Asaak, a Ugandan fintech, is joining the ranks of a select few African tech companies, like Nigeria’s Paga, making inroads into Latin America. Established in 2016, Asaak initially provided motorcycle and smartphone loans to Ugandans directly and in collaboration with partners such as SafeBoda. Now, the company has set its sights beyond the African continent by acquiring the Mexican operations of FlexClub, aligning with its strategy to grow outside of Uganda and Africa.
This acquisition comes after Asaak achieved profitability, primarily due to its program facilitating the purchase of motorcycles for boda boda drivers in Uganda. While exploring expansion opportunities within Africa, Asaak’s interest was piqued by FlexClub, a Mexican enterprise that offers car financing solutions for Uber drivers and develops software enabling South African car rental firms to provide vehicle “subscriptions” to drivers.
Given the operational challenges of managing diverse products across two continents, FlexClub was keen to concentrate on its South African market. This presented an opportune moment for Asaak to step in and acquire FlexClub’s asset financing business in Mexico. The acquisition was further facilitated by both companies sharing common investors, making the transition smoother and more favorable for all stakeholders involved.
Blake Musgrove, Partner and Chief Investment Officer at Simple. Capital expressed his support for the acquisition, emphasizing the potential benefits for both Asaak and FlexClub. Tinashe Ruzane, CEO and co-founder of FlexClub clarified that the decision to divest from its Mexican operations was driven by a need to focus more on South Africa, especially given the current challenging economic landscape.
In Mexico, only 37% of adults possess bank accounts, and a mere 32% have engaged in digital transactions, as per the World Bank. This has resulted in a predominantly cash-based economy, which often lacks a formal financial history required for credit eligibility. High interest rates, sometimes reaching an annual rate of 300%, further complicate the lending landscape.
Despite these challenges, Mexico boasts a flourishing Uber industry, thanks to its vast tourist attractions. Kaivan Sattar, CEO and founder of Asaak highlighted the cultural similarities between Uganda and Mexico, particularly in how vehicles, whether motorcycles or cars, play a pivotal role in family dynamics and income generation.
Asaak aims to replicate its Ugandan success in Mexico by offering car loans. The company envisions the vehicle as a gateway into its credit ecosystem, allowing drivers to access additional credit for various needs, from fuel and repairs to smartphones. Sattar emphasized Asaak’s passion for asset financing and expressed confidence in leveraging their experience from Uganda to digitize Mexico’s lease-to-own vehicle market profitably.