Kaivan Khalid Sattar, CEO and founder of Asaak, a fintech startup providing productive asset loans, faced a pivotal decision in 2023. After achieving profitability in Uganda, Asaak sought to expand its operations. The team explored neighboring East African countries to expand to but finally settled with Mexico — a leap that expanded its addressable market not by threefold but by a staggering 27 times.
This decision highlights not only the allure of Mexico’s vast market but also Asaak’s broader strategy to diversify its portfolio and mitigate the risks inherent in operating in emerging markets.
At the time of planning for the expansion, diversification was a central consideration for Asaak. Operating in Uganda — a country where external factors like elections, currency devaluations, and fluctuating interest rates can significantly impact businesses — Sattar recognized the importance of spreading risk across regions.
“When you’re an emerging markets lender, diversification is essential for survival,” Sattar stated in a recent post. Remaining confined to a single region left Asaak vulnerable to localized shocks, making international expansion a critical component of its long-term strategy.
The sheer scale of the Mexican market was irresistible. With a population of over 130 million, compared to Uganda’s 48 million, Mexico offered a massive pool of potential customers. Its mobility sector, driven by millions of Uber users and a robust tourism industry, presented an ideal environment for Asaak’s asset-financing model.
Uganda’s neighboring countries presented opportunities for growth but lacked the transformative potential of Mexico. “Expanding to another East African country would have grown our addressable market three times,” Sattar said. “Expanding to Mexico grew it 27 times.”
Asaak’s entry into Mexico was catalyzed by the acquisition of FlexClub’s Mexican operations last year. FlexClub, a startup offering vehicle financing for Uber drivers in Mexico and subscription services in South Africa, sought to narrow its focus to its home market. This presented Asaak with a rare opportunity to acquire a ready-made business in a high-potential geography.
“Our shared investors facilitated the acquisition, making it a natural fit,” Sattar said. For Asaak, the acquisition offered an accelerated route to establishing a foothold in Mexico. For FlexClub, it allowed the company to streamline operations during a challenging economic period.
Despite its status as Latin America’s second-largest economy, Mexico remains heavily cash-dependent. According to the World Bank, only 37% of adults have bank accounts, and just 32% have made or received digital payments. This lack of financial inclusion presents both a challenge and an opportunity.
In cash-based economies, the absence of formal financial trails often excludes individuals from accessing credit. Where loans are available, they come with prohibitive interest rates — unsecured loans can carry annual interest rates of up to 300%. Asaak’s model, which uses vehicles as collateral, addresses this gap.
“The vehicle is the entry point into our credit ecosystem,” Sattar explained. “From there, drivers can access additional credit for fuel, repairs, smartphones, or other needs. We’ve proven this model can work profitably and at scale.”
Transitioning from Uganda to Mexico required Asaak to adapt its business approach while leveraging its experience in serving informal economies. In Uganda, the company implemented culturally informed practices, such as involving spouses in loan agreements and creating family-friendly spaces for customers.
In Mexico, Sattar noted similarities in customer behavior. “The men come with their wives or girlfriends, and the women come with their boyfriends to pick up their cars. It’s a shared decision, much like in Uganda,” he observed.
Surprisingly, Asaak found Mexico’s infrastructure and regulatory environment to be more conducive to business than Uganda’s. “We’ve encountered more infrastructure and less bureaucracy than we’re used to,” Sattar remarked. This operational ease has helped Asaak onboard drivers more efficiently and scale its operations quickly.
Asaak ’s move to Mexico marks a bold step in its journey to become a global player in asset financing. The company’s success in Uganda, where it became profitable by enabling boda boda (motorcycle taxi) riders to own their vehicles, has provided a strong foundation. Sattar is optimistic about replicating this success in Mexico, albeit with a different set of products and market dynamics.
“We love asset financing,” he said. “It’s challenging, but it’s also rewarding. We’re building something that changes lives — whether in Uganda or Mexico.”