Ride Hailing Technology in Africa – A Welcomed Disruption?

Ride Hailing Technology in Africa – A Welcomed Disruption?

In most major cities ride-hailing technology has become part of everyday life (I personally could not imagine mine without my Uber app!) In recent years the disruptive industry has launched in Africa with large players such as Uber and Taxify undergoing rapid expansion on the continent. Since launching on the African market in 2013, Uber has quickly expanded to operate in 15 African cities including Accra, Lagos, Mombasa, Johannesburg and Kampala. Interestingly, It is as Afro Cab (Nigeria) and Little Cab (Kenya) have also launched operations. Thus as of November 2017 Africa hosted about 60 ride-sharing services across not just international players that are taking advantage of the increasingly urbanised economies and significant mobile penetration in the region as local startups such 21 countries.

 

Uber Nairobi Campaign 

Old problems in new places

Ride-hailing technology could be part of Africa’s mobility solution. The combination of smartphone and mapping technology with transportation seems ideal in a region where smartphone penetration is expected to grow at 52.9% year-on-year (Ovum) and where the need for robust infrastructure transformation is critical. However challenges that the industry has encountered globally such as regulation, employee disputes, safety and claims of anti-competitive practices could arguably, only be exacerbated on the continent.

Uber has faced opposition from taxi drivers (for example, conventional taxi operators protested against it in Abuja, Nigeria and burned cars belonging to Uber drivers) and from its own drivers (drivers in South Africa have joined Unions protesting low pay.)

We are paid only Sh26 per kilometre and with that, we just cannot break even,Vice-chairman of the Kenya Taxi Union and ride-sharing driver David Muteru

Lagos, Nigeria – www.ripplesnigeria.com

An industry notorious for lower wages and insecure employment would not be a welcomed disruption in a region where unemployment and poverty rates remain stubbornly high. Moreover despite the growth of mobile technology, reliable GPS infrastructure in which the ride-hailing tech industry model relies on remains limited in many African cities.

It’s no surprise then that Uber’s African ambitions were recently questioned by a key investor who urged it to focus on its ‘core markets’ instead. Yet it shows no signs of slowing down.

“Glocalisation”

“Glocalize – a combination of being global and being able to think local.” Deji Oduntan CEO at Gokada Inc.

Many of the ride-hailing companies on the continent have taken advantage of the uniqueness of African markets by adapting to the varying cultures, lifestyles and socioeconomic realities of each city. For instance both Uber and Taxify have launched motorcycle hailing apps in Kampala, Uganda: Taxify and Uber ‘Boda Boda’ (the name for motorcycles in Uganda).  Little Cab (launched in 2016 by the mobile phone operator Safaricom) accepts M-PESA in Kenya a cashless payment system said to be used by 94% of Kenyans. In South Africa, the locally based Africa Ride offers a variety of payment options including weekly and monthly payment plans.

‘Boda Boda’ Kampala, Uganda – Photo cred: ireneexplores on Tumblr

African Solutions

Another one of the indigenous startups in the ride-hailing technology space taking advantage of its market is Gokada. Launched earlier this year, Gokada is a motorcycle hailing app based in Nigeria’s busiest city – Lagos.

“If you remove the G you have ‘Okada’ – the name for motorcycles in Nigeria. We wanted to coin a name that people could relate to.” Deji Oduntan CEO at Gokada Inc.

Along with his partners, Deji started Gokada to create African solutions for African problems – specifically Nigeria’s, “We started primarily because of the need in Nigeria. There were a couple of huge problems we wanted to solve. One being Nigeria’s rising unemployment rate. It has been steadily increasing for 12 consecutive quarters between 2014 and 2017. We hope to tackle this by empowering millions of Nigerians on our platform.”

Another problem we are looking to solve is the absence of a reliable transport system in the country. As much as the government has done in the last few years there is still a huge underserved population when it comes to public infrastructure. So we are looking to standardise the transportation sector in the country.

 

With Gokada, Deji is also solving the problem of affordability an issue that has become ever more critical in the country in recent years and hopes that by leveraging on the motorcycles of Lagos (a relatively cheaper form of transport) Gokada can find a solution, “The spending power of the average Nigerian has dropped sharply in the past few years, so not many can afford to buy cars or take car taxis every day. They are left with buses, rickshaws and even trekking.

 Deji believes that Gokada will be able to serve a market that is not catered for by the likes of Uber or Taxify “I would say they operate in a somewhat separate space. The car taxi market is quite different from the motorcycle taxi market. People who would opt for a car taxi, in general, are quite different from those that would take an Okada. Their preferences are different, their wants, needs and fears are different. So we are more focused on targeting those customers who might not be able to afford these options

 

Unlike its international competitors, therefore, Gokada is creating African solutions to African problems. How will this be reflected in Gokada’s business model and service?

I think an advantage we have is that we are ‘local’ and are able to adapt quickly and iterate way faster than other international ride-hailing services. Unlike ride-hailing services operating in multiple countries, we are able to respond quickly to changes in our local market because we are Nigerian .” Gokada recently launched ‘Gokada LITE’ in response to local demands “We initially launched a traditional ride-hailing app but later pivoted to a lighter version for people that do not have good internet connection. We’ve seen these kinds of strategies in Asia where the ride-hailing players in India and China are winning the market because of their local knowledge and that’s also what we plan to do here.”

If you are in Lagos you can download the Gokada app on Android and all iOS devices.

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As a disruptive industry by its very nature, it’s no surprise that ride-hailing tech companies are facing resistance in Africa just as it has globally. What is interesting about expansion into the African market is how the industry is acting as a trigger for standardised transport regulation and technology development since in many parts of the continent there is a blank canvas for this type of development. Especially when we consider the fact that many transportation systems are mostly privately owned, there is massive scope for technology solutions in people’s everyday journeys. Larger international players such as Uber and Taxify have opened the door for local tech-based transportation companies to develop their own mobility solutions. I’m most excited to see the future of local startups like Gokada, carving out their niche in the industry and taking advantage of their local know how.

I’m most excited to see the future of local startups like Gokada, carving out their niche in the industry and taking advantage of their local know how.

What is your experience with ride-hailing apps in Africa? Do you believe they are a welcomed disruption? Comment below

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