How Nairobi boda boda riders are using collective savings to build businesses

In 2020, Edwin Obwoge rallied seven fellow boda boda riders to form a group where they could pool and save money to expand their businesses, improve their livelihoods and support each other financially.

At the time, they were operating in the Ngando area of Dagoretti South Sub-County, Nairobi County.

The seven members agreed to the idea and began saving. To ensure their savings were secure, they opened a bank account and continued contributing Sh1,000 each month.

Obwoge says they decided to formally register the group and obtain a certificate that would enable them to access loans from banks and other financial institutions in future. They named it the Cornerview Boda Boda Self-Help Group.

Obwoge, who is the group's chairman, says that after some time, the group sought a loan to expand its business. Unfortunately, the bank where they had been saving declined their loan application.

“New members were joining who did not have motorbikes, and we wanted to take a loan to help them purchase the bikes. The rejection threw us into confusion because accessing the loan was part of our business expansion plan,” he recalls.

As they pondered what to do next, a friend introduced the group to Apstar Sacco, where they discovered an opportunity to access much-needed financing.

At the time, the sacco was benefiting from funding under the Supporting Access to Finance and Enterprise Recovery (SAFER) initiative, implemented by the Kenya Development Corporation (KDC) in partnership with the National Treasury and the World Bank Group (WBG).

Through SAFER, the initiative helps groups expand access to affordable financing for micro, small and medium enterprises (MSMEs), enabling businesses to recover, grow and create sustainable livelihoods.

Obwoge shares that, after several months of saving with the sacco, the group eventually applied for its first loan, amounting to Sh145,000. The funds helped several members pay deposits to acquire motorbikes.

“We also appreciated the transparency we experienced. The business helped us open up opportunities for many boda boda operators,” he explains.

The group has since taken out a second loan worth Sh207,000 and a third worth Sh365,000, which they are currently servicing.

Its growth has attracted many members, including people who are not involved in the boda boda business. “We have members who sell vegetables and others who run different small businesses. We could not turn them away when they showed interest in joining us. It is good to grow together as a community,” he says.

So far, the group has employed three people to help run the organisation, among them a secretary, a treasurer and a management representative.

He says their repayment arrangements are flexible, allowing members to make smaller payments based on what they can afford, including Sh200, Sh300, Sh400 or Sh500.

Obwoge says one of the group’s biggest challenges is convincing young people to start saving and investing. He notes that some young people have a different mindset and do not immediately see the value of saving.

“As a chairman, I believe saving is important, and I would encourage young people to start small and gradually build themselves financially,” he says.

He adds that the group aims to grow into a stronger investment fund, acquire land and develop its own premises, providing a space where members can work and expand their activities in Nairobi.

David Oluoch is a member of Cornerview Ventures and an entrepreneur specialising in ICT. He joined the group through a friend, who introduced him to its policies and financing model.

Oluoch says he was required to pay a certain percentage upfront, after which he could acquire a motorcycle and pay the remaining balance in instalments.

“The amount required was affordable for me, so I joined. They helped me acquire a motorcycle, which I now pay for through daily or weekly instalments,” he says.

He says the motorcycle has been extremely helpful. As an ICT technician, Oluoch is often called by clients to repair laptops, computers, phones and other electronic equipment.

He shares that before acquiring the motorcycle, reaching some of his clients was difficult, mainly because some of the places were inaccessible unless one was using a car or a motorcycle.

“Now that I have my own motorcycle, I can move around much more easily and reach my clients on time. It has also made it easier for me to get stock. I can ride to town, purchase the ICT equipment and electronics I need and return to my shop quickly,” Oluoch says.

KDC Director General Norah Ratemo says the corporation provides accessible and affordable financing to investors, supports businesses, offers business advisory services and finances infrastructure projects.

The corporation works through various partnerships, including with the World Bank, to provide financing to businesses through financial intermediaries.

The programme has three components, with KDC implementing the first component, which focuses on innovation and liquidity and has a total funding of $55 million (Sh7.11 billion).

“The funds are channelled through financial intermediaries, including savings and credit co-operative societies (Saccos) and microfinance institutions, which then lend to micro, small, and medium enterprises (MSMEs) at concessional rates,” she says.

Ratemo says KDC received applications worth $7 billion (Sh906 billion) from financial institutions seeking the funds. After assessing and vetting the applicants, it partnered with qualifying institutions and provided them with liquidity at concessional rates.

The funds are also disbursed in tranches, allowing KDC to monitor how the money is being lent to beneficiaries.

“We have access to their books, so we can get a list of the beneficiaries they have extended these facilities to. We can see the interest rates and how the facilities are performing,” Ratemo says.

She adds that the programme has deliberately targeted women and youth, who often face challenges accessing credit because of limited collateral and credit histories.

“We are very intentional about supporting women and youth and we are very clear with these financial institutions in terms of setting aside a specific amount to support them,” she says.

The programme has created more than 30,000 jobs and supported more than 11,000 women and youth through various Saccos and cooperatives.

Ratemo notes that the initiative has also strengthened the cooperative movement, with Sh458 million channelled to cooperatives, benefiting more than 37,000 members, including over 21,000 women.

The programme also seeks to improve access to finance for informal businesses through digital platforms. Many informal businesses do not maintain proper records or have sufficient banking histories, making it difficult for them to access conventional credit.