Investments: Motorcycle Taxis

Boda boda, ready to take you anywhere

I'm not a very experienced investor and when I do invest, I prefer it to be in something tangible. It's also great if my investment can not only benefit myself financially but also help to spread the wealth a bit. It seems I've found the perfect type of investment for myself in the form of motorcycle taxis.

Motorcycle taxis (locally referred to as boda bodas) are very common here in Tanzania and it is also quite an informal industry. Taxis (both car and motorcycle) are unmarked and the overwhelming majority do not have any time of special operating license. An average trip in Moshi costs about 1,500-2,000 TSH (0.75-1.00 USD) and they are seemingly on every corner. They are normally an off brand 125-150cc model and they are used for transporting people, goods, and anything else you can think of.

Oversized "light" items can be a real treat to see. 

Don't be too impressed; squeezing kids on bikes is easy, its the multiple adults on one that is impressive (Note: I'm still impressed by this)

One of my good friends is a boda boda man and he is also someone from a tough background. He has a genuine interest in helping the struggling teens and youth and acknowledges the dangers of an idle mind. One day we were talking about how people enter into the business and he explained the most common way is a rent to own agreement with an investor. He said the investor usually buys the motorcycle, registers it in his/her name, forms a contract with a boda boda man whereby weekly payments are given, and then after a year or so the ownership is transferred to the boda boda man.

I thought the idea was awesome and it got even better when we moved to the financials. A new boda boda cost about 1,900,000 TSH (903 USD) when all is said and done. Payments of 70,000 TSH (33.25 USD) would be made to me weekly. These payments would be made for 10 months, at which point I would have received 2,800,000 (1,330 USD). So that would result in about a 50% return on investment in 10 months, not a bad figure at all! Unfortunately the Tanzanian shilling depreciates nearly as fast but the investment isn't exactly driven purely by financial benefit. After the boda boda man finishes paying his debt he then owns the motorcycle and has a means of creating income for himself and his family.

The investment isn't without risk as the boda boda men are typically from a much rougher background and many of them can be a bit unsavory. This is where the importance of my friend comes in as he has some clout in the community to make sure the debts are paid. On the contract agreement we have a type of underwriter sign, as well as the village chairman. This ensure there will be accountability from their side.

The first bike that I invested in has gone so well that this month I bought another. I'm hoping I can expand my fleet, provide jobs for some youth, and make a little money on the side as well!