Ugandan Startup Tugende Secures USD 5 Mn Loan From OPIC
Ugandan motorcycle taxi startup, Tugende, has secured a loan valued at USD 5 Mn from US-based Overseas Private Investment Corporation (OPIC). The loan is expected to facilitate increased small business lending and bolster the expansion plans of the Ugandan transportation enterprise.
Since coming into existence six years ago, Tugende has made remarkable strides in empowering locales by bringing about the economic emancipation of communities through the provision of lease-to-own financing to motorcycle taxi riders.
To its credit, the business has witnessed significant growth since its inception as it now claims to have over 150 employees on its payroll, all of whom attend to a customer-base that is believed to exceed 12,000 motorcycle taxi riders currently – of which 5,000 have been able to purchase their motorcycle taxis outright. Tugende is also known to provide other services which include training on safety, financial planning, and customer service to motorcycle taxi riders. Its business model effectively allows for riders to typically take full ownership of motorcycle taxis in 20 months.
The Ugandan startups’ benefactors; OPIC, is a foremost and self-sustaining United States Government agency that is focused on providing a means through which American businesses can invest in emerging markets.
With presence in more than 160 countries worldwide and mechanisms put in place to cater for such details as financing, political risk insurance, advocacy and partnerships with private equity fund managers, OPIC is known to facilitate the growth of businesses in select regions through the provision of tools that are instrumental to the management of the risks associated with foreign direct investment. By weighing in with these inputs, the agency is well-placed in its bid to foster economic development in emerging markets.
As indicated in a press release issued by OPIC, the Ugandan startup’s vision to scale up its successful operations to other parts of the Eastern African nation is expected to receive a significant boost in light of the recent development. Also, its expansion plans going forward – which is geared towards offering a path to ownership and higher income for many more of the estimated one million full-time motorcycle taxi riders in the sub-region – looks set to be buoyed considerably by the loan.
‘Bodas’ or motorcycle taxis are commonplace in Uganda, and they form an important arm of the country’s transportation infrastructure. The birthing of Tugende; the brainchild of its CEO, Michael Wilkerson who is an American that had already spent some time in Uganda as a Fulbright scholar and journalist prior to the startup’s establishment, was inspired by the recognition of the social, commercial and economic importance of motorcycle taxis in the Ugandan setup.
Michael’s creation, Tugende – which literally translates to “let’s go” in a Ugandan local dialect – is believed to have been borne out of the need to bring economic emancipation to Boda drivers who worked long hours but still had financial security out of reach due to their inability to access credit that will facilitate purchase of their own Bodas.
In the press mentioned above release, the CEO further buttressed that point as he is quoted as saying; ‘Bodas are a key source of transportation in Uganda, but for Boda drivers and many other small business operators, access to capital has always been the biggest challenge.” He went further to reiterate the importance of the loan to Tugende’s operations as he believes such perks will accompany it as financial security, asset ownership, and higher income for many more Boda drivers; a feat that should translate to improvements in the standard of living for many families that will become self-sufficient and financially-secure.
“By supporting Uganda’s Boda drivers, we are empowering local entrepreneurs while also helping to strengthen a key mode of transportation in Uganda,” said Ray W. Washburne, OPIC President & CEO, when he commented on the development. He further stated that the project would further the course of OPIC’s new Connect Africa initiative which is looking to impact such areas as technology, transportation and value chains in various regions of the continent.
The latest injection of capital into the Ugandan startup is coming in the wake of earlier funds raised in equity and debt from a number of firms including the Segal Family Foundation, Echoing Green, a number of private angel investors, as well as some impact-oriented investors drawn to Tugende in the aftermath of advances from the Unreasonable Institute.
Image source: opic.gov