MICROCAPITAL BRIEF: OPIC Loans $5m to Motorcycle Leasing Firm Tugende of Uganda

The Overseas Private Investment Corporation (OPIC), an entity of the US government that facilitates investments aligned with US foreign policy, recently loaned USD 5 million to Tugende Limited, a Ugandan motorcycle leasing company. Michael Wilkerson, the CEO of Tugende said, “OPIC’s financing will help us provide financial security, asset ownership and higher income for thousands of additional drivers and improved quality of life for tens of thousands of their family members.”

Tugende’s model involves guiding customers through the following steps: (1) attending a class on driver safety; (2) paying UGX 95,000 (USD 26) to apply for a lease; (3) if they are approved for credit, paying a deposit of UGX 400,000 (USD 107) plus a monthly payment to lease the motorcycle. At the end of 19 months, the customer takes ownership of the vehicle. Since its inception in 2012 through 2018, Tugende has served 12,000 customers, of whom 5,000 have taken on full ownership of their motorcycles.

The loan to Tugende is a component of the Connect Africa project, an initiative through which OPIC invests in transportation and telecommunication infrastructure on the continent. Connect Africa was launched in 2018 and has a three-year budget of USD 1 billion to invest in: (1) value chains; (2) transportation and logistics, including airports, roads, railways and shipping ports as well as warehouses and cold-storage units; and (3) information and communications, which includes wireless internet and mobile phone network systems.

Established in 1971, OPIC is an agency of the US government whose function is to promote economic partnerships and invest in areas deemed important to US interests. OPIC provides loans, grants, political-risk insurance and advisory services to US-based private equity funds; local financial institutions; and projects in the healthcare, energy, technology and education sectors. Its work has reached 160 countries since its inception. During 2017, the organization originated USD 3.8 billion in new commitments, mobilizing total capital of USD 6.8 billion and closing the year with 90 active projects.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

OPIC press release
https://www.opic.gov/press-releases/2018/opic-provides-loan-support-small-business-lending-and-transportation-uganda

Connect Africa background
https://www.opic.gov/opic-in-action/connect-africa

OPIC press release, Connect Africa launch
https://www.opic.gov/press-releases/2018/opic-launches-connect-africa-initiative-invest-more-1-billion-supporting-infrastructure-communications-and

Tagende background
https://www.gotugende.com/our-approach

MicroCapital Brief; June 21, 2018; OPIC Loans $143m to CrediQ for SME Vehicle Loans, Leases in Costa Rica, El Salvador
https://www.microcapital.org/microcapital-brief-opic-loans-143m-to-crediq-for-sme-vehicle-loans-leases-in-costa-rica-el-salvador/

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