Tugende, an asset-financing company that operates a lease-to-own business model, is moving to start leasing cars after raising $5 million in debt from OPIC.
This was revealed by the company's CEO, Michael Wilkerson, in an interview, I had with him recently. "We are running a pilot right now with special hires (cabs)," he said.
Before, Tugende has been focused primarily on the leasing of boda-bodas (motorcycles). This, thus, comes as a new addition to their offering.
In his pitches and speeches, Michael emphasizes their drive to help 'entrepreneurs' with income generating assets. This, thus, is why they are piloting with cab drivers. Because they are self-employed and are using the car as an asset rather than a luxury.
"That's our entire mission, it is to help people help themselves, put them in control and so if we could figure out the economics that will be very exciting," Michael Wilkerson, Tugende CEO.
Though, there is a challenge that will come with branching out to finance cars - centering around the period it will take to pay off the car. This can be attributed to the fact that cars are more expensive as compared to boda-bodas.
Additionally, they are less profitable according to Michael. "The challenges with that are that they don't earn as much money as motorcycles compared to the cost of the asset so the repayment period has to be longer," Michael said.
Though, he maintained that they are committed to figuring out what's necessary because the demand for the service is there.
"But overall its working and we have the same dynamics, where a lot of people driving special hire vehicles are renting and would like to own, and we want to put them in control," Michael pointed out.
Currently, they are looking at the various types of cars they should be leasing. Though they seem to be having a soft spot for electric ones. "So we are looking at other types of vehicles, we have seen hybrid electric vehicles starting to penetrate Nairobi," Michael said.
According to Michael, Electric Vehicles are 'exciting' because they are cost friendly since they don't need fuel - which is a significant expense for their clients.
"I am really excited because if there is a way to finance that and reduce the fuel expenditure, that would also make it more profitable for the driver and hopefully allow them to take ownership faster"
Asked if they are looking to have a special partnership with drivers who are already partners with ride-hailing companies like Uber and Taxify, Michael said that they are not yet sure. Though they are open to conversations.
Tugende was founded in 2009 by Michael and his friend Matt Brown as a side project. Andrew Mwenda joined them in 2010 both as an investor and co-founder and they formerly started operating as Tugende towards the end of 2012.