'Own your own boda' (motorcycle taxi) empowers Ugandans(Read article summary)
A startup helps motorcycle taxi drivers in Kampala, Uganda, buy their bikes, which in turn helps them buy homes, start businesses, and send their kids to school.
Courtesy of Edward Echwalu
Motorcycle taxis, or boda bodas, are that East African city's equivalent of rickshaws in India or yellow cabs in New York. But boda boda drivers, however sharply they're dressed, often barely make ends meet: A big chunk of most drivers' incomes goes toward rent payments to the motorcycle owner.
For a growing number of boda boda drivers, however, that loss of income has stopped: Instead of paying 50,000 shillings ($20) a week in rent for the motorcycle, they pay 60,000 shillings ($24) a week for 17 or 18 months to become full-fledged owners of their own bikes.
Own Your Own Boda (OYOB) is a young enterprise that aims to profit by empowering people to earn more income and be less dependent on an owner who can take the bike away at any time. OYOB reinvests its profits into buy more motorcycles and expanding the program to other drivers – and perhaps eventually to other cities.
To date, OYOB has loaned out about 70 motorcycles, most of which are on the road now (25 loans are already completed). Another 20 to 30 people are on the waiting list.
Co-founder and CEO Michael Wilkerson says that once the driver owns his own motorcycle, he takes home about $100 extra per month. Drivers have used that extra income to buy homes, start new businesses, and pay school fees for their children.
OYOB was founded by Mr. Wilkerson and a friend he met while working at The Independent news magazine in Uganda, Matt Brown. The enterprise came into being almost by accident. Medie Sebi, who is now the company's manager, was a boda boda driver in Kampala whom Wilkerson trusted and had befriended. Mr. Sebi managed to get a boda boda loan, and when he took ownership of the motorbike, he was able to sell it and buy land for his mother.
"Medie took me to have lunch with his mother, in her village on the land that he bought, in the small one-room brick house, which he also helped build," Wilkerson says.
He was impressed. So Wilkerson and Mr. Brown asked Sebi if he'd want another loan; they wanted to try out administering such a loan, and they trusted Sebi as a starting point. He said yes – and pointed out that many others like him needed the same kind of help.
Soon enough, Wilkerson and Brown had loaned out seven bikes. Ugandan journalist Andrew Mwenda, who founded The Independent, took notice. "I'll never forget the words he used," Wilkerson says. "'You are changing the trajectory of these people's lives.'"
Mr. Mwenda is not one to support just any old development program. Interested in seeing the positive impact scaled up, he invested the project. It's been growing ever since.
OYOB is currently adding about three bikes a month, Wilkerson says, all from the money it collects from the motorbikes it loans out. The goal is to get to 250, which he admits is a somewhat arbitrary number.
"But we just want to get to a place where we have to hire multiple new managers," he says. That will ensure they sort out any kinks that remain, at which point they can look into expanding to other cities in East and Central Africa.
The model could also be applied to other vocations, like sewing machines for tailors. Wilkerson says.
The plan doesn't come without critics. Milford Bateman, a freelance consultant on economic development and well-known critic of microfinance programs, says, "The poor are put in a much riskier situation when investing their scarce wealth into buying a taxi, when renting at least means they simply walk away if [there are] any problems."
He adds: "With a rental bike, if demand falls, you can simply hand it back and stop paying. But with an owned bike, you have an asset but nothing to do with it. Its value wastes away, and you lose your investment."
Wilkerson doesn't see demand for boda bodas falling. Indeed, Kampala is a bustling city, and motorcycles are a popular way to navigate the traffic-jammed streets. Plus, he says, OYOB is selecting the cream of the crop of boda boda drivers. It chooses drivers who are not only reliable with their finances ("We've only had one guy we gave a bike to run away with it, and that was a mistake on our part," Wilkerson says) – but are safe drivers, as well.
The OYOB staff has noticed a lack of accidents among loan participants – and boda boda accidents are usually common, Wilkerson says. "But we've only had two, with more than 70 guys who are on the road every day for many hours. That to me suggests that there's either something about our vetting process or about having your own bike that makes you less at risk for accidents."
If demand were to fall, OYOB drivers are likely to stay afloat because they’ve developed loyal customers who will keep calling when they need a ride.
It’s hard not to compare the OYOB formula to microfinance schemes. But, Wilkerson says, "This is better. We're not hoping that someone will be a successful entrepreneur. We're allowing them the means to own their own tools for a job they're already doing.”
The motorcycle itself is a physical asset, so if something does go wrong, the OYOB staff can take it back and give it to someone who will do better.
"At the end of the day, [the drivers] are paying us for the ability to use something they can't afford to buy themselves," Wilkerson says. "We have to invest in people who are willing to work hard for themselves."
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