Hanke

IMPORTANT NOTE: high risk product - direct loan to a company that leases boda boda's to local drivers. 

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.

 

Documents

Information document issuing entity

Information note issuing entity (for Belgium investors)

Adjusted general terms & conditions

Loan agreement (instead of the usual note terms)

 

About the issuer                 

General information:

• Borrower:                                                   Tugende Limited
• Country of operations:                              Uganda
• Head office:                                               Plot 57, Ntinda II Road, Kampala             
• Website:                                                     https://gotugende.com
• Date of incorporation/Founded:            2010
• # of employees:                                         750
   

Project terms:

• Currency:                                                  EUR
• Amount:                                                    500.000
• Maturity:                                                   24 months, semi-annually amortizing
• Interest rate:                                             5.5% p.a.

 

Summary

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 500,000 new partner Tugende can provide up to 500 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.

 

Mission

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. 

    

Impact

Key impact metrics to date:

●        20,000+ Leases completed/Owners enabled

●        26,000+ Active clients

●        245,000+ Lives improved

Since its inception, Tugende has financed over 50,000 clients with a loss rate of less than 1% and more than 20,000 already taking full ownership. Ownership increases job stability and raises daily take home income for the average driver from $5/day to $10/day. Over time, Tugende has enhanced its lease-to-own package by including life and medical insurance, high quality safety gear, government permits and more. Road safety, financial management and customer care training are also part of Tugende’s application process. This means the positive impact starts on day 1 of a Tugende lease thanks to the job stability of working with a formal, friendly finance partner and having better safety equipment like a high quality helmet.

According to client surveys, Tugende’s successful clients create an average of 2.5 new jobs per asset owned and the average household size is 5 people. This means the overall household beneficiaries of Tugende’s financing and support are now above 250,000 people.

Tugende has been recognized for its social impact by numerous awards and leading impact investors including Partech, Mobility 54, Global Partnerships, Blue Earth Capital, Yunus Social Business, Oikocredit, Symbioitics, Echoing Green and more.      

COVID-19 Update

When the Covid-19 pandemic struck Uganda in March, 2020, we knew our clients were struggling to take care of their families amidst the government lockdown. Tugende lived-up to its commitment to being with clients during the best and worst of times. So despite Tugende facing its own economic challenges, it provided a ~EUR6 grant assistance to our 23,000+ client base at the time. Tugende provided a late payment fee waiver to all clients and extended a four months moratorium. Tugende did not lay off any of the 750 staff at the time of the global tragedy. When the lockdown was lifted in August 2020, Tugende embarked on the journey to recovery. With the closing of Series A in 2021 Q1, new growth capital was deployed and organic growth was also picking up. Unfortunately a second covid wave has triggered a new lockdown in Uganda starting mid June 2021.  This has affected the debt capital pipeline for Tugende with fundraising processes delayed (but not cancelled) in light of potential repeated lockdowns.

Repeated Covid-19 lockdowns have caused an economic shock to businesses in the informal sector where Tugende operates. Although we have worked with clients to keep them on the path to completing their loans wherever possible, we did not receive the same degree of flexibility from our lenders and Tugende has continued to service its debt on time. Our lending is asset backed and payment plans designed around the income generated from the asset itself that we finance. Tugende’s ability to continue servicing existing loans, continue disbursement to vetted clients and giving existing clients flexibility to allow them recover is critical for future success once the pandemic is over. Tugende is capable of servicing it’s loans comfortably from the collections.

 

Management team

Michael Wilkerson, Founder & CEO, holds a BA in Political Science with Departmental Honours from Stanford University (USA), and an MPhil in Politics from Oxford University. He started his career as a Journalist in Uganda in 2006 and has worked on Tugende full-time since 2012 wining numerous merit-based grants and raising USD 35M+ in capital.

Paul Chaggar, Chief Commercial Officer (CCO), holds an MBA from the University of Warwick and Bachelor of Engineering & Commerce (Joint Honours) in Manufacturing Engineering and Business Studies from the University of Birmingham. Paul has a wealth of experience in both automotive and agriculture sector, and currently leads the strategy, product development, and marketing and PR functions at Tugende.

Sylvia Kushemererwa - Head of Human Resources holds a Bachelor’s degree in Education and a Masters in HR Management from Makerere University. She has 15+ years of experience in human resources administration.

Patrick Asiimwe - Head of IT Systems and Innovation is a Cisco Certified Networking Associate and holds a B.Sc. in Computer Science with honours from Makerere University. Patrick is a management information systems specialist with 10+ years of experience in all phases of information systems maturation.

Marisa Fee, Chief Operations Officer (COO), holds a BS degree with Honours in Management from Pennsylvania State University, and an MBA in Strategy and Global Business from New York University. She has 15 years of operations management expertise and has been critical to Tugende’s scale-up.

Daniel Ekpe - Head of Corporate Finance. Daniel holds an MBA from INSEAD and a BA in French and Spanish Literature from the University of Cambridge. During his 8+ years in the capital raising space, he has completed deals across Africa, Europe and the Middle East.

 

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