Sustainable Mobility in South Africa
July 06, 2017
We recently closed a new $5 million investment with SA Taxi, a credit provider that offers financial products and services for entrepreneurs in the minibus taxi business in South Africa. The investment is a participation in a larger fund that includes other US-based investors, including OPIC, MicroVest, and others. This is Calvert Foundation’s first international investment supporting transportation infrastructure.
In South Africa, 40% of the population uses public transportation and two-thirds of those commuters use minibus taxis as a primary mean of transportation. Minibuses are often cheap to ride and extend routes to both urban and peri-urban areas, and as such are an important provider for low-income populations not served by other public transportation. It is estimated that 69% of households rely on minibus taxis. The minibus taxi industry is made up of independent minibus drivers and entrepreneurs. Today there are an estimated 20,000 minibus taxis operating in the country.
To support the growth and sustainability of the minibus sector, SA Taxi offers loans, insurance and other related vehicle services to enable minibus entrepreneurs to purchase and manage new and more fuel efficient vehicles and expand their business. The focus on fuel-efficiency vehicles is a part of SA Taxi’s efforts to reduce overall minibus emissions. Our investment will be specifically supporting the financing of these vehicles.
Many minibus taxi entrepreneurs are lower-income and often struggle to access credit. SA Taxi aims to close this gap through its credit offering, alongside insurance and other related vehicle services, providing a complete package to entrepreneurs. It is estimated that 90% of SA Taxi’s clients otherwise do not qualify for credit from traditional South African lenders. All clients are black South Africans, a group that historically has lacked access to finance due to the legacy of apartheid. Many of these borrowers reside in rural areas, which are particularly underserved by traditional banks.
This work ultimately aims to provide credit opportunities to underserved communities in South Africa, grow the minibus taxi job market and public transportation infrastructure, and contribute to the reduction of minibus emissions. SA Taxi estimates that 1.8 direct jobs are created per vehicle that is financed.
The investment is also an important opportunity for SA Taxi to diversify its own investor base. This is the first time SA Taxi has received capital from international investors, and hopes that this financing will help catalyze other USD financing and render SA Taxi a more sustainable credit provider overtime. As SA Taxi grows, so can their ability to make capitall available to entrepreneurs in South Africa.
As Calvert Foundation seeks to learn more about the sustainable mobility space and emerging markets in South Africa, we look forward to tracking the impact of SA Taxi.