Digital loans for the last mile

Kenya’s boda boda economy is more than a traffic fixture — it is a frontline of entrepreneurship, a source of daily wages for millions, and a proving ground for fintech innovation. For many riders the motorcycle is both income generator and the single most important asset they own; yet the path to financing that asset has long been crooked: expensive hire-purchase deals, high-interest microloans, and fragmented access to safe, low-cost credit. In the past two years a small but important experiment — combining reputation-based lending, a local stablecoin (cKES), and accessible wallets like Clixpesa — has shown how digital loans can reach the “last mile” and actually make borrowing work for boda boda riders, not against them.

The sector at a glance — vital, informal, and undercapitalized

Boda bodas have moved from informal odd-job status into a major engine of youth employment and commerce across Kenya. Recent industry reporting estimates over a million motorcycles on the roads, with many riders earning modest daily incomes that nevertheless support households, school fees and small investments. The sector’s ubiquity makes it uniquely well placed for digital financial services: riders already use mobile money for fares, savings and informal lending, and many are organized informally in groups and sacco-like structures that could support alternative underwriting models. At the same time, the sector faces structural problems — safety, regulatory uncertainty, and heavy reliance on predatory or expensive financing structures for acquiring motorcycles.

Those financing structures matter. Hire-purchase schemes have long been the dominant route to owning a motorcycle; the convenience of low daily instalments hides a very high effective cost. Reported packages that look affordable per day can leave riders paying close to double the showroom price over the contract term, and the overall burden can lock a rider into a cycle of high repayments and little opportunity to save or grow. This gap between accessibility (you can start today for a small deposit) and affordability (you pay too much over time) is precisely what smart digital credit models set out to solve.

Why the last mile needs a different kind of loan

For the boda boda rider, timing is everything. Revenue is daily and margins are slim; small shocks — a bike breakdown, a medical bill, or a week of low fares — quickly cascade into missed payments and lost income. Traditional credit scoring and collateralised lending rarely fit this profile. What works instead is something that respects the rhythms of daily income, reduces transaction friction, and aligns incentives within the rider’s social and economic context.

Two features are especially valuable at the last mile. First, loans must be disbursed and repaid cheaply and quickly, with minimal overhead. Second, underwriting must use signals available in the local context — social reputation, group savings behaviour, and on-the-ground performance — rather than lengthy credit histories or collateral that most riders don’t have. Those two design choices informed a recent reputation-based, stablecoin-enabled pilot that gives a practical example of how this can work.

Clixpesa x Haraka x cKES: a practical experiment

Between May and August 2024 a pilot run by Haraka tested a reputation-based credit model among local savings groups (chamas) in Nairobi. The pilot used cKES — a local stablecoin pegged to the Kenyan shilling — as the medium of value, and Clixpesa as the user-facing wallet that integrated the Haraka lending application. Rather than relying on collateral, the pilot combined peer attestations and on-chain transaction histories to form dynamic credit profiles for borrowers. Loans were small, frequent, and intentionally aligned with everyday needs.

The outcomes were striking. Borrowers with strong social capital repaid on time nearly all the time; in the pilot, highly reputable borrowers repaid at a rate of 97% on time or earlier. The pilot also reported tangible business impact: about 88% of participants increased their revenue, with an average revenue uplift of around 18%, and a meaningful reduction in month-to-month volatility. These results point to an important conclusion: when underwriting reflects the social reality of the borrower and settlement is immediate and transparent, credit becomes a tool for growth rather than a debt trap.

How Clixpesa changed the mechanics of borrowing using local stables

Using a local stablecoin like cKES solved two practical problems. First, it kept the currency familiar: borrowers transacted in a unit linked to the shilling, which reduced cognitive friction and made loan amounts and repayments intuitive. Second, on-chain settlement offered transparency and automation that reduced operating costs for the lender: loan disbursements, repayment flows and reputation updates could be executed programmatically, speeding approvals and lowering labour costs.

