Absa in push to ease access to electric motorcycles
There has been a heightened acquisition of electric motorbikes in the last five years. Photo / File
What you need to know:
- Mogo expects to use the funding to issue at least 1,000 electric motorbikes under hire purchase by this month
Financial technology company, Mogo, has said it has obtained a loan facility from Absa to ease access to electric motorbikes.
The company, which indicated that it had previously benefited from Absa’s financing at the group level, said the first tranche of Shs5b had been disbursed.
The remaining funds are expected to be disbursed gradually before the end of the year to enable asset financing of electric motorbikes.
Mr David Wandera, the Absa executive director and head of markets, said that despite the lack of tangible security, they had confidently entered the partnership to offer solutions that support the country's transition to renewable energy.
“This partnership reflects our ongoing investment in solutions that address local challenges while promoting sustainable growth. We are aware that a significant share of economic activity is within the informal sector, however, access to financing remains an obstacle to the growth of informal businesses and could be a possible incentive for them to formalise. This partnership ... will drive greater financial inclusion, delivering credit to the last mile, while also contributing to a green economy,” he said.
Mogo expects to use the funding to issue at least 1,000 electric motorbikes under hire purchase by the end of this month, which will relieve many informal operators of the burden of paying large amounts for bikes.
It is also banking on the funding to scale its operations in the renewable energy sector which will largely depend on its customer credit score to measure creditworthiness.
Lenders and other service providers use credit scores to decide whether to offer credit and determine the interest and credit limit of a customer.
Mogo is one of the largest EV financiers in Uganda in terms of active boda loans, and it expects to benefit from lower safety risks to shift to a low-carbon economy as part of its sustainability drive.
“Since our launch in May, we have successfully financed nearly 870 e-boda units, enabling our clients to travel over 2.5 million kilometers using clean electricity. This initiative has not only resulted in a significant reduction of approximately 70 tonnes of carbon emissions but has also created substantial economic benefits for the riders,” said Mikhail Vydryn, the Mogo chief executive officer.
Electric bikes are significantly more cost-effective for riders than fossil fuel bikes, which cost Shs10,000 for 70 kilometers, compared to just Shs8,000, which riders can use to charge his or her bike for 80 kilometers.
This is a creative and financially feasible substitute because of the reduced operating and maintenance expenses.
Fintechs have recently moved in to take advantage of a global transition that seeks to reduce carbon emissions.
Uganda’s automobile industry continues to largely rely on fossil fuel, amid calls both internally and externally to transition to renewable energy.
