Forget credit ratings; Uber driver quality ensures loan in Kenya

Uber Technologies Inc. drivers in Kenya have an additional incentive to be extra nice to their customers. In a country with limited data on borrowers’ credit worthiness, a bank is offering them car loans based on clients’ assessment of their service.

Sidian Bank Ltd., a closely held Kenyan lender, has set aside 10 billion shillings ($99 million) to lend to taxi drivers buying cars to be part of the world’s largest global ride-hailing provider, Chief Executive Officer Titus Karanja told reporters on Wednesday in the capital, Nairobi.

The chief qualifying requirement is at least 500 trips and an Uber score of at least 4.6 out of a maximum of five points.

“The finance and leasing options are focused more on the applicant’s proven Uber experience than on his or her credit history,” Karanja said. “We expect speedy uptake of this financing package, with the entrenchment of Uber’s services in Kenya.”

Track Record

Sidian, majority owned by Centum Investment Co. Ltd., Kenya’s biggest publicly traded investment firm, is asking for zero down payment for high-scoring drivers and will charge a 10.5 percent interest rate for the debt. In comparison, banks charged an average 18 percent for loans in February, according to central bank data.

Drivers with no Uber track record and hoping to join the service will have to raise at least a tenth of the required amount and will be rated using the more traditional credit history. The Kenyan banking industry’s non-performing loans were 8.2 percent of total loans in April, according to the central bank. The regulator has licensed three credit information bureaus in the past five years to increase statistics on borrowers.

Uber has 10,000 partners in the country, with rides available in the capital and Mombasa, the second-largest city. The taxi-ordering service plans to add 3,000 more drivers this year and is targeting “tens of thousands more” by the end of 2017, according to Nate Anderson, the company’s acting general manager for Kenya.

Sidian says the cab-buying product could nearly double its 12.5 billion-shilling loan book. Drivers can borrow as much as 1.5 million shillings and pay it back within three years.

Earlier this year, traditional taxi operators attacked several Uber drivers and burnt down a couple of their cars, demanding the app-based service be shut down because it gave users undue advantage. That violence only worked to make the service more popular, Anderson said. More than half of the company’s partners now were formerly cab operators.

“What happened in January, February sparked a conversation,” Anderson said. “We did see accelerated growth during that time and were able to create even more economic opportunities.”

– Bloomberg