The Boda boda business has become a major source of livelihood for a lot of families across Africa, especially in East African cities. For instance, there are over a million motorbikes currently operating in Uganda, with over 200,000 registered in Kampala, its capital city.
But how many people can afford to own their bikes? The answer is very few; in fact, most riders hire motorcycles, pay daily dues and keep the remainder as income. This is because they cannot afford to buy their own in cash, nor do they have the formal credit or income history to qualify for a bank loan.
In a bid to solve this problem on a large scale, Untapped Global, an innovative investment company focused on emerging markets, has partnered with Asaak, a financial services provider to unbanked Ugandan entrepreneurs, to provide financing for over 2,000 motorcycles over the next 12 months.
This partnership that’s expected to solve the problem of motorcycle ownership and leasing in Uganda came a year after both companies had gone into a pilot test. In November 2020, Untapped began to test the waters by financing 40 motorbikes under Asaak’s motorbike financing programme. Now, a huge increase from 40 to over 2,000 bikes validates the potential of the Ugandan market, Asaak’s ability to deliver, and Untapped’s ambition to finance assets across Africa.
“Mobility is an important driver of economic development in Africa, and digitising financing for boda bodas is key to making transport more accessible and affordable,” says Jim Chu, founder and CEO at Untapped. “We look forward to providing the financing to help Asaak scale their business as much as they and their entrepreneurs need.”
Unlike banks that’d want to see some credit history, asset collateral, and human guarantor, Asaak, through its financing program, offers drivers the service based on their financial and behavioural data, such as the number of trips completed on mobility apps, including Bolt, SafeBoda, Uber, and Jumia. So to qualify, a rider needs to submit their riding history on any of the hailing platforms. This is done as a form of due diligence to confirm the worthiness of an applicant.
“Our goal at Asaak is to make it easier for gig-economy workers across Africa to access sustainable financial services,” Dylan Terrill, Chief Business Officer of Asaak, said. “The team at Untapped is aligned with that goal and our growing partnership underscores the dedication to ensure that business owners have the opportunity to reach their full economic potential.”
What’s Smart Asset Financing model?
Untapped Global’s pioneering Smart Asset Financing investment model finances revenue-generating assets or productive assets for entrepreneurs and SMEs in the world’s fastest-growing emerging markets, such as Uganda, Kenya, South Africa, and Mexico.
Few months before scaling up its deal with Asaak, the investment company had already scaled up its partnerships with two other enterprises: one is with Paga, a mobile payment and financial services company, to finance its point-of-sale (POS) machines for Nigerian merchants; the second is with FlexClub, a subscription marketplace to finance mostly electric vehicles for entrepreneurs in South Africa and Mexico.
The company uses its pilot program that takes three to six months to test the potential of a new market or venture, monitor operation and revenue flow, and then collect and integrate this data into its system. If the pilot is validated, it then doubles down with a scale up by investing a larger cheque.
So far, the success it has recorded across its endeavours proves that the innovative Smart Asset Financing model works, and it offers great potential for follow-on funding for growing partners. Untapped Global uses real-time IoT data for the assets it finances to track key metrics such as usage and revenue, allowing for faster due diligence.
From Paga to FlexClub and Asaak, there’s a trend of diversification that shows that Untapped is open to venture into financing productive assets across many sectors like agriculture and healthcare.
“Our goal is to build a diversified portfolio of companies and assets within our scale-up partnerships. So, we always look for good partners that are running good operations, with great potential for growth. But that data integration component is key,” Yvonne Okafor, investment officer West and East Africa at Untapped, told TechCabal.
Untapped says it’s currently running a crowdfunding campaign on Wefunder to enable any investor, large or small, to participate in the movement to empower entrepreneurship in emerging markets.
Through its proprietary smart investment model, Untapped Global’s ambition to create a seamless mode of asset acquisition for African entrepreneurs is clear. It has broken ground in Nigeria, Uganda, Kenya, and South Africa, and with a few more successful scale-up partnerships and countries, it will soon reach its projected peak.