Boda bodas: Riding day and night to repay loans

Mbarara

Acquiring a loan can be sweet because of the problem-solving promise that comes with it. But repaying that loan can become a nightmare if all things do not go well. The challenge of repaying a loan is what boda boda riders in the western district of Mbarara are facing.

Many have now resorted to working day and night in order to pay back the boda boda loan acquired from financial institutions. Mr Peter Amanya has been in the boda boda business for the last five years but feels he can not progress. A well-to-do man gave him a motorcycle to use. Mr Amanya’s task was to give his boss Shs5,000 daily from Monday to Saturday.

Although that looked a promising offer, getting the Shs5,000 plus catering for his family demands, made it hard for Mr Amanya to progress. “Raising that money was hard because even your family expects you to provide for them,” he told Saturday Monitor recently.

When the motorcycle owner withdrew his property, Mr Amanya decided to acquire a loan from the bank to buy a motorcycle. But even after buying his own motorcycle, saving enough money to repay the bank loan has not been easy due to the competitive nature of the business.

The growing number of boda boda riders, which currently stands at 3,000 in Mbarara town alone, has made the scramble for the about 200,000 town residents difficult by the day. The chairman of boda-boda riders at Ntare Stage, Mr Benard Namanya says life is hard for those who acquired motorcycles on bank loans.

Equity Bank is the biggest financial institution that gives boda boda loans and according to its management, it is hectic to recover the money. The bank has given out more than 850 motor cycles in Mbarara.

This newspaper’s investigation indicates that many riders do not fully own the motorcycles.
“I have to keep on working to raise money to pay the loan and to support my family,” Mr Abdu Mugisha, a boda boder rider in Kizungu Zone says. He says the financial institution that gave him the loan requires him to pay Shs8,600 daily for the next 15 months. Getting such money is next to impossible unless one works for extra hours. Working in the night also has its risks and many boda boda operators have fallen prey to attacks by robbers who take away their motorcycles and money.

Impounding motorcycles
Mr Kadri Byaruhanga, the Equity Bank’s Business Growth and Development Manager (Mbarara branch) said the loans are for 15-18 months and the beneficiary has to pay an agreed amount every month. He said on defaulting, the beneficiary is given 7 days to reconcile his accounts, but this comes with impounding the motorcycle. Mr Byaruhanga adds that when the beneficiary violates the agreement, the motorcycle is auctioned at an equivalent to the loan balance.

Saturday Monitor has learnt that on average, a motorcycle that goes for Shs2.1 million can cost up to Shs3.2 million if acquired on loan and paid within 18 months. “On this money we make about Shs300,000 as profit given the expenses we undertake in the project,” Mr Byaruhanga says. He says the bank faces the problem of thefts by riders though the motorcycles are comprehensively insured. “Cases of disappearance by the beneficiaries are costly to trace.” He says 92 per cent recovery has been made since they started the loan scheme in 2008.

The OC traffic Mbarara, Mr Peter Kagina, said they have been sensitising boda-bodas about their security and retiring from work early. He said if left unaddressed, working at night can become a source of accidents because the boda boda operators will be fatigued all the time.

Overloading
Police records indicate that only one accident involving a boda boda rider was reported last month in the district. Though the traffic officer is reluctant to discuss overloading by the riders, it is common knowledge that they carry more than one passenger including luggage.

Mr Michael Nuwagaba, who operates from Rwebikoona says, “We carry more than one passenger to make more money. There are a number of pressing issues around us like loans.” He said, work becomes even harder when fuel prices rise because many passengers don’t want any increment in charges.

Pressing family demands coupled with pressure to repay loans, are challenges that boda bodas have to contend with. Despite the challenges that boda boda operators go through, many keep flocking to financial institutions seeking for motorcycles on loan.