Moove, an African mobility company with a fintech play, wants to change that and is raising $23 million in Series A to scale rapidly across the continent.
Africa is home to more than a billion people where a majority have limited or no access to vehicle financing. In fact, the continent has the lowest per capita vehicle ownership in the world. In 2019, Africa had fewer than 900,000 new vehicle sales. The U.S. sold more than 17 million new cars that same years.
In Nigeria, owning a car is a luxury very few people can afford. It is a similar case across Africa where car owners often recycle used cars between themselves because of the difficulty of accessing new ones.
Moove was founded by Ladi Delano and Jide Odunsi in 2019. Delano said he and Odunsi, whilst trying to figure out the problems to solve in Nigeria after years of running successful businesses, were left startled by the figures highlighted above: Less than a million new cars sold in an entire continent and over 17 million in the U.S. alone.
“It became clear to us that people aren’t buying cars in Africa because there’s no access to finance. When you look anywhere else in the world, you have financing in most parts of the developed world when you try to buy a car. It’s that way in the UK, or Europe and the US. And that’s what’s driving mobility drive and vehicle sales,” Delano said during the interview.
The founders saw it as a huge task to address this deficit and figured that deploying an asset financing model was the go-to approach. Moove says it is democratizing vehicle ownership by employing a revenue-based vehicle financing model. However, this applies to only a subset of the driving population across the continent Moove calls mobility entrepreneurs.
These include drivers who work in the mobility space (car-hailing, ride-hailing, bus-hailing, among others). Although they make up a small part of Africans who need Moove’s services, Delano says the market for ‘mobility entrepreneurs’ is enormous.
What’s the rational behind backing ride-hailing drivers instead of the overall populace? Delano tells that inasmuch as Moove is changing how people have access to new cars in Africa, he wants the company to solve some of the unemployment problems facing the continent, even more so in Nigeria.
So instead of providing the service for individuals from all spheres of life who cannot guarantee a payback, why not target drivers who would use the opportunity to work and, in turn, generate income to pay back.
Moove is Uber’s exclusive car financing and vehicle supply partner in sub-Saharan Africa. The company embeds its alternative credit-scoring technology, allowing access to proprietary performance and revenue analytics to underwrite loans. It provides loans to these drivers by selling them new vehicles and financing up to 95% of the purchase within five days of sign up. They can choose to pay back their loans over 24, 36, or 48 months, using a percentage of the weekly revenue generated while driving on Uber.
Moove’s loan repayment process is more suitable to drivers than what traditionally exists in the market. Nigerian banks, for instance, are known to collect a 10-50% deposit from drivers; Moove says it charges 5%. The net effective annual interest rate also differs significantly. Nigerian banks charge between 20 to 25%; however, Moove runs on an 8-13% rate.
Also, when you consider the tenure of a vehicle financing loan, Nigerian banks rarely give a repayment duration of more than two years. Moove’s maximum duration is four years. In the long run, Delano says the company wants to extend the repayment duration to five years, a span with more parity to the West.
That said, Moove is looking to add financing to other vehicle classes and types in the coming months, including buses and trucks.