The two parts leading up to this story suggest I made all the right decisions, and that the cash from the business rocked my account on the 30th of every month.
Well, for the most part it did. The good runs outnumbered the bad runs – no doubt – but there some bad runs.
The biggest one was an emotional decision made in a season of desperation in 2014.
I ran the taxi business for three years – from September 2012 to September 2015. I had four taxis on the road at its prime but I usually prefer to say there were three. I say this because this fourth car purchase was such a terrible decision that it was more of a step back than a progressive move in the right direction.
CONSTANTLY RAN OUT OF CASH
2014 was generally a difficult year for me because I was constantly running out of cash: my savings from my corporate job had run out, I wasn’t making that much from my writing, the taxis were bringing in enough to sustain themselves with a little extra for me, but there was this headache of a StanChart bank loan hot on my broke behind.
I’d applied for the loan with my payslip as collateral, the bank didn’t have any asset from me to repossess. This was just about the best thing about that loan. I never had to avoid calls from a heartless auctioneer with a passive-aggressive voice, only from the bank asking when I’d transfer funds to my account to settle the monthly loan repayment. The bank was nice; I could manage the bank.
To get the StanChart loan off my back, I applied for a Sacco loan of Sh1.5 million. I invest with two Saccos. This Sacco I borrowed from is my main Sacco, I’ve been saving with them since I starting working. They lend four times your contributions.
I’d stopped contributing to the Sacco the year before – in April 2013 – when I’d left my corporate job. So what I did was, I pulled in all savings from the taxi business and dumped it into the Sacco to boost my contributions, qualifying me for a big enough loan to clear the StanChart loan and have a little extra to invest in a Toyota Belta.
With StanChart off my back, I had some breathing room to think of what next for my business.
I needed another taxi so I could make more cash per month. This desperate I-must-have-it-now thinking is where things went south.
I didn’t have the muscle to borrow from the bank, from another Sacco or from any fool willing to float me the cash. I entered a deal with one of the fleet managers. The deal was that he’d apply for a loan from his bank to purchase two cars for his fleet– a Toyota Wish and Toyota Voxy. The Wish would be mine.
The loan would be from Equity Bank.
I’d finance for my portion of the loan for the Wish.
I’d pay upfront 30 per cent of the purchase cost, the bank would loan us the balance. This balance would go straight to the car dealer in Nairobi we were buying the cars.
My Wish cost Sh1.15 million. I paid 30 per cent upfront, that’s Sh345,000. Equity loaned us the balance of Sh806,000.
This loan would run for three years, 36 months as the bank likes to say. Month one was September 2014. At 11 per cent interest rate, I was repaying Sh28,000 per month.
Aside from the cost of the car itself, there were also other costs we had to meet to get the car ready for the road. Costs for items such as alarms, trackers, valuation, KRA and county licenses, extra third party and annual comprehensive PSV insurance.
Because we were being financed by the bank, they’d hold on to the logbooks and we’d use an insurer on their panel. Jubilee Insurance. A tier-one insurer. One of the more costly motor vehicle insurers in the land. I couldn’t afford Jubilee insurance, not even when I had the choice to. Now we didn’t have a choice. It was either Jubilee or Jubilee. Annual insurance came to Sh90,000. We were getting insurance premium financing.
There was an ugly hidden cost for loan processing. It knocked us back a cool Sh35,000.
All these ‘Other costs’ totalled to Sh185,000.
These costs weren’t part of the loan, I had to settle them with cash from elsewhere.
The fleet manager would pay me on the 30th of every month, as he had with my other taxi he was managing. Only now, instead of the usual monthly rate of Sh30,000, he’d top it up to Sh40,000.
I already told you I didn’t have too much liquid cash lying around, so I went into the deal 60/40 with my sister. We’d split the returns along the same lines.
Our net returns – after paying interest on the loan and insurance premium financing – would be Sh9,600.
TAKING IT HOME
We didn’t see this cash.
For some reason, there was a deduction month after month that ate into our returns.
If it wasn’t minor repairs, it was major repairs like body work, replacing tyres and Lord-knows what else. The fleet manager was a tad vague.
And when the cash did hit my account and I split it down 60/40 with my sister, it was so little that the long waits and phone calls to follow up weren’t worth the trouble.
Equity and the fleet manager were having a feast, we were scrambling for the crumbs falling off the table.
I just over a year, my sister wanted out. I couldn’t say no because I understood and empathised with her frustration. I’m naturally a patient person but this taxi had me to the end of my rope.
I settled with her – I gave her what she’d invested plus a little extra to say asante.
I also wanted out a few months later.
The fleet manager advised me to be patient and give the car some more time. He said, “We’re more than halfway through the loan repayment, why don’t you hang on until we clear it then you can sell the car and keep the money? It’ll be good money.”
I could. But I didn’t want to. I didn’t have the luxury of time. I needed cash now.
I sold the car to him for Sh200,000. I don’t remember how we arrived at this computation. Probably some rudimentary math done on a scrap of paper while we stood around the banking hall of Equity Community Branch, that June of 2016. He gave me a cheque.
I redirected the cash to another investment and had a stiff drink.
I heard from a far the gavel strike.