•Stanbic Bank on Thursday advertised 72 vehicles for auctioning among them 31 Suzuki Altos common with Uber Chap Chap operators.
•Uber says it has reached out to vehicle partners to assess their support to drivers in need, through reducing the overall cost of their vehicles.
Image: COURTESY
The number of taxi operators loosing their livelihood is on the rise as banks close on car loan defaulters, whilst businesses continue to bear the brunt of Covid-19.
On Thursday, Stanbic Bank advertised about 72 vehicles set for the auctioneer's hammer, among them 31 Suzuki Altos common with Uber Chap Chap operators.
The lender entered a partnership with Uber and CMC Motors in 2018 to offer drivers with Sh835,000 low-cost vehicles at 14 per cent interest, payable over three years.
In its latest monthly Purchasing Managers’ Index, released on June 4, Stanbic noted business conditions have worsened in each month of 2020 , with the latest deterioration marked by historical standards.
May saw the headline PMI rise to 36.7, from 34.8 in April, to signal a further steep decline in overall business conditions across the Kenyan private sector.
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
"We still expect the epicentre of Covid-19 to be felt in Q2, with respect to economic activity. Business conditions have contracted for five consecutive months now,” said Jibran Qureishi, Regional Economist East Africa, Stanbic Bank.
NCBA Group has also put up 51 commercial and personal vehicles for sale.
It recently confirmed acquiring a yard for storing cars repossessed from loan defaulters, signaling a rise in asset seizures in the country where businesses and households have been hard-hit by effects of Covid-19.
More than 200 vehicles countrywide have been waved towards the hammer in the past one week, an indicator of tough economic times where individuals have failed to service their loans.
A huge number of saloon cars being auctioned are of between 1000cc and 1300cc, preferred for taxi businesses due to their low consumption.
Most taxi drivers operating on ride-hailing apps such as Uber, Bolt, and Little have reported low business in recent times, especially since the nation-wide curfew and restriction of movement was imposed to curb the spread of the virus.
“I used to take home even Sh3,000 after re-fueling my car and meeting other expenses. Since coronavirus hit us, getting even Sh1,000 after expenses is a struggle,” Kenneth Kimani, a Bolt driver told the Star.
Banks have been extending car loans under their asset financing arms where a huge number off individuals cannot not afford a one-off purchase.
According to the Economic Survey 2020, the number of newly registered motor vehicles increased by 7.6 per cent from 102,036 units in 2018 to 109,751 units in 2019.
Uber on Fridays said it is supporting its drivers which like any other business, have been affected by Covid-19.
“We know it’s especially concerning for anyone who relies on our platform to make a living. As the Covid-19 situation has progressed, we have been in touch with the drivers on our platform to educate them on making suitable arrangements for repayment of vehicle financing loans with their financial institutions,”Uber spokesperson replied to inquiries by the Star.
The company said it has also reached out to preferred vehicle partners to assess their support to drivers in need, through reducing the overall cost of their vehicles.
“As this situation progresses we continue to work with our partners on sustainable ways to support them and the community,” The company said.
It notes that many businesses faced extreme challenges at the onset of lock-down, limiting business and earning potential, as lock-down prevented movement of people and products.
“As a commitment to supporting drivers, we are providing up to 14 days of financial assistance to drivers and delivery people diagnosed with Covid-19 or ordered to self-quarantine by a doctor or public health authority, including where they have a pre-existing health condition that puts them at higher risk,” it said.
Individuals and businesses have been seeking relief from their banks, where majority have been restructuring loans.
In line with the emergency measures announced by the Central Bank of Kenya(CBK) on March 18, to provide relief to borrowers, the repayment period of personal/household loans amounting to Sh199.1 billion had been extended by the end of May, CBK Governor Patrick Njoroge said after the Monetary Policy Committee met on June 25.
For other sectors, a total of Sh480.6 billion had been restructured mainly to trade (23.7 per cent), real estate (20.6 per cent), tourism (12.5 per cent), transport and communication (11.2 per cent) and manufacturing (10.6 per cent).
“Total loans that have been restructured are worth Sh679.6 billion and accounted for 23.4 per cent of the total banking sector loan book of Sh 2.9 trillion. These measures have provided the intended relief to borrowers,” Njoroge said.
The ratio of gross non-performing loans (NPLs) to gross loans stood at 13.0 per cent in May, compared to 13.1 per cent in April.