Author: Sadheshan Govender


Date: 16 October 2019

Tugende: MicroFinanza’s Financial and Social Rating Affirmation


Tugende, founded in 2012 in Kampala is a leading technology-enabled productive asset financing company. It has achieved notable growth milestones including the financial and social aspects of the business. MicroFinanza completed a financial and social rating recently to support the capital raising programme arranged by Verdant Capital and was the first rating since inception. This rating produced impressive results for an institution of this size as indicated below.

Its financial rating of BB Stable indicates that the institution has good risk management and financial performance. Other aspects include adequate governance and strong market position. Tugende has reached a critical scale and is robustly profitable excluding grants income. New debt funding has enabled Tugende’s lease book to quadruple in 20 months from January 2018 to September 2019, to USD 13.7 M. The quality of its risk management policy and operations is excellent with PAR 30 at 0.85%, which speaks to future upgrades in financial rating.

Its social rating of BB- indicates adequate performance in respect of social performance, client protection and social responsibility, outreach, and quality of services with satisfactory alignment to its social mission. A survey carried out in 2018 shows impressing socially driven results on Tugende’s clients: 55% invested business, land, agriculture, or new houses; 48% used savings towards education or healthcare; 29% sold motorcycle for an average amount of USD 720; and clients enter a stable employment. Other social indicators include a substantial growth in active leases to 14,171 and 32% of female staff. The ratings report identifies action items, including a formal social strategy, as well setting social goals and targets, and more proactive measurement of outcomes. Given the high developmental impact of Tugende’s business, and that total number of clients impacts social rating, Tugende’s growth and addressing these action items will increase the social rating score soon.

An addressable market of 400 000 motorcycle taxis in Uganda opens the doors for further growth of this institution – Tugende is currently serving about 17,000 active clients. In this respect, Verdant Capital raised USD 13 M of debt funding in 2019 of which USD 2 M has already been disbursed for Tugende to finance its primary product “motorcycles” or “boda-bodas” as they are termed locally. In 2019, Tugende obtained a hire purchase licence in Kenya as part of its regional expansion strategy and it expects to be fully operational from 2020. Other new income generating asset products including cooling equipment for retail shops, automobiles and minibuses have been successfully piloted.

Verdant Capital is currently raising equity for Tugende as part of a broader debt and equity raise which has already secured commitments of USD 14 M of debt funding.

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