Rather than offering clients a payment holiday, which would increase their indebtedness after the Covid-19 lockdown, the taxi financier is ensuring that its clients will be able to survive the lockdown and thrive once they are able to operate again without the added burden of increased debt.
"Instead of a payment holiday, we have chosen to rather direct R175m straight to clients, effectively paying off their interest," says Vincent Raseroka, Bridge Taxi Finance Chairman. "This direct cash injection equates to a benefit of over R450m in interest over the credit lifetime on the accounts of the customers currently on our books.”
The taxi industry is a critical component of South Africa’s economy as more than 70% of the country’s workforce is transported to and from work by taxis on a daily basis.
"We do not penalise or proceed against clients if they have a valid reason to not trade. We look at our clients’ recent taxi operations’ activity and the frequency of trading to determine if they have a valid reason not to pay instalments," says Raseroka.
During the Covid-19 lockdown, most of the taxi operators on Bridge Taxi Finance’s books have clocked up less than 50% of their normal mileage and carried restricted loads of less than 50% capacity. The company will settle 50% of the taxi operators’ finance instalments on their behalf.
A payment holiday of six months will on average add R311,000 to the total payment due by a minibus taxi operator, and would add 21 months to the client’s payment term. For new clients, the effect is even more severe, with an addition of more than R600,000 to the client’s total payment obligations as well as an extended repayment term of more than 42 months to settle the debt.
The taxi financier will backdate these support measures to the start of the lockdown in April and continue with them until the taxi industry is up and running, which is expected to happen at level 1 of the lockdown.
The company is in the process of being granted emergency dispensation from SARS, which will allow it to work with the Solidarity Fund to give a total of R450 million of relief to its clients, and has committed a further R12m to the provision of sanitisers to be retro-fitted into clients' taxis and for the ongoing monthly sanitation of taxis.