Mogo Uganda receives $5.2 million loan from Absa bank

From the newsletter

Absa Bank Uganda (formerly Barclays Bank of Uganda) and Mogo, an asset financing company, announced yesterday that they will partner to finance access to electric motorcycles in Uganda. Absa Bank will provide $5.2 million in credit to support affordable loans to boda-boda riders to acquire electric bikes. The company now has a net loan portfolio of $30 million.

• Mogo entered the market in 2021 and currently finances e-motorcycles from Zembo and Spiro and e-bicycles from eBee.

• To date, they have financed over 870 electric motorcycles in Uganda.

More details

• The Ugandan electric motorcycle market is in its early stages of development, with few startups involved in asset financing, electric motorcycle and battery manufacturing. 

• Currently, the total number of electric motorcycles in operation stands at over 3,000. 

• Key players include Spiro with 500 e-motorcycles and 32 swap stations, Gogo with 1,800 e-motorcycles and 66 swap stations and Zembo with 700 motorcycles and 29 battery swap stations.

• In the asset financing space, other players exist, such as Watu Credit, which finances Gogo e-motorcycles, and Asaak, which finances Spiro motorcycles.

• The key challenge in e-motorcycle adoption remains affordability. Many interested individuals cannot afford them. Even for those with access to loans, it is expensive. 

• This is because banks and other financial institutions obtain these loans in foreign-denominated currency and pass the costs on to borrowers. 

• Absa Bank is addressing this by providing local currency funding to Mogo to mitigate foreign exchange risk.

Our take

• The fact that Absa Bank has entered into financing electric motorcycles speaks volumes for a sector that banks have shied away from investing in. 

• It is a good starting point, though the amount can roughly finance only about 3,400 electric motorcycles. Achieving scale needs to start somewhere, and the market needs risk-takers to demonstrate it can work.

• Uganda's electric motorcycle market is undoubtedly expected to grow. Projections show it will be among the top five countries in Africa with a huge demand for electric motorcycles, with annual sales potentially reaching 148,000 by 2030.