Nordic Microfinance Invests USD 5 million in Tugende, supporting entrepreneurship in East Africa

The USD 5 million subordinated loan given in local currency will support Ugandan-based Tugende in expanding its digitally-enabled lease-to-own asset financing, helping self-employed people own the tools they need to make a living.

Established in 2012 in Uganda and expanding to Kenya in 2019, Tugende offers a range of financing packages for assets to help customers move from renting to ownership or increase existing income streams with new equipment—including motorbikes, cars, boat engines, e-mobility assets, and retail and agriculture equipment. Over USD 18 million worth of fully owned assets have been transferred into the hands of customers since Tugende’s inception.

The funding from NMI will be used by Tugende to continue to meet high customer demand and scale up its successful digitally-enabled operations in existing markets and further strengthen their technology. “We are excited to welcome NMI as a partner to drive further scale and deep social impact,” said Tugende CEO and founder Michael Wilkerson.

Supporting the journey to ownership

Tugende’s core product is a lease-to-own package for boda boda (motorbike taxi) drivers. Over 54,000 customers have benefited so far from Tugende’s financing package which includes road safety and financial training, medical and life insurance, safety equipment, driving permits and hands-on support through the journey to ownership. Tugende clients also build a digital credit profile and score as they own their asset, unlocking new opportunities as their businesses grow.

Boda bodas are a critical part of East Africa’s transportation infrastructure and a big economic driver, providing hundreds of thousands of people in the informal sector with an opportunity to generate an income. Many of Tugende’s customers—often young men—had previously struggled with attaining access to credit to purchase their own bodas, with informal renting arrangements typically lacking stability and halving their earnings.

Benefiting whole household

Through owning their assets, drivers can use the money previously needed to rent their motorcycles to pay for food, medical bills, and school fees for their families. A Global Social Benefit Fellowship survey in 2018 showed on average that Tugende drivers provide for 4.5 family members in their households and 2.6 dependents elsewhere.

“NMI are proud to be partnering with a game-changer like Tugende, whose innovative model gives people more control over their own financial future,” said Arthur Sletteberg, Managing Director of NMI, commenting on the deal. “Tugende lead the market in going beyond just providing an asset, and in addition give customers the tools and support they need to succeed in the long-term. Tugende’s initiatives around environmental sustainability are also commendable, and we are eagerly following the developments in their e-mobility products.”

In early 2021 Tugende launched an electric motorbike pilot in Uganda in partnership with bike manufacturer Zembo, with a similar pilot being scoped in Kenya. Tugende believe that with the right model and infrastructure in place, electric vehicles can be a great fit for mobility and they are currently exploring other potential e-mobility initiatives.

Client support and growth in the long-term

“Tugende is committed to help our clients grow for the long term, far beyond ownership of one asset,” said CEO Michael Wilkerson. “This means making sure—whether it is helping clients access smartphones and the digital economy or learning about e-mobility, insurance and credit scores—Tugende is a true business partner and catalyst, not just a financier. NMI’s impact focus, long term view and immense experience in financial services make this investment a great fit for us.”

Tugende, which loosely translates to “let’s go” in numerous East African languages, has seen impressive growth in the last 3 years, roughly doubling each year since 2012, with the exclusion of 2020. As East African economies were hit by efforts to contain COVID-19, in 2020 Tugende supported 23,000 active customers with unconditional cash grants—an investment in client relationships that was rewarded by quick recovery of payments post-lockdown. Tugende are now poised to resume their growth and are focused on diversifying their product offering across both mobility and non-mobility sectors.

800 full time Tugende staff currently work across 23 branches in Uganda and 5 in Kenya. Along with their high-touch human approach, accessible digital solutions also play a crucial role for Tugende to effectively serve customers, including those in rural areas. As well as building ownership through digital payments, Tugende clients earn a digital credit profile allows them to access discounts, rewards, and add-on products—such as smartphones and sewing machines—and makes their payment track record accessible for future opportunities.

About NMI

Established in 2008 in Oslo, Norway, as a public-private partnership, NMI invests in and supports institutions providing financial inclusion to poor people in developing countries. Both positive social impact and sustainable financial returns are targeted, and investors include the Norwegian and Danish governmental funds for developing countries (Norfund and IFU) and private financial institutions including DNB Livsforsikring, Ferd, KLP, Lauritzen Fonden, PBU, Storebrand, TD Veen and Koldingvej 2, Billund A/S.

Our investment philosophy is based on active and long-term partnerships. We take board positions and work actively to support growth and professionalization. Furthermore, our Technical Assistance (TA), funded by the Norwegian development agency Norad, supports projects to build institutional and human capacity at the investees

About Tugende

Founded in 2012, Tugende uses asset finance, technology, and a high-touch customer support model to help Micro, Small, and Medium-sized Enterprises (MSMEs) own income-generating assets. Tugende’s core product is a lease-to-own/hire-purchase package for motorcycle taxi drivers in Uganda and Kenya. The package includes training, medical and life insurance, safety equipment and hands on support through the journey to ownership. Tugende has served over 54,000 clients with more than 23,000 already achieving full ownership of at least one asset. With 800+ employees, Tugende is growing geographically and has also added new productive asset finance products including vehicles, boat engines, and equipment for retail shops.

A for-profit social enterprise, Tugende has been recognized for its social impact by numerous awards and partners including the Unreasonable Institute, Echoing Green, The Zambezi Prize for Financial Inclusion, Shell Foundation, GSBI – Miller Center for Social Entrepreneurship, and Yunus Social Business.

Tugende has also raised more than USD 30M in debt capital to fuel its portfolio. Current debt partners include Blue Earth Capital, U.S. Development Finance Corporation, Symbiotics, Frankfurt School Financial Services, Agora, Global Social Impact Fund, and Oikocredit.