Written by: Pete Simms
Wednesday, July 29, 2009 

SA Taxi Finance (“SA Taxi”), South Africa’s leading provider of finance to the taxi industry, today announced a new safety initiative designed to begin the elimination of unsafe converted panel vans from the roads of South Africa.

Under the terms of the programme, SA Taxi will be investing in the region of R20m to ensure that those taxis which have been financed by SA Taxi Finance and are converted panel vans, will be inspected, made structurally compliant and returned to the roads to continue servicing the needs of commuters. SA Taxi also announced that it is making 100 vehicles available at its own expense for use by those Taxi operators affected, whilst their non-compliant vehicles are upgraded.

The conversion of panel vans in South Africa began in the early 2000’s, in response to a shortage of vehicles relative to demand and the fact that once converted, these vans could accommodate two extra seats making them commercially more attractive for taxi operators.

In the last quarter of 2007 the government introduced a new, higher level of safety specifications, which required all new taxis to have seat belts and roll over protection. The new specifications also stipulated that Toyota vans must be restricted to a maximum of 14 seats with the seats fixed to the chassis.

Converted vehicles were registered as taxis on the government’s eNatis system after being passed by the SABS and government testing stations whose duty it is to establish that these vehicles were adequately converted. In common with other taxi financiers, SA Taxi relies on the eNatis registration documentation for verification of the vehicles that it is financing.

In October 2008 IVID (International Vehicle Identification Desk), a Business Against Crime initiative, approached SA Taxi (having already approached the banks’ SABRIC committee, the Department of Transport and Toyota South Africa) to inform the group that it could no longer rely on the government’s eNatis system as a means to identify converted panel vans.

SA Taxi immediately commissioned IVID to conduct an audit of every taxi ever financed by the group. This exercise established that of the almost 20 000 vehicles financed by SA Taxi, 584 – less than 3% - are converted panel vans of which 374 are compliant and legal in every respect and 210 legal but not complaint with the required safety standards. In terms of current specifications all 584 are considered unsafe.

As a result, SA Taxi approached government proposing that:

• All 4000 converted panel vans in the industry be upgraded to the new safety specification – not just the 15% SA Taxi is responsible for financing - having established from an industry specialist that the cost of implementing such changes will be between R15 000 and R40 000;
• SA Taxi will make 100 vehicles available for use by the 584 operators financed by the group while their risky vehicles are upgraded;
• SA Taxi further proposed and is assisting in a police investigation into dealers and convertors who might have colluded to circumvent the government eNatis system, making all of SA Taxi’s documents available to be used in this investigation.

The lack of resolution of this matter by all stakeholders, including government, has prompted SA Taxi to launch this new safety initiative announced today.

Commenting on the initiative, SA Taxi CEO, Martin Bezuidenhout, said: “As a leader in the financing of taxis across South Africa, we are taking a lead in lifting safety standards for the 15 million commuters who rely on taxis every day. This initiative ensures that all converted panel vans financed by SA Taxi will be inspected and rectified at our expense. Operators will be given a loan vehicle to enable them to continue to work whilst their vehicle is being upgraded.”

He continued: “We are making contact with all 584 operators this week and expect that the process will be completed within 4 months, following agreement with the authorities. It is important that operators wait to be contacted by us to ensure the process is conducted efficiently and as quickly as possible. We will need to stagger the inspections to ensure that operators that need a loan vehicle can receive one.”

Issued by Brunswick on behalf of SA Taxi

Notes to Editors

Detailed History and Chronology

The South African Taxi Industry

• Among developing economies, South Africa is almost unique in the provision of public transport. Over decades the failure of successive governments to provide adequate integrated rail or bus services has led to the growth of a privately owned and operated taxi industry, which provides accessible, affordable, transport to around 15 million commuters every working day. Most of the 180 000 taxis are owned and operated by individuals, who are associated with local and regional taxi associations that represent their interests within a loosely controlled framework of government legislation.
• The South African Taxi industry was spawned by informal black entrepreneurs during the darkest days of the apartheid era and today flourishes more formally as an essential part of the country’s economic and social existence. The industry is not without flaws. However isolated, incidents of illegal and reckless driving, unmannerly conduct towards commuters, unsafe vehicles, horrific accidents, violent conflicts between taxi leaders and associations, and resistance to legislation or control, have all contributed to a less than favourable image by the public.
• In 2006 the South African government set out to address the particular issue of commuter safety with the introduction of the Taxi Recapitalisation Programme, which offered owners of aging vehicles a R50 000 incentive to scrap their old vehicles and purchase new taxis that complied with various safety requirements. This initiative resulted in a dramatic increase in the demand for vehicles and finance. Dealers experienced difficulty in obtaining vehicles from manufacturers, and institutions that provided traditional vehicle finance assessed the risk of, and responded with various degrees of focus to, this new opportunity.

SA Taxi Finance

• SA Taxi Finance (Pty) Ltd (“SA Taxi”) is South Africa’s leading provider of finance to the taxi industry, having financed the businesses of almost 20 000 taxi operators over the past 12 years.
• To fulfil its role SA Taxi employs its own equity as well as raising funding through appropriate structures, including Moody’s Aa2ZA rated debt instruments which have been issued directly to leading financial institutions.
• SA Taxi views its societal role as an enabler of affordable, safe transport to the 15 million commuters who travel the roads of South Africa in taxis every day and a contributor to the financial empowerment of taxi owners who in turn are providers of employment to over 400 000 drivers, rank managers and providers of associated services.
• SA Taxi seeks to be a preferred provider of finance, competing against the multinational banks that dominate vehicle finance in South Africa, through a detailed understanding of the needs of its customers, a superior assessment of and response to individual owner’s credit capacity, responsive trustworthy relationships with motor dealers nationally, and exceptional administrative speed and efficiency.

