By Steven Enatu
Boda boda riders in Soroti City have raised alarm over the high interest rates and unfavorable conditions set by Motorcycle lending institutions.
In an exclusive investigation, Boda boda riders mainly youths say they pay over Shs8Million to eventually acquire the motorcycles commonly known as Bajajs.
Some of the institutions mentioned by the Soroti City youths are; Tugende, Asaak and Centenary bank.
Speaking to this reporter, Richard Ochuli, the Chairperson Soroti City Boda Boda Association said because many youths are unemployed and can’t afford the Bajajs, they resort to these institutions for loan motorcycles.
Ochuli however stressed that though this has caused a sigh of relief to the youth for daily income generation, the situation has also come with a huge challenge of loan repayment.
He said many of these lending institutions give out motorcycles at high interest rates that cannot be paid by the youths.
“Institutions like Asaak, one has to pay initial deposit of 1.6million and above cash, and a weekly installment ranging from 67,800shs for two years to own a Baja boxer or TVS motorcycle, Tugende 600,000Ugx and a weekly installment of 80,000ugx. Eventually one pays over 8million for a Bajaj boxer instead of 5million if purchased in cash,” he said.
The weekly installments depend on how much one pays as an initial deposit.
Drawing an example of Tugende, a company that lends motorcycles to riders, George William Ojade, a boda boda rider in Soroti city says that the company requires one to make an initial deposit ranging from 600,000ugx and a must weekly installment of 80,000 ugx for two years as he rides to own. “The weekly installment depends on how much you pay as your initial deposit,” he said.
Surrounded by other tough conditions that a motorcycle should not operate outside the area stated in agreed terms and conditions, Ojade narrates that this makes it very difficult to raise the weekly Shs80,000 required by the company.
“In average, a boda boda rider makes up to 10,000 shilling a day and this money one has to fuel, save, buy food at home and do maintenance of the bike,” Ojade noted.
According to Ojade one has to make sure he does not default on payment because the company may take back their motorcycle or levy other charges.
“They take back their motorcycle and you’re not compensated,” he said.
He added that sometimes they are forced to keep borrowing from outside to facilitate paying the loans, a trend that makes one survive on debts for years.
Through their chairperson, the boda boda riders are now seeking for government intervention to rescue them from these companies by offering motorcycles to the youth at cheaper interest rates.
One customer whom we cannot disclose, revealed to us that currently he is processing for a motorcycle loan with Asaak but has been told to make at least Shs1.6million deposit, commitment fee of 100,000shs and will be required to make weekly installment of 69,000shs for 104 weeks.
Abraham Omoding, also a boda boda rider at Stanbic Bank stage in Soroti city said the industry needs an independent intervention from the government in form of motorcycles at loan fee with low interest rate.
“If government could use like one Bank where we go and acquire motorcycles on loan then keep paying like 100,000 shillings a month, that would be fair enough to allow us also develop,” Omoding said.
Meanwhile our attempts to get a comment from the Tugende branch in Soroti were unfruitful for two weeks as the officer at the office referred us to Kampala for a comment through their customer helpline which could not give results.
Our sources were also threatened, especially the chairperson boda boda riders Richard Ochuli by one of the officers at Tugende for giving us information.
At Centenary Bank, our insider whom we cannot reveal for Job security said that the Bank gives out over 100 motorcycles to youth under the youth venture fund the government channeled through some Banks.
He said the loan is given to youth between the ages of 18 to 30 years at affordable interest of 11% interest per annum.
He added that the loan is paid within the period of two years maximum but one has to put 1 million in his account to access the loan.
“But this is the most affordable loan, eventually one owns the motorcycle after paying all the monies at a price not more than Shs5 million,” he officer said.
Ochuli said that Soroti has a total of over 2000 people employed in the boda boda industry who mainly use the road reserves for staging.