Graphic Business Editorial: Help commercial drivers with soft loans    

Ghanaian taxi drivers have been at the mercy of their vehicle owners, mostly in ‘work and pay’ schemes.

The scheme is an arrangement in which taxi drivers make part payment for the vehicles and work to pay the rest in instalments.  

Though the scheme is laudable, in as far as it makes the taxi driver the owner of the vehicle in the long run, the terms have become so exploitative that the drivers have had to appeal for an alternative financing arrangement (refer to the lead story of the Daily Graphic of October 29, 2014 with the headline, ‘Work & Pay schemes killing us’).

With microfinance companies charging interest rates of between 48 and 50 per cent per annum, these taxi drivers pay almost double the loans they take. 

They subsequently have to work extra hours in a bid to raise more money to meet the instalment plan. 

For instance, a taxi driver who borrows GH¢15,000 from a microfinance company to acquire a second-hand car will end up paying close to GH¢30,000 as a result of the high interest rate.

But with no alternative financing arrangement for these young entrepreneurs, they have no option but either remain with these microfinance companies or become jobless.

What is more heartbreaking is the fact that after these drivers have worked tirelessly to repay the loan, they often end up with vehicles which have depreciated below what they bargained for. 

An attempt by the government, through the Youth-in-Driving module of the GYEEDA, to aid these drivers hit a snag, leaving the drivers with no option but to resort to the microfinance companies. 

One of the driver associations, the Progressive Transport Owners Association (PROTOA), has, consequently, appealed to the government to facilitate the acquisition of vehicles with lower tax duties and flexible repayment terms for its members to address what could best be described as a complex situation. 

The challenge the drivers are going through only typifies what has become an endemic problem in the Ghanaian economy — access to finance. 

Most businesses in the country, particularly small and medium enterprises (SMEs) and not just these taxi drivers, often complain about inadequate access to and the high cost of finance. 

The universal banks are unwilling to lend to that sector of the economy because it is considered a risky client, for which reason the financial institutions which decide to deal with the sector slap higher interest rates on credit to it.

Although the GRAPHIC BUSINESS sympathises with taxi drivers over this unfortunate twist to their source of employment, the paper believes that it is high time some of the recalcitrant drivers who default in paying their loans desisted from that practice, as that behaviour is poisoning the chances of the few good ones. 

The lending sub-sector should also be fair in the discharge of its services, bearing in mind the fact that the entire economy is harsh and worthy efforts such as drivers looking for their daily bread should not be torpedoed.

The paper commends Vanguard Assurance for going to the aid of taxi drivers with soft loans to acquire vehicles with full insurance cover. 

It urges the government to institute an efficient system to ensure the success of its interventions, as those interventions have so far turned out to be better offers for the drivers. GB