Vehicle manufacturer Toyota Kenya is looking to make it easier for boda boda operators in Kisumu County to buy motorbikes in a new financing scheme.
Toyota Corporation’s in-house franchise, Tsusho Capital Kenya, in partnership with the Yamaha division, has launched a pilot scheme in Kisumu to empower the riders to own motorcycles without collateral.
The scheme called Crux Finance has enabled a number of boda boda riders acquire their own motorbikes by pooling resources. The plan requires six riders to register in a group and raise Sh48,000, with each getting a bike in phases of two months.
Toyota has entered into the plan with Kisumu County to boost sales of its Crux model bikes.
General manager Tsusho Capital Kenya Beatrice Ndung’u said the company targets to increase sales of its Crux brands to riders who may not afford the total cost of the bike upfront.
“Each of the six members in a pooled group is expected to raise Sh166,000 over a period of one and a half years in payment for the bikes from the time they are accorded,” said Ms Ndung’u.
She said the finance package has been broken down to a daily remittance of Sh355 toward settlement of the loan.
“The uniqueness of this payment system is it gives the riders an advantage in taking care of comprehensive insurance fee that covers the rider, pillion passenger and the bike; and also tracking devices and safety accessories like the guards not issued by other manufacturer we are competing with in the East African market,” said Ms Ndung’u.
Tsusho Capital Services managing director Keiji Tani said the motorcycles market value is Sh119,000 exclusive of value added tax, hence cheaper under the scheme.
He, however, added that the tracking and insurance coverage, which are part of the total cost, are only valid for period during which the members are settling the loans.
“We are also working towards making ownership cheaper through the scheme by providing training on basic safety, riding and maintenance,” stated Mr Tani.
The company has also partnered with Automobile Association (AA) driving school to offer lessons to the riders in the groups at a cost Sh4, 900, almost half the price offered by driving schools. The fee is comprehensive of public service riding licence.
The project will be carried out in three phases; the first being the pilot project within Kisumu County, which aims at equipping 60 riders with motorbikes.
The second, due mid next year, will reach out to other counties while the third phase will be scaled up to individuals who are not members of any riders’ group.
Ms Ndung’u said more than 1,200 bikes will be financed countrywide in the third phase. So far 10 bikes have been issued to the first five groups that embraced the idea.
Victor Omondi, chairman of Yatin Riders Group, who is also a beneficiary, described the scheme as a platform for riders to attain financial independence.
“Once I assume ownership, I can be guaranteed a loan to invest in other ventures since the bike is a collateral,” he said.
Geoffrey Okwaro who lost his motorcycle two weeks into acquisition when a rider he had employed was attacked, praised the speed at which he was compensated two months later.
Though economists say the move by Toyota is geared partly to steal and seal the growing market, Yamaha’s national manager Elizabeth Wangara described it as an empowerment scheme visited to a vital sector of the economy.
“The boda boda transport sector is responsible for nearly 70 per cent micro financiers in Kenyan market today,” she said.
Kisumu County is targeting the scheme to ease job creation among the youth.