Recently rebranded lender Sidian Bank has launched a Sh10 billion fund that will see Uber drivers access car loans at below market rates.
The lender, formerly known as K-Rep Bank, will advance loans of between Sh1 million to Sh1.5 million to each Uber driver.
The loans are repayable in three years at a fixed interest rate of 10.5 per cent per annum, which is below the current average lending rate of about 18 per cent.
Sidian Bank is looking to grow its loan book by tapping into demand created locally by the revolutionary online taxi-hailing application.
“We are creating an economic opportunity to a much larger scale by injecting 10 billion towards Uber partner-drivers,” said the Sidian Bank chief executive officer Titus Karanja during Wednesday’s launch.
The lender, majority owned by investment firm Centum, recorded a 27.5 per cent drop in net profit to Sh372.3 million for the year ended December 2015 on the back of higher interest expenses.
Its loan book expanded by Sh2 billion to Sh12.5 billion. The bank is hoping to grow its lending by having an additional 10,000 Uber drivers under the loans scheme in the next three years.
The US-based company announced earlier in the month it had signed nearly 1,000 drivers on to its platform since it began operations in Kenya.
Centum Investment Group will provide the cash that will be released over the next three years through its subsidiaries, Sidian Bank and asset leasing company Zohari.
Only Uber drivers that have covered more than 500 trips and have a service rating of more than 4.6 can access full funding. The car loans will also be accessible to other cab drivers with a good credit record and are able to put down a 10 per cent of the vehicle’s value.
While rebranding in April, Sidian Bank announced that it will unveil unique products targeting small and large businesses. The lender has since started enterprise, corporate and institutional banking units, as it aims to offer tailor-made services.
Acting General Manager for Uber Kenya Nate Anderson said the Sidian Bank fund offers drivers a means to buy reliable, high-quality cars to establish and grow their businesses.
“We are building an even more sustainable ride-sharing network in Kenya which moves us forward towards achieving our vision of being a first-choice transport solution for everyone in the country,” said Mr Anderson.
Regular street taxi drivers who wished to join Uber have in the past been blamed the taxi-hailing company of imposing high entry barriers for them. Uber currently signs up cars that were manufactured from 2008 or later.
The regular cabs have also blamed Uber for a slump in their business, as more customers use the application which is deemed to offer cheaper prices.
The ICT Secretary Joseph Mucheru however came to the defence of Uber when a few of its cabs were burnt by protesting regular drivers, who were demanding they quit the Kenyan market.
“Kenya is an open market and we do not object to competition (referring to the likes of Uber, Mondo ride and Mara Moja) because only players offering quality services and value for money win. It is important to for firms to first understand the environment to offer better solutions,” he said.