Toyota Supports Ugandan Startup With $4 Million

The trading arm of multinational automotive manufacturer, Toyota, has invested $4 million in Tugende, a credit facility startup that offers loans to assist informal sector entrepreneurs.

Tugende began offering motorcycle loans to riders after it launched in 2019. Eventually, the company expanded to offer loans for fishing boats, sewing machines, refrigerators for small shops and minibus taxis.

The investment in Tugende came from Mobility 54, the investment fund for Toyota Tshusho Corporation <8015.T> 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 disclosed, noting that many minibus taxis were Toyotas.

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

Michael Wilkerson, Tugende’s Chief Executive Officer (CEO) of Tugende noted that more than three-quarters of the borrowers pay off the two-year loans off early using mobile money service or other digital platforms.

According to him, the company was seeking further $40 million in debt and equity to expand its existing motorcycle mortgages, grow its new motor vehicle financing product, and enter new markets in the region.

With an asset base of $30 million, the start-up has handed out about 35,000 bike “mortgages” so far in Uganda, which Tugende estimates has about 800,000 riders.

The financing gap for micro, small and medium 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 kind of microlending Tugende is providing is key to closing that gap.