Watu Holdings, the microfinance firm specialising in motorcycle asset financing, has released a report on its 2023/2024 financial statement.
The report states that their 2024 profit dropped 84% to Ksh157 million from a reported Ksh985 million in 2023.
This did not come as a shock to many who predicted it, after the company faced a low number of customer loan repayments.
Watu Holdings operates in Kenya, Uganda and Sierra Leone, where citizens face economic challenges due to high inflation and currency depreciation.
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A 2024 Science Direct study on East African motorcycle taxis highlighted sustainability challenges like slow electrification adoption and high digitalisation volatility. This is also because Kenya and Uganda face market saturation and regulatory hurdles.
In an unexpected and highly positive turn of events, Watu Tuu Limited, the Tanzanian arm of Watu Holdings, reported a profit surge to Ksh 650 million in 2024. This is a 93% improvement from 336 million in 2023.
The financial report reflected a strong demand for motorcycle asset financing in Tanzania, where the transport sector contributes 8% to their GDP, according to TanzaniaInvest, 2024.
Tanzania had a successful economic flourish under the newly elected president, with a 5.2% GDP growth as stated by the IMF and a declining inflation in 2023.
This likely supported Watu Tuu’s growth by boosting borrowers’ capacity and a growing demand for motorcycle taxis amid urban sprawl.
The 84% profit drop clearly reflects the contrast in regional disparities. High inflation in Kenya and Uganda erodes the purchasing power of borrowers to repay loans.
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For Watu Holdings, these inflationary pressures call for the need for more adaptive strategies, like flexible loan terms or diversifying their operations to more stable markets like Tanzania, to mitigate the impact of Kenya’s economic challenges, according to the motorcycle loan company.
What Next for Kenya and Tanzania
According to the World Bank, the only way for Kenya to deal with the economic crisis is through boosting agricultural productivity, stabilising the shilling and improving energy infrastructure, a long-term plan that will benefit Watu Holdings and the loan borrowers.
Tanzania’s stable macroeconomic environment will likely continue to drive demand for motorcycle financing. This will be even more successful if a few investments in infrastructure and private sector support are added.
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