Founded in 2012, Tugende is a Uganda-based for-profit social enterprise dedicated to putting people in control of their economic future. An asset-finance specialist, Tugende provides finance and support to help self-employed entrepreneurs own income generating assets.
Tugende’s primary product is a lease to own package for motorcycle taxi drivers, helping them own rather than rent their essential equipment, as well as providing training, life, medical, and vehicle insurance, and safety equipment.
The company serves over 10,000 active customers across 9 locations in Uganda, with 7,000 additional leases already fully repaid and ownership transferred. Tugende is expanding quickly within Uganda and preparing for further growth regionally and into other income generating asset products. In an August 2018 interview with Digest Africa, Michael Wilkerson, Tugende's co-founder and CEO, pointed out their desire to move into leasing cars.
However, at the same time, the company is also looking at closing in on unemployment as well as expand financial inclusion in Uganda following their recent fundraise.
On February 4, 2019, global impact investment firm, PG Impact Investments announced that it had made a $5m debt investment into Tugende. "PG Impact Investments has become a lender to Tugende, a Kampala-based provider of lease-to-own financing to financially excluded individuals to help them own income-generating assets," read part of the release.
Last year, Michael told Digest Africa that they couldn't meet their current demand for motorcycles. “We are getting 100-200 new applications a week,” he said then. This particular investment, therefore, will go towards ensuring that Tugende meets that demand for its primary assets (boda-bodas).
Lack of transportation has been highlighted by the United Nations as one of Uganda’s most significant obstacles for economic development, while high unemployment and exclusion from financial services compounds a lack of opportunity for the majority of low-income individuals.
Also read: How Michael Wilkerson turned a side hustle into Tugende
Tugende works to provide financial stability and to increase access to wealth through their unique financial products in the transportation sector, including insurance, safety equipment and training, as part of its financing packages.
The company's clients are considered too risky to lend to by most banks, but with 7’000 leases completed, the company has found that customers on average double their daily net income as a result of owning through Tugende. This ownership allows customers to invest their own higher earnings to buy land, property, livestock, healthcare and education, which Michael says is key to creating economic growth.
“There are millions of self-employed entrepreneurs in East Africa who will make and save more money with the right access to finance, particularly for productive assets,” Wilkerson says. “The impact created when these new owners invest those gains back into their own communities is transformative, and Tugende is dedicated to continuing to help people drive themselves up the economic ladder.”
Tugende has been looking for growth capital of at least $10 million throughout the past 24-plus months. On July 31, 2018, they announced that they secured $5 million in debt from the Overseas Private Investment Corporation. Between 2014 and 2015, Tugende also raised $780,000 in funding, the majority of our fundraising in that round was debt.
In the interview with Digest Africa, Michael pointed out that he prefered debt financing compared to other funding types. "There were two things that were different for us than for a lot of early-stage companies,” Michael told Digest Africa then, "first, Tugende was raising both straight debt (loans), and convertible debt which could turn into equity at a later stage".
The main reason for preferring debt is his desire to control the destiny of his company. "[We] are very cautious about keeping control of our direction," Michael said. “We want to make sure that we control the strategic direction so that we don’t get pushed into something that is profit maximising at the expense of our customers.”