Loan out your boda to make money

Monday April 09 2018
pros005 pix

Boda bodas transport thousands of people everyday as they try to avoid the increasingly messy traffic jams. File photo

You have scratched your head for months, wondering where to invest?
I would say, buy a boda boda for commercial purposes, if I was your investment adviser.
Boda bodas, despite the menace they have become, are a good investment that comes with some commercial value.
They seem to be the only means of transport as the city continues to experience unprecedented congestion, especially during rush hours.
True, many of the handlers, if not all, are an irritating lot, but the returns it can give you are better than most of the businesses you can invest in a business in Uganda currently.
And today, we shall expound why we think a boda boda is a good investment and worth trying out.
According to Newton Buteraba, the chief executive officer of House of Wealth, a business advisory services company, the current setup of Kampala makes boda boda a worth investment.
“The two million people during day alone make Kampala congested. Add on the vehicles and then you see the traffic mess. In this case if you have to rush somewhere, the only option is a boda” he says.
However, he says, the best way to benefit from this business is to buy reconditioned motorcycles and loan them out.

So, what does it take to start?
A simple market survey shows that a new boda boda costs about Shs3m and a used one Shs2m.
According to Buteraba, through the loan system, the rider deposit a wholesome figure of about Shs500,000 and make other weekly or monthly instalment as you may agree.
The loan can be repaid with a weekly payment of Shs60,000, which in essence will require about 52 weeks before the debt can be fully settled.
If you use such a method you could find that you will have a repayment of about Shs3.5m, which means that you can make about Shs500,000 in profit for every boda boda.
So, if you loaned out say five boda bodas, then you will have a profit of about of Shs7.5m, which is enough to buy you another two boda bodas. Besides, you will still have your capital intact.
“Loaning out boda bodas is the best model through which you can make money yet it doesn’t require you to have any responsibility such as servicing and repairs which come with it,” Buteraba says.
Hire purchase
Tugende is a profit social enterprise that helps people to access income generating assets such as boda bodas.
Ideally, Tugende gives hire purchase leases for boda boda, which helps them to take ownership of the motorcycle in about 20 months or less.
“Ownership doubles income for riders compared to renting and also increases road safety as the riders will be more responsible than when they are riding a loaned out boda, says, Michael Wilkerson, the managing director of Tugende.
Our leases, he says, include training riders, life and medical insurance as well assisting riders to go through required processes such as getting PSV and driving permits.
Tugende only works with riders who have more than six months of experience.
However, such riders, Wilkerson says, must be people with a plan to own the boda boda themselves.

How Tugende operates
According to Wilkerson, hire purchase riders must have a stage that they have applied to be part of.
After this, they can pay Shs95,000 application fees and provide two guarantors.
The application is assessed and after it has been approved, one is required to make a Shs500,000 down payment.

Weekly payments range from Shs67,000 and Shs78,000 per week depending on the type and model of the motorcycle.
The rider is responsible for servicing. However, Tugende helps with ensuring that suppliers honours their warranty.
William Tusiime Amooti, a resident of Kisugu in Makindye Division, shares his experience after he was loaned a boda from Tugende.

Unlike others, Tusiime uses the boda boda to distribute different commodities such as matooke in markets around Kampala.
He also uses the motorcycle to transport passengers every time he is not occupied with his other business.
This is a venture he started about one year ago and he has been able to buy himself a brand new motorcycle.
He has since loaned out the older boda, which he was able to clear before 22 months elapsed.

Tusiime respects his business and ensures that he pays all required taxes as well as other obligations instituted by KCCA.
He also respects safety and must always ensure that he has a helmet for his customers and for himself.
“I have since started loaning boda bodas and I always make sure that they are in good condition and meet all requirements,” he says.
Tusiime plans to invest all the proceeds into purchasing a Fuso truck to grow it commodity diction business.

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Advice
According to Wilkerson, those who hope to join the industry must find a good stage and the right routes.
“A stage in a busy place and with good leadership will link you up to the right people who will help you to own a boda boda in a short period of time,” he says.
However, it is also advisable that you do some research and background checks from the company or person you are going to get a boda from.
Riders, according to Wilkerson, are also advised to avoid working late at night as well as getting into compromising deals that make them lose out on the boda.

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