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In Uganda, Lease-to-Own Boda Bodas are Good Business

In Uganda, Lease-to-Own Boda Bodas are Good Business
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Boda bodas, or motorcycle taxis, are one of the main forms of transport in Uganda. But the costs of buying one and starting your own business are high. Now, an American entrepreneur has started a lease-to-own boda boda business -- with good results. There are about 800 paying drivers and 200 on the waiting list.

People in Kampala love to hate them. Or hate the fact that they actually love them: motorcycle taxis, otherwise known as boda bodas. They are immensely popular not only among the thousands of people hitching a ride every day, but also among young people hoping to make a quick buck.

But owning a boda boda and having your own little business is expensive. That is where American social entrepreneur Michael Wilkerson saw an opportunity. He started a lease-to-own boda boda business, called Tugende.

“The simplest way to put it is that Tugende is a for-profit company, because it provides people with an opportunity. If they don’t take that opportunity, we can’t help them,” said Wilkerson. “Ownership helps drivers make more money. It actually doubles their take home income. But more importantly it gives them the ability to think longer-term and plan for their family’s financial future.”

Boda drivers leasing a bike from Tugende pay 70,000 Ugandan shillings per week, which is about 25 U.S. dollars. It takes about 18 months to fully pay off the bike to own it.

By contrast, renting a bike the ordinary way costs a driver 60,000 shillings a week, a little over 21 dollars, and they’ll never fully own their taxi.

“A lot of people use the bike that they now own as a stepping stone up. They either sell it or they lease it to somebody else and now have two income streams," said Wilkerson.

Like Jonan Ariyo, a Tugende client. He paid off his first bike and now rides around Kampala on his second.

“They give me a bike. I can ride my kids to school. And look for money for them, for cattle for them, and to pay Tugende,” said Ariyo.

Wilkerson said Tugende fills a niche, as most boda boda drivers have a tough time getting business loans due to the perception they are reckless.

“For a lot of people who don’t interact with this community, their perception of the boda boda is the one guy who’s like zigzagging crazy through traffic, not the 10 who’re actually parked at the traffic light waiting for it like they’re supposed to,” he said.

When the business started in 2009, three people signed up for the lease-to own program. Now there are about 800 paying customers driving a Tugende bike. Some 200 have fully paid off their bike, and another 200 are currently on the waiting list.

Ariyo sees himself as a living example that Tugende works.

“After finishing this bike, the second one, I’m planning to come to Tugende to give me a car… the car, I’ll transport some children, like taking them to school. Renting that car to give me money and having this bike of mine to add on that,” said Ariyo.

The success of Tugende has led the company to expand to other Ugandan towns, including Mbarara and Jinja.