Rogue buy now pay later motorbike owners bury bikes to cash in on insurance claims

Kenya’s fast-growing Buy-Now-Pay-Later (BNPL) motorbike financing sector is facing a costly new threat — borrowers who deliberately bury their financed motorcycles to stage thefts, pocket insurance payouts, and walk away with new bikes.

Investigations by lenders and insurers have uncovered a disturbing pattern, reported in the fast-expanding Buy-Now-Pay-Later (BNPL) motorbike financing sector.

The scheme exploits insurance replacement provisions, allowing fraudsters to reset their payment obligations and start afresh with a new asset, which is now emerging as a costly vice for lenders and insurers.

According to asset financier Watu Credit, some borrowers intentionally hide or damage motorcycles, often burying them before reporting them stolen, expecting a replacement through insurance.

“Once they report a bike as stolen, some know there’s a chance they could get a replacement. We’ve uncovered cases where customers buried our assets in their backyard,” said Watu Credit’s Kenya Country Manager Eric Massawe.

The company, which has financed over half a million two- and three-wheelers since its launch in Mombasa a decade ago, says it has put in place a layered recovery and claims verification process to counter the trend.

Other than burying the bikes the findings show that fraudsters have also adapted, using tactics such as blocking tracking signals, dismantling parts, or moving the asset across borders.

“We’ve seen both genuine theft and self-theft — and the latter is growing,” Massawe said.

According to insurance experts, the scams are driving up operational costs for lenders, inflating insurance claims, and threatening higher premiums for honest riders.

While insurers eventually reject confirmed fraudulent claims, the investigative process can stretch for months, tying up capital and replacement inventory.

The Kenyan two and three-wheeler market is one the largest in the entire African Continent while the challenges to boost in the next decade are relevant.

Kenya’s boda boda sector, comprising of an estimated three million motorcycles, has employed millions of young men in both urban and rural areas.

However, the industry has been blotted by rising criminal activity, reckless riding, and fatal accidents.

The government has long struggled to impose order, looking to Rwanda’s highly regulated motorcycle taxi sector as a model.

Collectively, the sector generates over Sh660 billion annually, accounting for at least 4.4 per cent of Kenya’s GDP and supporting millions of households, small businesses, and local economies.

Massawe says GPS tracking recovers about 50 per cent of reported theft cases, while suspected fraud incidents are flagged for further investigation in collaboration with police and insurers.

The fraudulent claims come amid broader challenges in the BNPL mobility sector, including rising defaults linked to economic pressures.

The motorcycles have been a darling for many in the Kenyan market since its can be very adaptive to unpaved roads, which are still the majority in the country, and in the huge traffic jam of the few metropolitan areas.

For this reason, the new motorcycles market is over 10 times bigger than the car market.

As the pro capita income is growing up, the two-wheeler market is having benefit from a growing consumer demand and this will continue for the entire decade.

However, the sales of new vehicles are deeply influenced by government policy and the restrictions applied to the import of pre-owned vehicles.

The last two years economic crisis, with deep inflation growth, was fully reflected in the motorcycle industry, very price sensitive, and we assisted a a sharp sales fall in both 2023 and 2024.

However, Massawe said credit performance has dipped in recent years due to fuel price spikes, inflation, and shifting market dynamics, but stressed that Watu’s flexible repayment and “win-back” campaigns have kept repossessions relatively low.

To mitigate operational disruptions for genuine customers, Watu offers maintenance subsidies under its 70-30 scheme — where riders pay 30 per cent of repair costs and the company covers the rest — and provides temporary replacement bikes during insurance claims.

Industry-wide, the issue underscores the regulatory gaps that have historically existed for non-deposit-taking asset financiers.

However, recent amendments to Kenya’s business laws have created a new category for such lenders under the Capital Markets Authority, paving the way for more structured oversight.

“This new framework is good for businesses, customers, and the government,” Massawe said, noting that Watu aims to expand electric motorbike financing to curb fuel cost volatility and environmental concerns.

The company has already financed more than 1,000 electric bikes in 2025, up from 460 last year, though combustion-engine bikes still dominate at over 90 per cent of the market.

Beyond motorcycles, Watu has also expanded into smartphone financing. Since launching in late 2022, the company has issued 128 million devices in Kenya, with most customers opting for entry-level and mid-range Samsung models.

“High-end models like the Galaxy S20 or S24 account for only 1–2 per cent of our customer base,” Massawe said. “Many clients are upgrading from feature phones or low-cost Chinese brands to more reliable devices they can use as tools of trade.”

The BNPL motorbike industry has until recently operated in a regulatory grey zone, with unclear oversight between hire-purchase, microfinance, and digital credit regulations. This ambiguity, industry insiders say, has slowed coordinated enforcement against organised fraud rings.

Recent amendments to Kenya’s business laws have introduced a new category for non-deposit-taking asset financiers under the Capital Markets Authority, a move expected to tighten compliance and give regulators more tools to address such schemes. But the framework for licensing, reporting, and enforcement is still pending.