Truestone Impact Investment Management Limited has invested US$300,000 in a three-wheeled vehicles project to provide business opportunities and improve the welfare of low-income citizens in Sierra Leone.
The investment supports a partnership between Keh Keh SL Ltd and ACTB Savings & Loans Limited (the microfinance bank owned by Truestone) which will provide financing options to Sierra Leoneans who would otherwise not be able to purchase the vehicles. The motorised rickshaws are an opportunity to create mobile businesses such as low-cost taxis, delivery vehicles, waste management units or portable food stalls and shops.
“By partnering with the microfinance bank, you not only get the capital but also the training that goes with that. [Keh Keh SL Ltd] wanted us to have the prototype products in our nine branches so we could go beyond private asset-backed finance and help them launch the project on the ground, and explain to the customers what it means and how it works,” explained Paul Szkiler, CEO of Truestone Impact Investment Management.
As part of the agreement, a customer will be able to pay off the principal and interest within one year whilst earning, on average US$12 per day through Keh Keh-related trade. This agreement includes full insurance cover as well as free replacement parts and servicing for up to one year. For this partnership and providing debt, Truestone will take ten percent equity stake in Keh Keh SL Ltd dependent on sales.
“With the microfinance bank in Sierra Leone, we are considering a business plan to sell two thousand rickshaws in the first year,” added Szkiller. “If we hit the KPIs in terms of sales then the microfinance bank also gets ten percent equity in their business.”
Unlike other African markets, including Liberia’s 20,000 strong Tuk-Tuk service fleet, Sierra Leone has only three thousand operating Keh Kehs. The business has benefitted from favourable legislation in the capital Freetown, which introduced a general ban on commercial bike riders using certain designated areas in the central business district, leaving space for the introduction of the motorised rickshaws.
“I think that it would be fair to say that most of our good deals always comes through relationships and this is no exception,” said Szkiler, adding that thanks to the connections with the founder of Africell in Sierra Leone and the manufacturer of Keh Keh vehicles Piaggio, it became possible to observe the market potential and identify business partners.
The government of Sierra Leone has recently launched the National Strategy for Financial Inclusion (2017-2020) which looks to overcome the difficulty of accessing credit for SMEs. With Joe Abass Bangura, CEO of ACTB Savings & Loans Limited in Freetown, sitting on the board of this initiative along with David Kamara, Managing Director, operating as the Anglophone ECOWAS representative for financial inclusion, Truestone is aiming to facilitate this drive for diversification through scaled investment into the country.