Absa Bank Executive Director David Wandera (in necktie) having light moment with MOGO Loans CEO MIKHAIL VYDRYN
Kampala, Uganda- Absa Bank Uganda has announced a UGX 19 billion ($5 million) loan facility to Mogo Loans, a fintech company revolutionizing Uganda’s informal economy by providing affordable electric bikes to commercial riders.
“The deal underscores our commitment to supporting the transition to a low-carbon economy and enabling greater financial inclusion,” said David Wandera, Executive Director & Head of Markets for Absa Bank Uganda. “We are aware that a significant share of economic activity is within the informal sector, however, access to financial services remains the main obstacle for growth of informal businesses.”
According to World Bank data, Uganda’s informal sector accounts for 72% of businesses, 78% of the labor force, and 51% of GDP. Uganda aims to reduce the size of the informal sector from 51% to 45% by 2025.
“Mogo Uganda has demonstrated significant investment in Uganda, with a net loan portfolio totaling 28 million EUR, funded primarily through equity, shareholder loans, and offshore debt,” said Mikhail Vydryn, Mogo Uganda CEO. “Absa’s involvement through local currency funding mitigates Mogo Uganda’s FX risk, creating a perfect alignment between Absa’s Environmental, Social, and Governance (ESG) values and Mogo’s efforts to tackle unemployment in Uganda’s informal sector.”
Mogo Uganda has already financed nearly 870 e-boda units, reducing CO2 emissions by approximately 70 tonnes and creating economic benefits for riders.
“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,” Vydryn emphasized. “This initiative has not only resulted in a significant reduction of approximately 70 tonnes of CO2 emissions but has also created substantial economic benefits for the riders.”
The electric bikes offer significant cost savings, with charging costs of UGX 8,000 for 80 kilometers, compared to UGX 10,000 for 70 kilometers for fossil fuel bikes.
Wandera added, “Despite the lack of tangible security, Absa Bank Uganda confidently entered this partnership based on the strength of Mogo Loan’s corporate guarantees and the potential of the project. At Absa Bank, we believe that our clients’ stories are central to everything we do.”
With this financing, Mogo Uganda projects reaching 1,000 electric motorbikes issued through hire purchase by the end of November 2024.
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