Toyota invests $4m in Uganda start-up Tugende

KAMPALA - The trading arm of the Toyota Group has invested $4 million in Ugandan start-up Tugende, saying it hopes the firm’s loans to small, independent businesses will also help customers buy the carmaker’s vehicles.

Launched in 2012 in Uganda, Tugende began by offering motorcycle loans to riders and has since expanded to offer loans for everything from fishing boats and minibus taxis to sewing machines and refrigerators for small shops. It opened a branch in Kenya last November.

The investment in Tugende came from Mobility 54, the investment fund for Toyota Tshusho Corporation as part of $6.3 million Tugende raised in its Series A investment round this month.

“We see a huge potential for Tugende business in the taxi market,” Mobility 54’s chief executive officer Takeshi Watanabe told Reuters, noting that many minibus taxis were Toyotas.

Watanabe said the group aimed to invest $45 million in transportation and asset-financing start-ups like Tugende in Africa next year.

Tugende’s “mortgages” - the bikers wouldn’t get a title to the bike until the final payment was made - target people like Mark Yaweh.

The 25-year-old motorcycle taxi driver had scraped by riding someone else’s bike for three years, but put a downpayment on a new one and hoped to own his own after 18 months..

Banks are often reluctant to lend money to small or informal businesses in Africa because of the high rate of default.

– REUTERS.