Putting Drivers in the Driver's Seat: Kenya

Kenya boasts one of the fastest growing economies in East Africa,

averaging an annual GDP growth of 5 percent over the last 25 years.

Capital Nairobi has seen its population double over this period,

and its middle class continues to grow.

A growing demand for private transport

has sparked an increase in the number of people taking up a career as a taxi driver.

However, a large number of these drivers can't afford to own their own vehicles.

So they rent cars by the week.

Some drivers seek loans from financial institutions to purchase a car,

but few can afford the large down payment that is required.

I had a car whereby I was paying 1000 as a rental per day to the owner for seven days

which at long last the car could never be mine.

Most of client, they have been taking with a low price.

You have to eat, you have children, you have a family...

Hakki Africa is a Japanese company that helps taxi drivers

by offering them advantageous loans on the purchase of used cars.

The loans are provided at a relatively low interest rate,

and require a much smaller down payment than the ones from other financial institutions.

Once drivers finish paying off their loan, they acquire full ownership of their cars.

Our company's mission is to create
a world where hard work is rewarded.

Through financing, we want to build a
world that wasn't previously possible.

Local businesses who share Hakki's vision are also contributing

to make sure drivers get the best quality cars possible.

Let's take a look at this collaborative effort to raise drivers' income and bring more stability to their lives.

Nairobi, Kenya's capital, is home to approximately 5.3 million citizens -

around 10 percent of the country's total population.

In recent years, the number of residents using taxis to commute to work has increased.

Hakki CEO Kobayashi Reiji is one such commuter.

He doesn't own a car, so he uses a ride hailing service to travel to work each day.

Communicating with drivers as a customer allows him to learn about their current situation and needs.

What's your name?

Anthony.

Anthony yeah...

So Anthony, what's the situation for this car, is that your own car or...

No, this car I've rented from someone,

I've been with it for almost three years now.

3 years...

You're paying every day?

No, I'm paying on a weekly basis.

How much do you pay for the weekly basis?

7500.

Did you negotiate for the discount with the owner?

Yeah, I negotiated with the owner.

We come to the conclusion of 7500.

So you mean these 3 years, you paid 7500 every week?

Every week.

Hakki was founded in 2019, and has quickly grown to employ 34 staff.

The company has made loans to over 450 taxi drivers so far.

I think Kenyan people are very serious
when it comes to work.

We want to be able to offer strong support
to such hardworking people.

Driver James Theuri plans on applying for a loan from Hakki to purchase a car.

He currently rents his vehicle from a private owner.

For this job, I have done this job for almost like 2 years now.

We are not getting a lot of money from this, but it's ok.

This is a car wash.

Used to come here at lunch time.

We take our lunch time there and then as we finish we come take our vehicle and it's clean.

Then we continue with our work.

In Nairobi, street food stalls can often be found right next to car wash businesses.

Taxi drivers need to keep their cars clean and use their time efficiently,

and these are the most convenient places to do that.

The food stalls also serve as a gathering place for drivers to exchange valuable information.

Sister! What's on the menu today?

I'll have the bean stew and chapati.

- Are you a taxi driver too?
- I am.

Those cars use a lot of fuel,
so I don't like them.

The car I have now can drive
a whole day on 15 dollars.

It lasts you a whole day? That's cool.

James makes around 30 US dollars a day driving,

but spends about a third of that money on rental fees.

Factoring in fuel and living costs, he is barely able to save money.

He once tried to take out a loan from a local bank to purchase a car,

but couldn't afford the 50 percent upfront payment that the bank required.

A few months later, James heard that Hakki only requires a 5-percent down payment.

So he's decided to visit their office and apply for financing.

To receive this financing, he must first pass the company's credit screening process.

- Hello.
- Hi.

So you said you are working with Bolt and...

Mostly Bolt and Uber.

Hakki employs a unique credit scoring system to determine drivers' ability to pay back loans.

The system considers more than just the applicant's financial assets.

When drivers apply for a loan, they must first submit their ride hailing income,

passenger rating and electronic payment financial statements.

This data is entered into the company's custom accounting software,

which checks for fraudulent funding, irregular expenses, previous loan history and gambling debts.

The software then automatically determines drivers' credit viability,

ranking them by order of S, A, B, C and D.

This software was developed by a small team led by Hakki co-founder and COO Tokita Koji.

Our credit scoring system uses information
that other financial institutions don't.

Sometimes we have to make judgement calls.

And having a small team helps us
make those decisions faster.

It also helps clear up our workflow.

But it's still a tough process.

On the very same day he submits it, James' loan application ends up getting approved,

and he decides to start searching for a car right away.

First, he visits a local car dealer that Hakki has formed a partnership with.

This is a 2013 Toyota Passo, again slightly used in Kenya.

