Owning a boda in instalments

Tuesday March 17 2015

boda bodas

Many people earn from boda bodas using the hire-to-ride arrangement. However, Tugede has put arrangements that can afford anyone to have their own motorcycles. Photo BY faswal kasirye. 

It would be a daunting task for many Ugandans to raise about Shs3m as a wholesome figure to buy a boda boda, but as Mark Keith Muhumuza writes, there is a possibility that one can own it in instalments.

For at least five years, Alex Omwesigye, 32, was riding a boda boda belonging to someone else.
Every week, he had to give the owner Shs60,000. It was a routine he has repeated for the last five years but he can’t go no further.
“The boda-boda wasn’t mine and now I want mine. I have been riding for all these years and did not get to own a motorcycle,” he says in an interview.

On a Wednesday morning just off Bukoto-Kisaasi road, hundreds of boda boda riders jam into a room to get lessons on road safety and financial management. Omwesigye is one of them and he has completed the three weeks mandatory training with Tugende.
“After three weeks of study, you have to bring all your credentials for due diligence. I am now waiting for that call to let me know my application has been approved,” he tells this writer.

Tugende provides loans in form of new motorcycles to recommended riders in a lease-to-own arrangement.

Started in 2010, Tugende now has about 700 active riders, mostly in the greater Kampala area.
Back in 2012, they raised about $300,000 (Shs859m) to provide leases on motor cycles. In 2013, another round of investment brought in an additional $300,000 (Shs859m). Two years later, investors appear upbeat and they’ve extended yet another $780,000 (Shs2.2bn) towards the programme.

For Michael Wilkerson, the co-founder and chief executive officer of Tugende, this additional investment from the Segal Foundation and Echoing Green is an indication of a model that is working and has the potential of being profitable.


“This is a start for us going to a higher level,” Wilkerson says in a telephone interview. “One of our biggest challenges is working capital and this next round of investment will help us build good systems and improve our technology for us to expand faster,” he adds.
Boda boda’s have become a popular mode of transport in the city. Often, they are used to navigate the clogged traffic at rush hours.

They’re also considered time-saving. The estimates from URA are that there are about 500,000 boda boda’s on Uganda roads. Tugende is closing in on 1,000 customers, both active and those who have completed paying off their leases.

“It’s clear from a moral standpoint that the riders, not whoever they rent from, should benefit more from their own risk and labour.” Wilkerson says.
“But ownership also has immense ripple effects for communities and the economy by helping riders to invest more in their families and futures. Owners think longer term–including in the way they ride – and accumulate assets so they can lift themselves up the economic ladder,” he adds.

David Gumisiriza is a business accounting graduate from Makerere University but he opted to ride a boda-boda instead of searching for job.
“Every week I make up-to Shs300,000 after deducting fuel expenses. On that, I pay Shs75,000 a week through mobile money or PayWay to Tugende,” Gumusiriza a rider at the Unicalo House stage on Archer Road in Kololo says.

Gumisiriza is in his fourth month of the paying for his boda boda.
Each rider is required to pay a minimum of Shs73,000 a week to Tugende so that they can be able to complete payment in in not more than 18 months. But some riders such as Mugwanya Polly opt to pay more than the required amount. For other riders, this is on an opportunity to save up some money. On a ride from Bukoto to Nakawa, one rider says after completing payment, he sells it.

“Once I sell, I use the windfall to make down payment on land and construction material. Then I will go to Tugende and start the process again,” the rider says. Tugende is registered as a for profit NGO but with emphasis on creating a social impact.

“We are very close to breakeven. Most of the new funding we got is debt financing, meaning that we have to pay back at some point. In 2014, we made a very small profit but our investment is in a social plan and being able to make profit,” says Wilkerson. But considering the risk associated with boda bodas Tugende ensures that riders are already fully compliant with all regulatory guidelines, according to Wilkerson.

A boda boda owner’s experience

Polly Mugwanya, 35, has been a boda-boda rider since 2008. In 2010, he bought his first motorcycle but only rode it for two weeks. “It was stolen from me after just two weeks,” he says adding, “I was stranded for at least two years until a friend told me about Tugende.”

After his boda boda was stolen, Mugwanya tried riding someone else’s motorcycle who had promised to give it to him after a period of time but took it away after one year. That forced me to look for alternatives and that is how I ended up at Tugende after a friend had given me a referral.

In May 2013, Mugwanya got the motorcycle from Tugende but was required to make monthly payments of Shs60,000 for 18 months before he could own it. “I had no problem making this payment. In fact, instead of paying 60,000 a week, I was paying Shs100,000,” he says.
The decision to increase his weekly contribution was driven by rising income. In a week, his income after fuel and other expenses was about Shs400,000. “In 11 months, I had completed the payment,” he claims.

According to Mugwanya, it is not difficult to make payments but it wasn’t a smooth ride all the way. He says almost all boda boda riders face the same challenges. From being arrested by police to working in a risky environment. “But Tugende cautions us riding boda bodas beyond 10pm. When you get a bike, it comes with third party insurance, a helmet and PSV licence. We must have permits as a perquisite,” he says. With daily income of almost Shs60,000, Mugwanya has seen his boda boda make him money enough to cater for his family.