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Ride-hailing services find success in Africa

SETH ONYANGO, BIRD STORY AGENCY

UBER has now topped 1 billion rides in only nine African countries where it operates, highlighting the growth potential of the digital taxi business on the continent.

Uber’s offerings are spread across 42 cities, in South Africa (where it first launched in 2013), Nigeria, Ghana, Egypt, Kenya, Tanzania, Uganda, Morocco and Ivory Coast.

It is worth noting that South Africa was the first country for Uber outside of the US where the firm had three cities operational at the same time.

Its billion-ride milestone reflects growth in Africa’s tech ecosystem that continues to see a record number of investments amid rising demand for tech solutions in that market.

Tech start-ups across the continent gobbled up 4.77 billion US dollars worth of deals in 2021. At least five new tech unicorns were also created in the reported period.

Last week, Uber announced that the most popular time users requests their rides is 2 p.m, with Friday being the most popular day for ride requests in Africa.

“The most popular drop-off destination is the OR Tambo International Airport in Johannesburg. The most popular ride option is UberX,” the company announced.

It said the average trip time recorded on Uber is 24 minutes, and the longest recorded trip was over 492 km.

Uber and rival companies like Bolt, Gett, Ola Cabs, Little Cab, Free Now, Easy Taxi and Wingz are expected to continue to enjoy success in Africa.

Mobile money payment services are now natively available on many ride-hailing services, a convenience that also fuels the growth of this niche business.

Trends suggest the continent’s transit sector is evolving with the emergence of new transport modes such as Bus Rapid Transit, light rail systems, and e-ride sharing.

Analysis of African transportation by Engineering for Change in partnership with Yamaha Ventures Countries show that African states are liberalising their transport sectors to encourage competition and innovation.

For instance, across the continent countries are becoming more aware of the need for a holistic approach to solving transport issues.

“Governments are revising transport policies in order to better integrate non-motorized and motorized transport modes, like creating dedicated city walkways and building more efficient mass transit networks like Bus Rapid Transit,” reads the analysis that was first published on the online information portal, Medium.

“This represents a policy shift from the historical trend of increasing (costly) road network expansion.”

By 2030, 50 per cent of Africa’s mostly young population will be urban dwellers, further creating room for digital taxi services to thrive.

More countries are expected to give Uber and other players in the industry operating licences.

In states that continue to shield local taxi operators from Uber encroachment, local cab-hailing apps have been launched, for instance, Yego in Rwanda and ETTA in Ethiopia.

Allianz Global Corporate & Specialty analysis shows that as urban sprawls grow, and the middle class expands, higher demand for motorized and non-motorized transport is seen in the continent.

“Primary forms of non-motorized transport in Africa include walking and bicycles. At higher income levels, communal taxis and moto-taxis are popular, accounting for between 75 to 80 per cent of Africa’s total motorized trips,” it reads in part.

In Africa, cab-hailing platforms like Uber have solved a few challenges for users. It has cured the problem of parking for those who are happy to leave their cars at home, made private taxis cheaper and encouraged ride-sharing which ensures fewer vehicles on the road.

The downside, however, is that Uber, Bold and the like are pushing local companies out of business.

Local operators are now struggling to compete for passengers, for drivers, and they’re losing out on important corporate accounts, most of which went to digital taxi providers who are better organised and have stronger lobbying power.

Some taxi firms have tried to replicate the ease of booking an Uber or Bolt with their own ride-hailing apps but failed to capture any meaningful market share.

In Kenya, digital taxi owners have revved up their bid to have ride-hailing app providers registered as transport companies in their renewed push for a favourable pricing model that is pegged on operation costs.

Currently, Uber, Bolt and Little Cab are operating as digital platforms, making it easy for them to set up shop across the globe as they leverage the flexible app regulatory regime. But once listed as typical transport operators, app owners will face tighter controls like matatus (minibuses) which fall directly under the purview of the National Transport and Safety Authority (NTSA).

It will also force the app providers, who earn millions from the labour of their drivers without the expense of treating them as employees, to draft new binding contracts.

Uber, the market leader has long maintained it is simply a service provider, connecting people needing a ride with drivers − either amateurs or professionals, depending on the country – in over 630 cities worldwide.

Although Uber and Bolt control a good share of the market in the countries they operate in, they have barely scratched the surface. Studies show that the return on investment in digital services in Africa is sound.

Africa is expected to continue becoming profitable for fintech companies, with the UN having already listed it as the most profitable region in the world.

A past report by the UN Conference on Trade and Development states that between 2006 and 2011, Africa had the highest rate of return on inflows of Foreign Direct Investment at 11.4 per cent, compared to 9.1 per cent in Asia, 8.9 per cent in Latin America and the Caribbean. Globally, the figure is 7.1 per cent.

Meanwhile, as the battle to control Africa’s taxi industry heats up, operators are already adopting the transportation of the future.

Electric cars and shared mobility concepts are already starting to disrupt Africa’s taxi industry, as ride-hailing services add electric vehicles to their fleet.

By The African Mirror

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