The mileage is less than 150,000, which is the standards for Hakki.

Also we've done a full inspection, as you can see there's an inspection report here.

A couple of minor fixes, but it's generally in good condition.

How much is this one?

This one we're asking for 650,000.

And this one we're asking for 680,000.

This dealership was started by a Japanese and an American founder.

Every single car that we deal with has been through our inspection.

So like for instance, our customers like Hakki or the people who come and buy from us know what they are exactly buying.

So I think together for us, it's like really solving,

making sure that the gig workers do have an access to a better quality, good quality vehicles.

That's the biggest issue that we may be able to solve together.

James will visit a few dealerships before deciding which car is right for him.

Once he chooses a car, Hakki won't purchase it right away.

A local repair garage that they have partnered with will first make sure the car James has chosen is truly in good condition.

There's a wide range of quality
among used cars here.

In bad cases, even after the sale...

...the seller might switch out parts,
or change the tires for old ones.

It's not even the same car anymore.

After James receives his new car, he will start paying back his loan.

James' weekly loan payment will be nearly identical to his weekly car rental fee.

However, once he pays off the loan, he will fully own his vehicle.

His profit margin will also substantially increase.

I have my wife with 2 childrens.

I have 2 children, one is 3 years, the other is 5 months.

For my children, I can able to pay for their school fees, in the future.

And then I can able to go somewhere with my family.

Yeah.

This is Kobayashi's home.

So once I'm chasing her, she always runs away like that.

Besides his cat, he shares the apartment with four roommates.

We didn't count it so much.

Oh, oh my gosh!

Kobayashi grew up in Chigasaki, a seaside town not far from Tokyo.

When he was a college student, he traveled around the world for a year.

He visited 17 countries in Africa, and shared rooms with other backpackers to save money.

This experience ignited his passion for shared living.

After he returned to Japan, Kobayashi felt the urge to leverage this experience to create something meaningful.

He decided to quit university and start his own sharehouse business near his hometown.

After the Great East Japan Earthquake in 2011...

...many people's mindsets and lifestyles
changed, and I started thinking...

...how great it would be to have a place
where people could gather...

...and value living in the present together.

I wanted to build a community business.

And I decided opening a sharehouse
would be the best way to do that.

Kobayashi's business was successful, launching 13 share houses in four years.

However, as his work became progressively busier,

he grew frustrated that he had little time to interact with his residents.

He finally decided to sell the business.

In 2017, Kobayashi traveled back to Kenya to research what kind of company he could build there.

He chose Kenya because it was where he'd felt closest with the locals during his travels.

It was there he met Tokita at a social gathering for the Japanese residents of Nairobi.

He told me he wanted to start a company,
just like me. It was such a coincidence.

I was born in Kenya and moved to Japan
for high school.

Until then, my father's work had us
living in many developing countries.

That inspired me to start a company
in one of those countries.

And then I met Kobayashi.

Kobayashi and Tokita hit it off right away,

and they soon decided to start a microfinance company in Nairobi to help small and medium sized shop owners

by granting them collateral-free loans.

They named their new company Hakki, which means fairness in Swahili.

The microfinance business started off well,

but the arrival of the COVID-19 pandemic saw 40 percent of the company's customers default on their loans,

leaving it with massive debt.

However, Kobayashi realized that the pandemic could also bring new opportunities.

Knowing that demand for taxi drivers would rise because of the need for social distancing,

he suggested to Tokita they try specializing in financing for drivers.

The first person to invest in Hakki after the pivot was Takahashi Nobuaki,

who had been an initial supporter of Kobayashi's sharehouse business.

Takahashi runs a venture capital firm for start-ups in developing countries.

What Kobayashi and I have in common is
we both used to do a lot of backpacking.

He was always telling me he wanted to
challenge himself in Africa next.

I could feel he had this instinctual drive
within him to change the world.

Kobayashi's gamble has paid off, and Hakki has now provided over two million dollars in financing to drivers.

The company has also created a follow-up team to help drivers who are late on payments come up with a plan to catch up.

- So, how are you?
- I'm fine, thank you.

So we need to figure out how we can adjust your current payment,

so that we can cater for this much that is remaining, 29074 shillings.

So, Kevin,

Yes?

I have a wife and children.

I completely understand, I know you had a -

My children need to go to school.

It's actually just the first month,

that's why I want us to understand,

how we, on our end, we can help you deal with the first month,

Your people didn't inform me
of the full price of the car.

You sold the car to me,
so you should understand.

Let me remind you one thing.

At the point of signing the contract, you willingly did it.

Yes, someone from our company may have suggested a car,

but at the end of it all, it was your decision to pick the car

over any other option that was presented to you, right?

