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Asaak Boda Financing

Hello, it has been quite some time since our last blog post. Our business has changed quite a bit since then and now we are again adapting to the new coronavirus situation. In the past 4 years of lending in Uganda, one of our major lessons has been that cash is fungible. When giving a business loan, it is generally known that some part of the money will be used for household needs like children’s tuition and medical treatment for relatives; whatever remains after funding these critical needs actually gets invested into the business.


We realized that it is much more impactful to directly give assets and inputs for one’s business rather than cash. This guarantees productive use of the funds and dramatically lowers credit risk. We have done asset financing loans in the past and in a portfolio analysis last year, we realized this was our best performing loan product.


Around the same time, we got in touch with SafeBoda, an impactful African mobility company connecting passengers with trained boda boda drivers through a sleek app. Most boda drivers do not own their own motorcycle and are instead forced to rent one. The motorcycles available for renting are usually decrepit, break down often, and must be repaired at the renter’s own cost. The driver would much prefer to invest in his own bike, but for lack of a credit history he cannot easily access a bank loan to do so.


Thus, our boda financing program was born. We have since then started working with various partners such as Bolt (Taxify), Jumia, and several Savings and Credit Cooperatives (SACCO’s) wherein we quickly approve boda drivers for motorcycle loans based on financial and behavioral data such as number of trips completed in the app, number of months spent saving with the SACCO, etc. An Asaak motorcycle is usually the first asset our clients have owned in their lives and they are eager to pay off their loans as this can double their income.


Through monthly focus groups with our boda drivers, we learned they have a number of other financial challenges as well. For example, most boda drivers never have a full tank of fuel. They carry a passenger for $1, buy $1 of fuel, carry someone for $2, etc. — they can even go to the petrol station 4 times in a day. This wastes time and it’s also fuel inefficient to drive when the tank is almost empty. This inspired our fuel loan product in which we don’t disburse cash to the driver, but instead we load money onto a prepaid card which can only be used to buy fuel from our partner petrol stations. By financing an essential input, we ensure productive use of the loan and enable the driver to do more trips in a week.

Once a driver builds a payment history with Asaak, he can also qualify for personal loans to meet emergency needs at very affordable rates compared to 10–25% monthly interest rates that digital and traditional moneylenders charge in Uganda. In the future, we shall finance other goods and services which directly increase our drivers’ income or reduce their expenses.


Asaak motorcycles parked at our Kampala office at a recent focus group.

Every month, we invite our drivers to our office to share their experiences with our products and raise any other challenges they have in their businesses. From speaking regularly with our clients, we were inspired to create our fuel and personal loan products to meet their other financial needs.

Pictured here are some of our very first boda clients catching up at our Kampala office after a focus group.

Moses Mugerwa, Operations Specialist at Bolt-Uganda, speaks about the Bolt-Asaak bike financing partnership.

Part of the team behind the success of Asaak’s boda financing program.
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