Kenyan lease-to-own motor cycle firm gets Sh155 million loan from America

A Kenyan boda boda (motor cycle taxis) firm has received a short in the arm from the United States.

Watu Credit, a lending firm based in Mombasa has secured a Sh155 million ($1.5 million) loan from an American firm to boost its expansion in Kenya and grow its market share.

“We’ve benefited from time and cost savings in using Lendable’s digital deal platform. This form of financing means Watu Credit can access working capital to grow its loan book without having to tie up its balance sheet,” said Watu Credit chief executive officer Andris Kaneps.

The funds have been secured using future repayments on loans advanced by Watu Credit to its boda boda clients.

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Los Angeles-based Shinnecock Partners were the sole investor in the deal and marks its first investment in Africa.

“We’re proud to help Watu Credit scale up through the provision of credit and free access to analytics,” said Lendable chief executive and co-founder Daniel Goldfarb.

The digital platform, Lendable has in the past financed similar ventures across Africa, in Uganda, it runs Uganda-based Tugende, which offer a lease-to-own model for Ugandan boda-boda drivers.

Lendable says it targets alternative lenders whose customer base is small and micro businesses, to scale up their operations through access to technology-enabled structured financing.

Under the deal, Watu credit will use the capital to enable more Kenyans to purchase boda boda motorcycles on credit.

The lender now says it plans to extend its geographical coverage across Kenya, moving into Central, Rift and Western regions by the end of next year.

In 2015 the Motorcycle Assemblers Association of Kenya estimated that eight million Kenyans on average used a boda boda daily, generating Sh400 million ($3.8m) in revenue.