ClixPesa’s wallet served as the human interface: a simple app where borrowers requested loans, saw repayment schedules, and received peer attestations. Because the wallet tied into on-ramps and off-ramps (for example via KotaniPay in the pilot), riders could convert between mobile money and cKES — critical for day-to-day liquidity. In short, the tech stack bridged new blockchain primitives with the entrenched mobile-money habits of boda boda riders, which is exactly what last-mile adoption needs.

Real benefits — lower rates, faster access, real business impact

Two outcomes matter more than technical novelty: cost to the borrower, and the borrower’s ability to use the loan product to improve earnings. The pilot reported interest costs materially lower than many informal or microfinance alternatives — and loans that could be approved and disbursed in seconds after approval. Borrowers used working-capital-style loans to stabilise stock, smooth cash flows and buy bulk inputs; the consequence was an average revenue increase and notably lower income volatility. For boda boda riders, that can mean paying for servicing before a fault becomes a business-stopping problem, or buying fuel during peak demand without sacrificing household needs.

What didn’t work — liquidity frictions and fees

The experiment also exposed real implementation challenges that are worth emphasising. Early in the pilot the lack of a reliable off-ramp delayed disbursements for many participants — some experienced waits measured in days — and transaction costs for converting between cKES and mobile money were sometimes high relative to the small sums involved. For borrowers who live on tight daily margins, even a 1–2% conversion fee can be a meaningful deterrent to frequent repayments. Any scalable last-mile solution must make these rails cheap, fast and predictable; otherwise the promise of blockchain-enabled lending is undermined by plumbing costs.

What this means for boda boda finance at scale

The pilot’s lessons point to a simple framework for expanding digital loans to the last mile in Kenya’s motorcycle taxi economy:

• Use instruments that map to local money (stablecoins pegged to the shilling are one example) to preserve transparency and user trust.
• Leverage social structures — chamas, sacco groups, rider associations — as underwriting signals and enforcement mechanisms rather than forcing formal collateral systems on informal actors.
• Make the user experience as frictionless as possible: instant disbursement, clear repayment schedules, and easy conversion back to mobile money.
• Reduce the cost of on/off ramps and batch transactions so small daily repayments are economically viable.

Scaling these ideas will require cooperation between fintechs, on-ramp providers, regulators and rider associations. Importantly, regulators will need to see that local stablecoins and reputation-based lending can be consumer-protective: transparent ledgers and automated repayments can be written into product design to avoid the very exploitation critics rightly worry about in hire-purchase markets.

A caution and an opportunity

Digital credit is not a silver bullet. Poorly designed products can still become predatory if fees, conversion costs or opaque terms creep back into the model. But the Haraka–Clixpesa pilot demonstrated a different possibility: financial products that are tuned to the cashflows and social realities of last-mile actors, priced lower than traditional alternatives, and delivered with speed and transparency. For boda boda riders — whose livelihoods depend on everyday liquidity and whose access to formal credit has been limited — that matters.

If stakeholders can tackle the remaining infrastructure frictions (notably cheap, reliable off-ramps and lower conversion fees), the boda boda sector could be one of the fastest adopters of reputation-based, stablecoin-enabled microcredit. That is a real opportunity: better loans, used the right way, become enablers — of safer bikes, steadier incomes and incremental capital formation — rather than another burden for already stretched households.

Conclusion

The last mile in financial inclusion is less about flashy tech and more about thoughtful design: translate innovation into everyday usefulness, and you enable real people to build real businesses. Clixpesa Loans, used in pilots with cKES and reputation-driven underwriting, show that it is possible to reimagine microcredit for boda boda riders in Kenya. The results so far are promising: higher repayment reliability, measurable revenue increases, and an alternative to the expensive hire-purchase traps that have dominated the sector. The road ahead is operational — improving conversion rails, reducing fees, and scaling trusted user interfaces — but the direction is clear. Digital loans, if built around the realities of the last mile, can transform not just access to credit, but the livelihoods that depend on it.