The commercial arm of the Toyota group has invested $ 4 million in the Ugandan start-up Tugende. Clearly stated objective: to help (and above all to encourage…) customers to buy vehicles from the car manufacturer by offering loans to small independent businesses.
Tugende: offering loans from Uganda to Kenya
Launched in 2012 in Uganda, Tugende started out by offering loans to motorcyclists so that they could acquire motorcycles and has since expanded its offering to offer loans for the acquisition of products from different markets such as minibus-taxis, motor boats. fishing, sewing machines, refrigerators… Last November, the company opened a branch in Kenya, a strategic country for the automotive sector on the African continent.
Toyota invests in Tugende through its investment fund
The investment in Tugende comes from Mobility 54, the investment fund of Toyota Tshusho Corporation as part of the $ 6.3 million raised by Tugende as part of its fundraising operation completed this month.
Toyota Tsusho is a sōgō shōsha, a Japanese trading house. It has a relationship with the conglomerate established by Toyota, which is its reference shareholder. It is one of the world's largest trading houses.
Toyota foresees huge potential in the taxi market
“We see huge potential for Tugende’s business in the taxi market,” Mobility 54 CEO Takeshi Watanabe told Takeshi Watanabe, noting that many minibus taxis were Toyota vehicles.
Toyota wants to invest $ 45 million in transport and credit start-ups
Watanabe said the group aims to invest $ 45 million in start-ups like Tugende transport and asset finance in Africa next year.
Funding gap in Africa
Banks are often reluctant to lend money to small or informal businesses in Africa due to the high rate of default.
The financing gap for micro, small and medium-sized enterprises in sub-Saharan Africa is estimated at $ 331 billion, according to a 2017 report by the International Finance Corporation, the private investment arm of the World Bank.
Development organizations say the type of microcredit Tugende provides is key to closing this gap.
With an asset base of $ 30 million, the start-up has so far provided around 35,000 bicycle purchase loans in Uganda, which Tugende says has around 800,000 cyclists.
More than three-quarters of borrowers quickly repay two-year loans using a mobile financial service or other digital platforms, said Michael Wilkerson, managing director of Tugende.
Wilkerson said Tugende is seeking an additional $ 40 million in debt and equity to expand its already existing motorcycle mortgage provision offering, develop its new automotive finance product and enter new markets in the region.
Our opinion, by leblogauto.com
While the potential is there in terms of needs, Toyota now intends to develop in Africa by offering the financial means to acquire its vehicles. A very common mode of operation on the American and European continents but which was slow to take off on African territory, for fear of defaults.
In a car market heavily disrupted by a drop in demand from the world, which the Covid-19 crisis only accentuates, the potential of the African market could appear as an El Dorado. What to encourage the manufacturer to invest in credit companies.
Sources: Reuters, Toyota