By Jeremy Gordon, KF11, Kenya

“People like us can’t get a loan. You have to be a member of a group with an influential person in it—we don’t know anyone like that.”
- Rama

The second day I passed him on my way to work, a man on a bright red and chrome boda boda (motorbike) befriended me. Rama is not a Kiva entrepreneur, and though he has been in this business for just over a year and a half, he rents his bike daily. He’ll spend the full retail price of a new motorbike every year in rental fees.

Before I left Mombasa, I asked Rama if I could take him to lunch, and ask him a few questions about his business. Over fries and cola, Rama and a fellow boda boda driver told me—in quite a bit of detail—about the financials of their work and lives. I’ve summarized most of what I learned in a balance sheet below, but if you’re interested in the specifics, please read on.

Background

Before he began driving his bike, Rama sold chips and fried eggs very near where I met him in Mombasa. He lives in town with 3 younger brothers (12, 15, and 18), all in school and none yet working.

The Business

Rama rents his bike from an owner for as much as 300 KSH per day, though sometimes the price falls to 200 or 250 due to rainy weather which is bad for business. If anything minor happens to the bike, it is Rama’s responsibility (a punctured tire will cost 50-70 KSH to repair.

Rama works every day of the week, usually starting at 5am and working through 8 or 9 at night. If there’s good business, he sometimes works all night.

Rama’s best days for business are Monday, Friday and Saturday. On an average day, Rama will make 1,000-1,200 KSH in revenue from short rides within town, and the odd longer trip up or down the coast. My commute from work to home is a typical job for Rama, and will earn him anywhere from 150 to 300 KSH.

Rama and his friend say they typically stop for petrol three times a day: once in the morning to buy 150 KSH of fuel, once at 11am to top up 100 KSH, and once at 3pm to top up another 100 KSH which will get them through the day. They’ll rarely spend more than 400 KSH on petrol in a day.

Business Challenges

Rama mentions dishonest clients as a large problem—he reports frequenty scams: a client will refuse to pay the prenegotiated price, call him a liar and complain to a nearby police officer, or will ask Rama to wait for him to be taken somewhere else, but then will never show up to pay his fare. These occurrences represent large costs of time, fuel, and money. Rama told me that the day before my conversation with him he was scammed by a client, and earned only earned 100 KSH after fuel and rent as a result.

Miscellaneous Costs

Rama has a Safaricom phone, chosen because most of his clients use this carrier, and he gets discounted rates in-network. He buys airtime in 25 KSH cards, and usually spends about 60 KSH a day. Most of his calls are to arrange pickups with customers, but he uses the phone for personal calls as well. He has an M-Pesa account but uses it very rarely, mostly in emergencies or for remittances to his mother who lives outside of Mombasa.

Food

Rama and his friend usually take tea and a mahamri (think fried donut, but less sweet) in the morning for 15 KSH total. Later in the morning, for breakfast, they’ll have beans and 2 chapati (tortilla-like flat-bread) for 40 KSH. Lunch is almost always a half-plate of pilau, rice with 2 chunks of meat for 30 KSH, and a water for an additional 5. For dinner, Rama usually buys ugali and sukuma wiki (maize porridge and greens) for 40 KSH.

Housing

Rama lives in government housing in town (as his home is a day’s drive away). His room costs 3,000 KSH a month, and rent is collected monthly. Electricity costs 800 KSH per month, though Rama mentioned this was from an illegal distributor. Water costs 30 KSH per day (he pays for his brothers as well).

Savings and Credit

Rama estimates that he saves around 3,000 KSH a month, or about 100 KSH a day. He and his friend agree that they typically store their savings daily in their house somewhere, and then take 3,000 to the bank monthly. Rama has an account with Family Bank, which required a 500 KSH minimum to open an account. His ATM card cost 300 KSH initially, and a 100 KSH per month fee is charged regardless of whether he withdraws or deposits money that month. His account pays no interest.

Among other things, Rama uses his savings for travel out of Mombasa to visit his family. Both he and his friend hope to save enough to buy their own bike at some point—the one’s they’d like to buy run, in total, between 90,000 and 100,000 KSH.

I asked Rama and his friend if they had ever heard of Yehu Microfinance, or other organizations that give small loans to entrepreneurs like him. The quote that began this post was his response. The fact is, however, that with a few assets to declare, Rama could form a solidarity group and apply for a loan to finance his bike. While he might be required to take a smaller loan first, in order to build a credit history with an organization like Yehu, an influential group member isn’t necessary.

Balance Sheet

According to my conversation with Rama, his daily and monthly cash-flow looks something like this:

[Download as PDF]

Disclaimer on savings:
Not included here, is anything beyond the bare essentials of one man’s daily life. Rama also mentioned spending his savings to help pay for his brothers’ school fees, and to send remittances to his mother. These expenses come out of a slim margin.

I’d love to hear your thoughts in the comments.

Jeremy is a Kiva Fellow working with Juhudi Kilimo in Nairobi, and Yehu Microfinance in Mombasa. He writes from the Juhudi Kilimo branch office in Nkubu where he is discovering a deep fondness for dairy cows.

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