate reputation in South Africa, this is despite the fact that the sector transports over 20 million people every day, with an estimated annual revenue of R39.8 billion. There is no denying it,  the taxi business is the ultimate consumer industry.

SA Taxi is hoping to play a part in changing this negative perception. The company arrived in South Africa’s taxi landscape over 10 years ago and forms part of the BEE taxi financing unit of Johannesburg-listed financial services group Transaction Capital.

Kalnisha Singh director of the SA Taxi Foundation says they cater to the market that cannot access funding through traditional channels. The process is, however, not without conditions, according to their website, to qualify for a loan you do need to be a registered member of a recognised taxi association, operate a viable taxi route and have a reasonable credit history.

Unleashing the inner entrepreneur

In an effort to support SMEs, the company introduced their Shayela Rewards Programme in June 2013 to equip taxi drivers with business skills.

“These taxi drivers have the potential to become astute businessmen as they have a very deep insight into their cash flows,” Singh says. That is our integral objective, to give them ownership over something that will result in being their life source,” Singh says.

“As a taxi operator, I am an entrepreneur … That realisation encouraged me to venture into other business areas”

Martin Nkomo (pictured above), aged 40, has been part of SA Taxi’s Shayela Programme since 2011. His minibus taxi business now boasts five vehicles covering Ivory Park, Sandton, Centurion, Midrand, and Alexandra and occasionally, long distance trips to Giyani and Venda. He says when he joined the programme he had no idea that the business would see him expand his entrepreneurial efforts which now include a stake in a construction company and a Coca Cola vending franchise.

“As a taxi operator, I am an entrepreneur. So, unlike an employee, I have no limits as to what I can do to earn an income. That realisation encouraged me to venture into other business areas,” Nkomo says.

Elsah Maimela has been running her taxi business since 2005 after falling ill and leaving her job. She says the programme taught her the importance of managing cashflow.

“While money certainly comes in, it also goes out – to drivers, petrol and oil, maintenance of the vehicles, and, sometimes, to repairs. So, you’ve got to sit down and plan how you’re going to balance income and costs – and that’s not always easy.”

‘Ripple effect’

According to SA Taxi, the institution has financed around 26,000 taxis on the roads, giving direct business to 26,000 SMEs with an annual revenue of R6 billion. Singh says each taxi benefits more than the owner but the entire rank’s economy including queue organisers, conductors and street traders.

“We are empowering taxi drivers to become business men, who in turn, create employment for an estimated 400,000 drivers, rank managers and associated service providers” Singh says.

Added benefits

Singh says Shayela members have access to various benefits including earning cash back on their monthly credit instalments if they keep up with their instalments. They also offer taxi insurance and tracking devices and their drivers are required to attend the Go-Shayela professional driving course as well as various other benefits. Nkomo says he earns R8,000 a month cash back on his monthly vehicle instalments through the programme.

To date over 180 people have completed the programme. Singh says the turnout is significantly lower than their network of clients as most taxi drivers are reluctant to take their businesses off the road.

The taxi vehicles are all equipped with tracking devices, giving it data into the profitability of routes and individual owners. Singh says they use the data to sell localised advertising space in taxis.

Nkomo says the most important thing he’s learned is that despite the opportunity, there is no magic bullet.

“Take advantage of the help that is available. But make the decisions and do the work yourself,” he says.

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