Tugende, a social enterprise in Uganda that helps boda-boda (motorcycle taxi) drivers own their vehicles, has raised $300,000 in seed funding.
Boda-bodas, which originate from East Africa, are the main sources of income for young men who often have not completed school because they drop out to work and support their families. They’re also a popular mode of transportation as they are easy to maneuver through unpaved roads and traffic.
The problem is, around 80 percent of boda-boda drivers do not own their motorcycles. They rent from landlords with no fixed contract, which means their tool for income can be withdrawn at any time. Besides, take-home income is small after paying for rent and fuel.
Tugende offers a lease-to-own model for drivers who pay 15 percent more per week than renting, but benefit by gaining full ownership in 18 months or less. Once they own their motorcycles, their income more than doubles.
In an interview with VC4Africa, CEO Michael Wilkerson says that the company hopes to increase the number of active motorcycles from 250 to at least 1,000 in 2014. Given the massive, and relatively immediate, social impact the company creates, Tugende was able to get a small amount of grant funding too. But in the interview, Wilkerson says that grants come with a load of paperwork. Even though it’s still something they consider, the company is determined to be financially self-sustainable.
Aaron Pattillo, an angel investor who now serves as one of the company’s advisors and board members, says that he liked the business for its “straightforward rent-to-own business model that proved to be working, albeit on a small scale,” adding that, “I decided to invest because I saw the potential for the company to scale, the positive impact side of the business for the boda drivers was clear and real, and – perhaps most importantly – I was impressed with the commitment and clear-headed capabilities of Michael, the co-founder and CEO.”
Photo: Annika Allman, The Advocacy Project, Flickr
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