Background to the Conversion of Panel Vans

• In the early 2000’s, accelerating in response to the shortage of vehicles mentioned above, enterprising individuals commenced with the conversion of panel vans to 16 seat taxis.
• In 2005 Toyota Japan, via Toyota SA issued letters to dealers saying it will not assume any legal liability for the local conversion of panel vans into taxis as they deemed them unsafe.
• Government legislation did not however object to this practice and panel vans were converted into taxis which were legally allowed to operate on the roads and be financed in terms of the government Taxi Recapitalisation programme.
• A shortage of vehicles and the fact that these converted taxis had two additional seats made them an attractive alternative for taxi operators.
• Converted vehicles were registered as taxis on the eNatis system after being passed by the SABS and government testing stations whose duty it is to establish that these vehicles have been adequately converted. In common with other taxi financiers, SA Taxi relies on the eNatis registration documentation for verification of the vehicles that it is financing.
• Without access to Toyota’s data base it was and is not possible to identify converted vehicles from the eNatis documentation vin numbers (i.e. the vehicle identity numbers).
• Over this period, for the reasons stated above, Taxi operators chose to purchase over 3000 converted panel vans, all of which were legally compliant with the taxi recapitalisation requirements and most of which were financed.
• In the last quarter of 2007 the government introduced a new, higher level of safety specifications, which required all new taxis to have seat belts and roll over protection and with the Toyotas restricted to a maximum of 14 seats with the seats fixed to the chassis.
• From late 2007 converted panel vans were rendered illegal, as none had authorised roll over protection or seats fixed to the vehicle chassis.
• Since then a further 973 converted fourteen seat vehicles were purchased by taxi operators.

SA Taxi’s Financing of Converted Panel Vans

• From 2005 until the last quarter of 2007, SA Taxi financed 374 converted panel vans after having inspected eNatis registration documentation to ensure that the vehicle financed was a legal and compliant taxi vehicle, and having verified the authenticity of each taxi operator’s license with the relevant provincial licensing board, prior to final credit approval.
• Subsequent to the last quarter of 2007, SA Taxi unknowingly financed 210 of these converted panel vans, it being impossible to establish their illegality despite SA Taxi's credit procedures and verification processes. Invoices from dealers and government produced eNatis documents all show these as “new” 2008 compliant vehicles.
• In October of 2008 IVID (International Vehicle Identification Desk), a Business Against Crime initiative, approached SA Taxi (having already done approached the banks’ SABRIC committee, the Department of Transport and Toyota South Africa) to inform the company that SA Taxi could not place reliance on the government’s eNatis documentation as a means to identify converted panel vans. IVID has access to confidential manufacturer information, not available to financiers, which enables it to do so.

SA Taxi’s Initial Response

• In immediate response, SA Taxi mounted two initiatives:

• Firstly, IVID was commissioned to conduct an audit on every taxi ever financed by SA Taxi. This exercise established that of the almost 20 000 vehicles financed by SA Taxi, 584 – less than 3% - are converted panel vans of which 374 are compliant and legal in every respect and 210 legal but not complaint with the required safety standards. In terms of current specifications all 584 are considered unsafe.
• Secondly, SA Taxi instituted a process whereby IVID confirmed the legitimacy of all new vehicles prior to the approval and acceptance of financing. In the ensuing months SA Taxi received in excess of 300 applications to finance such vehicles, rejecting all of them.

• As a result, SA Taxi approached government proposing that:

• All 4000 converted panel vans in the industry be upgraded to the new safety specification – not just the 15% SA Taxi is responsible for financing - having established from an industry specialist that the cost of implementing such changes will be between R15 000 and R40 000
• SA Taxi will make 100 vehicles available for use by operators while their risky vehicles are upgraded.
• SA Taxi further proposed and is assisting in a police investigation into dealers and convertors who might have colluded to circumvent the government eNatis system, making all of SA Taxi’s documents available to be used in this investigation

SA Taxis Latest Response

• The lack of resolution of this matter by all stakeholders, including government, has prompted SA Taxi to take the initiative and out of concern for commuter safety the following was announced during the week commencing 27th July 2009:

• In the interests of all stakeholders, SA Taxi is totally committed to playing a constructive role in the evolution of the South African taxi industry from the unregulated and informal industry of previous decades, into the more regulated and ever maturing industry that it is today
• SA Taxi is totally committed to complying with the letter and spirit of all laws and regulations regarding the South African Taxi Industry.
• SA Taxi has taken every precaution to adhere to laws and regulations by placing reliance on government information and institutions (i.e. SABS, government testing stations and eNatis documentation).
• Despite this due care, clients of SA Taxi may be operating taxis that are not compliant with the government’s latest safety regulations.
• SA Taxi will rectify this situation as soon as is logistically possible by:
  • Inspecting any vehicle thought to be structurally non compliant
  • Advising the client of the requirements for the vehicle to be made structurally compliant
  • Rectifying the structural defects at the expense of SA Taxi
  • Loaning the client a vehicle for use while rectification work is underway.

• SA Taxi supports and is a protagonist of the transformation of the South African minibus taxi industry, which provides: efficient transport for 15 million commuters per day; the empowerment and creation of Small and Medium Enterprises proving a sustained livelihood to approximately 180 thousand entrepreneurs; and direct and indirect employment to over 400 thousand people.
• As evidenced by this recent initiative, SA Taxi is well poised to facilitate the growth and maturation of the industry, and to respond sensibly to the inevitable formal constraints and regulations that will be imposed over time.

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