Loan (not notes)
In this case, you will not acquire notes in an issuing entity, but you will provide a loan. While loans and notes both constitute financial instruments there are a few legal differences between the two instruments namely:
- Loans are signed both parties (ie the Borrower and the Lender/Investor);
- The contractual terms of a loan are more comprehensive than that of a note;
- Loans impose obligations on Lenders/Investors and
- Loans cannot be traded amongst Lenders/Investors.
We recently visited Tugende in Uganda. Read more about our visit and their activities here.
Tugende is a for-profit social enterprise formally established in 2010 in Uganda. They use asset finance, technology, and a customer-centric model to help informal sector entrepreneurs dramatically increase their economic trajectory.
Tugende is tackling the credit gap for small business in Africa by enabling informal entrepreneurs to:
1) own income generating assets
2) build a verifiable digital credit profile with Tugende based on real world earnings, and
3) earn future growth opportunities through the Tugende digital platform including discounts, smartphones, e-commerce opportunities, and on-demand credit lines.
Starting with motorcycle taxis in Uganda and Kenya, Tugende has served over 52,000 clients on their path to ownership and increased earnings while maintaining industry leading portfolio quality. In addition to continuing to grow its core products, Tugende is growing into new geographies and asset product lines including boat engines for fishermen and fridges for retail shops.
Use of Proceeds / Loan purpose
With EUR 250,000 new partner Tugende can provide up to 250 new clients with a so called lease-to-own package (including life and medical insurance, high quality safety gear, government permits). Instead of a loan, clients receive the product directly: a boda boda, agricultural equipment or assets for retail shops. Each EUR 1,000 helps put a self-employed entrepreneur on the path to job stability, higher take home income, and a verifiable credit history they can use to keep growing.
Tugende’s standard asset finance term is 24 months. Customers pay about 10% as an initial installment and then make payments daily to weekly through 100% digital channels. Tugende’s hands on branch teams and digitally enhanced support ensure clients progress and assist with bumps in the road. Further support is provided by the included medical, asset and life insurance as well as safety equipment. Each client also has 2 guarantors who are a strong part of the Tugende ecosystem, helping ensure timely success. With increased job stability, higher income and the value of a fully owned asset, successful Tugende clients grow their businesses further and create an average of 2.5 new jobs in their community.
Tugende’s mission is to help people help themselves. The company began by helping motorcycle taxi “boda boda” drivers in Uganda own their own motorcycle instead of renting indefinitely from an informal landlord. Ownership increases job stability and raises daily take home income for the average driver from $5/day to $10/day.
Highlights or Awards
● 2012 Unreasonable Fellow
● 2014 Echoing Green Global Fellow
● 2015 MIT Zambezi Prize for top 3 Inclusive Finance Companies in Africa
● 2016 GSBI Fellow
● Numerous media - Guardian, BBC, Economist, Reuters, How We Made it in Africa,
● USD 19M+ assets transferred to new owners