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Boda boda morphing into a financial subsector

Boda boda riders and their passengers in Kampala

Boda boda riders and their passengers in Kampala

The boda boda industry has steadily morphed into an extended arm of the finance sector, giving banks and other financial institutions a run for their money.

Service providers like Tugende and Safe Boda have entered the financial sector, and are already disrupting the way people receive and send money. These new disruptors now offer services that previously were a preserve of the banks and other financial institutions.

Safe Boda, under their parent company, Guinness Tech (U) Limited, received two licenses from Bank of Uganda under the National Payment Systems Act of 2020 as a payment systems operator to operate as a medium funds transfer, and as a Small Electronic Money issuer.

In the same boda boda industry, Tugende offers a drive-to-own programme to cyclists who get motorcycles on credit and pay back in installments.

With transnational services, the services of Tugende are present in Uganda and Kenya, while Safe Boda is present in Uganda and Nigeria, having withdrawn from the Kenyan market at the height of the pandemic in 2020.

Shafiq Manafa, Safe Boda’s head of payments, says although they have diversified into the payments, the service of offering rides remains their core product.

“Covid-19 challenged us to become innovative and serve our clients better. We have been having cashless on our app as a payments product. The licenses shall help us increase scale, leveraging on our over 35,000 riders around Kampala.”   

He says their entry into financial technology (fintech) will offer them a benefit to attract more venture capitalists, although their main goal is to offer better services to customers.

“We have been receiving investment even before. So, it cannot be the prime reason for our entry into fintech. We want to open more options for our users to use the app. Our users will be able to send and receive funds, save and earn an interest of up to 10 per cent annually, a pay feature, among others. We shall be opening 300 cashless agents around Kampala.”

Manafa adds that for their boda boda loans, their consideration is only with their riders, an operation that has been on for the first four years.

“We have a partnership with Watu, a tier-four non-deposit-taking financial institution that provides our motorists a chance to ride their own motorcycles while serving Safe Boda. We are not in to compete with banks because they have also made innovations like Stanbic bank has Flexipay.”

Charles Mwanguhya Mpagi, the manager, Corporate Affairs and Communication for Tugende, says they are a tier-four non-deposit taking financial institution, regulated by Uganda Microfinance Regulatory Authority and the trade ministry.

“Our asset products go far beyond motorcycle financing alone although they are the major assets of choice for our clients. We are focused on financial inclusion and informal sector growth. We also include significant value-added services beyond credit.”

He adds that the boda bodas are part of a growing list of products like boat engines for fishermen, fridges for shops, tractors and more that they finance across their 23 branches in Uganda and five in Kenya.


Mercy Odu, a corporate and finance expert at the lawfirm, Bowmans, says the new move by Safe Boda will help it convert itself into a super app with the ability to do many things.

Odu says: “Safe Boda can be a fintech, an online shop, a transport company, etc. After approval from the central bank, there’s no squabble because it is now allowed to operate under the National Payment Systems Act, 2020”

She adds that the banks have also realized that they have to become a platform for e-commence, aggregators, payments providers, etc.

“Soon, you will observe that there’s a mash-up of the traditional way of business. Once big data converge, everyone will play to their strengths. With fintech, everyone can be a credit provider,” says Odu.

Odu emphasizes that the new changes shall lead to loss of some revenue streams that the banks had been getting, such as fees on financial instruments, account opening and many more. She highlights that the new changes shall still open up other revenue streams like online shopping, wallets, integration, among others, replacing those streams that could have been phased out.  

Odu says asset finance and receivable finance is largely contractual and unregulated and no rules are being breached by Tugende. She says that unless the central bank takes interest in the sector, which is a measly one per cent since it is on a contractual basis.

Louis Kizito, a lawyer and expert on emerging technologies, believes Covid-19 could have accelerated the need for ride-hailing applications like Safe Boda to diversify into other areas for them to attract more venture capitalists.

“Safe Boda has to show scalability for it to attract more venture capitalists and fintech is hot cake,” says, Kizito.

Kizito reasons that Safe Boda’s entry into the money transfer business will benefit the users since the telecoms - Airtel and MTN - had created a duopoly on the funds transfer sector.

“If Safe Boda is successful, it shall push the giants MTN and Airtel to drop the costs on their transactions,” he predicts.

Kizito agrees that with more ride-hailing apps getting approval from the central bank to operate, some bank revenue streams shall shrink.

Kizito adds that the entry of these other service providers will ease the losses that clients were making through the bank transfers they were making from one country to another.

“Most transfers of money of different currencies through the bank cause a 30 per cent loss in value. Since Safe Boda is in Nigeria, money will now be transferred from here to Nigeria with ease, minimising value loss.”

Kizito believes that due to peer-to-peer networks, other ride-hailing apps like Uber may follow Safe Boda because they have numbers in their favour, which could in the long run benefit the users.



0 #1 OPIO JOSEPH 2022-02-13 12:06

please review and advise as a stakeholder
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