Lack of access to quick and affordable credit has undoubtedly made it harder for Kenyan small businesses to thrive in a market where a host of SMEs continue to report increased operation costs, tedious paperwork and delays in loan disbursements among other pitfalls. Compounding this are the ongoing macroeconomic difficulties being witnessed today such as high interest rates, high taxes and a generally stressed economy, with the latter having disproportionately disadvantaged their profit margins. But amidst these challenges, a Kenyan asset financier – Watu Credit limited is gradually changing the narrative, becoming a driving force for change and catalysing innovation and technology advancements by bridging the gap between people and accessibility to flexible financing.
By Steve UMIDHA
For close to a decade, Watu Credit limited has been at the forefront of cultivating a vibrant tech ecosystem across the African continent, particularly the East African region and its neighboring markets.
Through the strength of community networks, this asset, FinTech, has become a driving force for change, catalyzing innovation and technology advancements in the continent by bridging the gap between people and accessibility to flexible financing.
Founded in 2015 in Mombasa County, Watu – a loosely translated Swahili word for ‘folks’ or ‘people’, is on the cusp of building a Pan African brand with one mission; to revolutionise mass-market mobility across Africa through financial inclusion and approachability.
“There’s something bigger beyond what we currently do at Watu today. The idea is to become the largest asset financing company in Africa, with a Kenyan root,” reveals Erick Massawe – the Country manager of Watu Credit limited during a recent interview at the firm’s Nairobi’s head office in Upper Hill.
For Massawe, it’s this problem – solving mindset that is helping to shape the WATU of the future. He tells me that the firm, which has since disbursed or issued over 750,000 motorcycles on loan and counting, has created a culture of “thinking outside the box to find unconventional solutions to unconventional local problems, through innovation – changing lives one loan at a time.”
By providing access to affordable and flexible financing for two and three-wheelers, namely; motorcycles or commonly known as boda-boda and tuk-tuks, he says the firm has provided over 1 million loans across 7 countries where Watu has operations today, positively impacting the lives of more than 4 million people.
“I want you to think of it this way, in Kenya today for every working adult, there are five people depending directly or indirectly on bodaboda owners, so literally we have more than 2 million people in our community who have been impacted because of what we do,” says Massawe.
Also read: Entrepreneurship and innovation are key to addressing youth unemployment
Further noting that, theirs is a business that exists not only to make money but essentially to impact lives.
“We are customer – centric, at the core of this business is the people, and it is the people who serve the people we serve. Watu is for Watu and by Watu. We are also actively promoting financial literacy and independence, adoption of digital payments and increased regulatory and safety compliances,” he says.
At the core of the firm’s business are three broad financing products in mobility, WATU Boda – a financing model for both petrol and electric motorcycles, WATU Simu, a bankrolling model for smartphones, tablets that provides affordable and flexible financing solutions for various smartphones to the Kenyan market.
Watu Simu finances a select range of Samsung Galaxy smartphones, with the devices having a warranty period of 24 months.
The firm also runs a road safety program, WATU Shule – a first driving school financing in Kenya, that offers driving and driving classes and road safety lessons for its customers – a move its management says is meant to help address the rampant road carnages, a chunk of which is believed to be triggered by boda-boda riders.
To but that into context, Kenya has about 2.4 million boda-boda operators who ride 22 million daily trips making Sh1.2 billion daily (US$100 million), making the sector crucial to the economy of the country.
Only 30 per cent of the riders have undergone training in a registered driving school, and 65 per cent are not insured.
The industry is run by youths, who contribute 76 per cent of the country’s population; Over 60 per cent of the riders are below 35 years, and in every 5 Kenyans, 4 of them do not have medical insurance.
Those statistics are stark and life-bullying, but it is something Massawe says is being addressed through their Watu Boda packaging offer, which has so far seen over 4,000 active claims that had insurance receiving a form of compensation, with about 1,300 customers having received a compensation bike because they had insurance coverage.
Holdups
Few cases of fraud remain a ‘manageable’ threat for Watu, according to its Country Manager Massawe, who says with their motorcycles and three-wheelers fitted with tracking devices, occurrences of theft and con have been “restrained.”
The Economics of E-Mobility for Passenger Transportation study by the World Bank shows that the feasible entry points to an electric mobility transition are emerging in several developing countries like Kenya, but a sluggish uptake is being witnessed by players like Watu Credit whose quest is to help reduce air pollution and health issues caused by it, even as the global economy races to hold global warming to within 1.5C above pre-industrial temperatures in curbing the effects of climate change.
Such innovations, according to Massawe, reduce dependence on petroleum, as well as noise pollution, with EV-innovations seen to be consuming less energy when stationary.
“Electric two- and three-wheelers and low-cost electric motorbikes, in combination with solar photovoltaic systems, reduce dependence on expensive or hard-to-obtain gasoline, facilitate access to markets and other opportunities, and help solve the first or last mile problem when using public transit,” he said, who calls for government support if e-mobility as a concept is to succeed like it has in markets like South Africa.
Available statistics show that East Africa has become a hub for e-mobility innovation, with local companies creating business models that aim to fill gaps in transportation services without waiting for infrastructure and grid expansion to catch up.
Investors like Watu Credit have spotted the opportunity that e-mobility offers, raising $62 million in 2021 for e-mobility in Kenya, Rwanda, and Uganda. Interesting partnerships are emerging in which companies work together to build battery-swapping stations for electric motorbikes and commercial banks offer their customers credit for e-mobility products.
Future outlook
Watu Credit is eying to cover other African markets where it currently has no operations with a target plan to have 8 more product offerings by the time it turns 10 years.