Taxi hailing service Uber has partnered with Kenya's Sidian Bank to provide car loans to its most experienced drivers using a model that it hopes can be rolled out to all its countries of operation within Africa.
Lack of access to credit is often cited as one of the shortcomings affecting small businesses and individuals in Africa, since relatively few people have bank accounts or credit worth that lenders can assess risk with.
Sidian Bank, which is part of Kenya’s biggest listed investments group Centum Investment, will collect customer satisfaction data from Uber and use it to determine whether the drivers will get access to relatively cheaper loans to buy their own cars.
Under the Sidian scheme, a driver must have accumulated a minimum of 500 trips with Uber, along with an average passenger rating of at least 4.6 points out of 5. This way, the bank hopes to identify the best performing drivers in order to give them access to the loan service.
Sidian will be offering up to 100 percent car loan financing, with a maximum amount of KES1.5 million (US$ 14,700).
“It’s essentially a data driven approach to credit risk analysis, dispensing with the traditional banking method and relying instead on data that Uber has collected” Sidian Bank CEO Titus Karanja said at the launch of the partnership.
Sidian Bank has so far allocated KES10 billion (US$98 million) to the car loan scheme and Uber hopes it can be adopted within the countries it operates in Africa.
“It makes sense to implement similar programs for all of these countries that we are going into in Africa”, Uber Kenya‘s Acting General Manager Nate Anderson added.
With a similar credit scheme rolled out using Uber data in South Africa, Uber hopes to enter into partnerships with financial institutions in Tanzania, Uganda and Ghana in order to introduce and streamline the car loans scheme.
Access to personal credit in Kenya is severely limited, with just 4.4% of Kenyans out of a population of 45 million holding personal bank loans according to the Central Bank. This partnership introduces an interesting model that uses data to streamline an otherwise complicated loan application and approval process.