Minibus taxi financier Bridge Taxi Finance announced on Monday that it is providing financial relief to taxi drivers and owners in the form of a R175 million cash injection directly into their clients’ pockets.
With the support of its holding company Mokoro Holdings and shareholders, Bridge Taxi Finance has taken the bold decision to settle 50% of its clients’ monthly finance instalments on their behalf throughout the lockdown period.
Rather than offer clients the false assistance of a so-called payment holiday, which would increase their indebtedness after the COVID-19 lockdown, Bridge Taxi Finance said it 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 R175 million straight to clients, effectively paying off their interest,” says Bridge Taxi Finance Chairman, Vincent Raseroka.
“This direct cash injection equates to a benefit of over R450 million in interest over the credit lifetime on the accounts of the customers currently on our books.”
Bridge Taxi Finance views the taxi industry as 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.
Since the company’s inception, it has been Bridge Taxi Finance’s policy to not request payment from clients if they are not trading.
“We do not penalise or proceed against clients if they have a valid reason to not trade,” says Raseroka.
“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.”
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. Bridge Taxi Finance will settle 50% of the taxi operators’ finance instalments on their behalf.
A so-called 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, said the company.
Bridge Taxi Finance further explains that 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 month to settle the debt.
Bridge Taxi Finance 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.
Bridge Taxi Finance has committed a further R12 million to the provision of sanitisers to be retro-fitted into clients’ taxis and for the ongoing monthly sanitation of taxis.