I just want to know how much you actually earn vis-a-vis how much is in your account,

and how much we need to take into account,

so that on our end we can see how much we can adjust, or how we can help.

Thanks to Hakki's highly accurate screening process and its attentive follow-up staff,

only 0.08 percent of the company's loans have become uncollectible.

And, as an additional preventive measure,

to stop drivers who can't pay back their loans from disappearing with their cars,

Tokita's team has developed a tracking device that can also be used to remotely stop the vehicle's engine.

Jeremiah Ongeti, a local electrician, is tasked with installing these devices inside the cars.

We work outside of the road, yes.

Because we don't want this clients to know how we do this work.

So we hide, we just hide the car.

The office is here, but we hide here.

Drivers are aware their car is equipped with a tracking device,

but where exactly it's installed is a company secret.

The device isn't just there for our own benefit.

The GPS can be useful for our customers too.

A few times, it helped us recover
their cars after they were stolen.

This is Paul James, a driver who finished paying off his Hakki loan in two years.

- Good Evening.
- Good evening sir, how are you?

- I'm good! And you?
- I'm good too.

Where are you heading to?

Thank you - I'm heading to town.

What do you do for a living?

I run a catering firm.

You run a "cateting firm?"

How is that kind of business?

Paul always tries to make a personal connection with his customers,

which has helped earn him a high passenger rating.

- It was nice meeting you.
- Nice meeting you, thank you.

Paul lives in Mlolongo, a small town about an hour from Nairobi.

He usually takes a break from work in the afternoon off-peak hours to check in on his family at home.

These are the bed.

My daughters' here on the top bed, then me here.

Paul rents a one bedroom apartment for 60 dollars a month that he shares with his wife and two children aged 7 and 3.

He bought his first car on, which date?

I remember it was 2020.

That was the time I also give birth to my second born.

When he bought the car, he managed to, after working,

he managed to open the grocery shop for me.

We used to support each other.

Paying off his loan also helped Paul handle a difficult family situation.

I have a case like, last year on November.

My mother has been sick like in and out, she was diagnosed with cancer.

So what's the thing- it uses a lot of money for medication and all of this,

but the car has been supporting her through.

Paul is now saving money to move his family into a bigger home.

In February 2023, Hakki entered a new market: Electric bicycles.

In the last three years, COVID-19 has caused demand for food delivery services to grow exponentially.

Meanwhile, gas prices have also almost doubled.

Many delivery drivers are concerned that their lifestyles are becoming unviable.

If I can spend, the rate at which I'm going to spend at the fuel, buying fuel, and delivery,

There's nothing left for us-

I may be using maybe all the cash at hand for that day.

That's not even a profitable job or business.

We should quit then!

By offering these struggling delivery drivers the opportunity to use e-bikes,

which are cheaper than their gasoline counterparts, Kobayashi and Tokita are hoping to improve this situation.

To set this plan in motion,

they have begun a partnership with a British e-bike manufacturer that owns a production factory in Nairobi.

Just like with their car finance business,

Hakki will offer loans to drivers who wish to purchase e-bikes at low interest and with a small down payment.

The e-bike manufacturer is hoping that this partnership will lead to increased sales.

Hi, how are you?

- How have you been?
- I'm fine. Thank you.

Right, it's nice to see you again.

Okay, please have a seat.

So today, thanks for giving me your time for the meeting.

So we've been thinking of ways that we can work with you guys on developing different packages as well,

where we send customers your way for financing, you guys send them to us for cash,

and trying to create a mutually beneficial operation.

We know that working with finance partners like yourselves,

we can save the customer around 300 shillings every day.

So that's our aim: is to increase what's in the customer's pocket,

and obviously, you guys get to finance it.

Today, Hakki has set up a tent in front of a popular shopping mall where drivers go to pick up food orders,

in a bid to promote their new e-bike financing project.

- It charges with electricity?
- That's right.

You just take off the battery and plug it in.
We'll give you a cable to charge at home.

Kobayashi and his team are also discussing the best way to approach food delivery platforms and form partnerships.

We got a chance to talk with the Bolt side tomorrow.

And we need to talk about Hakki's vision, how can we get an alliance with them.

I think we can also add that we already have the riders in place.

It's not that we are just starting off and asking for an account so that we can start giving out the bikes.

Kobayashi and Tokita have set a goal of financing 120,000 vehicles by 2030.

Besides taxi drivers, there are many others in Kenya
who need better access to financing.

We want to scale up our operations
to help as many people as possible.

I want to help create a future where...

...the harder people work,
the greater their reward becomes.

Through financing, we want to build a world
that wasn't previously possible.

Going forwards, Kobayashi, Tokita and their collaborators will continue to work tirelessly

to give Kenyan drivers a chance to change their life's destination.