Mar 5

Written by: Pete Simms
Friday, March 05, 2010 

At the end of July 2009 SA Taxi Finance (“SA Taxi”) made a commitment of R20 million to ensure that those taxis which have been financed by SA Taxi and are converted panel vans, will be inspected, made structurally compliant and returned to the roads to safely continue servicing the needs of commuters.

SA Taxi is pleased to show that progress has been made on resolving the issue of legalising converted panel vans as TRP compliant vehicles and SA Taxi is particularly pleased with the announcement by the Deputy Minister of Transport which has cleared the way to finalise the process of completing the upgrades to the converted panel vans and ensure that the vehicles are made compliant and that the owner’s eNatis documents will be updated to reflect the vehicle’s compliant status.

Since September last year SA Taxi has already spent over R3 million undertaking an extensive process in conjunction with the Department of Transport (DoT), the SA Bureau of Standards (SABS) and the National Regulator for Compulsory Specifications (NRCS), to actively verify if the converted panel vans comply with the TRP regulations and where they do not comply, developing a process in which these shortcomings can be rectified and thereafter retrospectively legalising all converted panel vans that have been financed by SA Taxi. This exercise established that of the almost 20 000 vehicles financed by SA Taxi Finance, 484 – less than 3% - are converted panel vans.

Other role players that have been consulted in the process include the following: South African National Taxi Council (SANTACO), National Association of Automobile Manufacturers of South Africa (NAAMSA) and, to a limited extent, the other financial institutions.

SA Taxi submitted two representative vehicles that were used for compliance testing, which was undertaken by the SABS at their facilities in Pretoria. The testing indicated that all of the converted panel vans that have been financed by SA Taxi complied with the Type II Brake Test, the Tilt Test and the Roll Over Protection System Test.

The only concern experienced in the test programme was the seat and seatbelt anchorages, where the original seats and anchorage system failed to meet the strength requirements of the TRP. After extensive testing of seat and seatbelt anchorage combinations, a solution was found which significantly exceeded the minimum requirements of the TRP.

The total cost for the upgrade of each vehicle financed by SA Taxi amounts to R16 728 (excl. VAT) for the high roof variant and R16 199.09 (excl. VAT) for the low roof variant.

A recall process and call centre capacity have also been developed to facilitate SA Taxi’s clients access to the workshops at which the changes will be carried out with a minimum of disruption to their business. This process will ensure that the only safety shortcoming associated with the seats and their anchorage would be properly rectified. SA Taxi has 6 months to complete the process but will aim to upgrade those converted panel van taxis it has financed before the 2010 Soccer World Cup.

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 to ensure that these taxi entrepreneurs are able to continue running their businesses and contributing to the SA economy.”

Photographs are accessible by clicking on the the following links:


ENDS

Media Enquiries

Brunswick South Africa

Byron Kennedy
Office: 011 502 7300
Mobile: 082 453 2066
Tshepo Mophiring
Office: 011 502 7300
Mobile: 082 887 4124

Notes to Editors

Detailed History and Chronology

Additional Safety requirements for TRP

The additional requirements relating to a TRP vehicle over and above the standard personnel carrier, for which compliance has to be verified, are safety related and are as follows: Type II Brake Testing, Tilt Testing, Roll-over Protection, Seat and Seatbelt anchorage.

Over the past 6 months an extensive test programme has been carried out on the additional TRP safety requirements. SA Taxi submitted two representative vehicles that were used for compliance testing, which was undertaken by the SABS at their facilities in Pretoria. The tests and results are summarised as follows:

Certification test:	Comment:	Safety/Comfort	Compliance
Type II Brake Test	TRP requirement	Safety	Compliant
Tilt test to (28°)	TRP requirement	Safety	Compliant
ROPS (Roll Over Protection System)	TRP requirement	Safety	Compliant
Seat and seatbelt anchorage	TRP requirement	Safety	Non-compliant A solution was found which significantly exceeded the minimum requirements of the TRP

The testing indicated that all of the converted panel vans on SA Taxi’s book complied with the Type II Brake Test, the Tilt Test and the Roll Over Protection System Test.

However the seats and seat belt anchorages proved to be inadequate and so SA Taxi engaged with reputable companies, TFM Industries and Ulrich Seats, to develop seats and mounting that could be fitted to the panel vans to ensure that they met the TRP safety standards. A recall process and call centre capacity have also been developed to facilitate our clients access to the workshops at which the changes will be carried out with a minimum of disruption to their business. This process will ensure that the only safety shortcoming associated with the seats would be properly rectified.

SA Taxi has 6 months to complete the process but will aim to upgrade those converted panel van taxis it has financed before the 2010 Soccer World Cup. The total cost for the upgrade of each vehicle financed by SA Taxi amounts to R16 728 (excl. VAT) for the high roof variant and R16 199.09 (excl. VAT) for the low roof variant. 

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 has been assigned a primary and a special Servicer Quality (SQ) rating of SQ3 rating by Moody’s Investors Service regarding its ability to effectively prevent or mitigate losses in a securitization” and prevent defaults in the first place or maximizing the recoveries to a transaction when defaults do occur.”
• 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 multi-national 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 SA Taxi financed 484 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.
• In October of 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 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, 484 – less than 3% - are converted panel vans which in terms of current specifications 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 converted panel vans in the industry be upgraded to the new safety specification – not just those that 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 Taxis Latest Response

• SA Taxi has already spent over R3 million undertaking an extensive process in conjunction with the DoT, SABS and NRCS, to actively verify if the converted panel vans comply with the TRP regulations and where they do not comply, developing a process in which these shortcomings can be rectified and thereafter retrospectively legalising all converted panel vans that have been financed by SA Taxi.:
  • 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 is rectifying 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
• 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.