Mobile service providers around Africa are always looking for ways to diversify and grow revenue in new and innovative ways, such as mobile lending, online shops, pay TV and even off-grid electricity solutions.
Backed by user data collected over the years, some are developing taxi app services that piggy-back off their financial and technical muscle to make headway in a competitive market.
Kenya’s Safaricom and Zimbabwe’s Econet Wireless are taking on global ride-hailing startups Uber and Bolt by setting up their own ride-hailing services — Little Cab and Vaya Lift, respectively.
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Despite increased competition, ride-hailing and other services in the shared economy still hold a lot of potential across the continent.
Many cities and urban areas are still not covered by global operators, according to Tarig Hilal, co-founder of aidx, a company that builds mobile tech to support mutual aid.
“These opportunities are being turbocharged by rapid and widespread adoption of digital technologies and mobile banking (in Africa),” Hilal said in a research report. “That Africa’s population is young and increasingly urban also helps (as they are) quicker to adopt new technologies.”
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As initial resistance fizzled across major cities like Nairobi, Cairo and Johannesburg, more drivers and users signed up to ride-hailing apps.
There are almost 60 ride-hailing operators across 21 countries on the continent, according to the United Nations publication Africa Renewal.
Reduced resistance boosted acceptance and quick expansion of the local telecoms-backed ride-hailing services into African cities and countries that were previously not covered by Uber, Bolt and other large players.
Little Cab, which already operates in Kenya, Uganda and Zambia, announced in February that it plans to expand to Tanzania and Ghana by mid-year amid a fundraising drive.
It was the first taxi app to launch in Kenya’s lakeside city of Kisumu in 2017.
“We are meeting a couple of investors both on the continent and in Silicon Valley,” said Kamal Budhabhatti, CEO of Little Cab’s parent firm Craft Silicon, in a VOA interview. “We are hoping that the investment should close (mid-year).”
Craft Silicon partnered with Safaricom to start the app-based ride-sharing service Little in 2016.
Sendy, a Safaricom-backed motorcycle hailing startup, was also launched in Kenya in 2016.
Little Cab, which operates just like Uber, squeezed its way into the market by allowing cashless mobile payments that used Safaricom’s M-Pesa service. M-Pesa is used by more than 90 percent of Kenyan adults and has a strong regional presence.
“Using our network as a platform, both Sendy and Little Cab plan to compete in an open market which is rich with opportunity,” Safaricom’s CEO Bob Collymore said during Sendy’s launch.
South Africa-based Africa Ride also leveraged on acceptance of payments via mobile wallets to gain popularity in Cape Town, Johannesburg and Rustenburg.
Uber’s initial public offering in May at the New York Stock Exchange lifted its valuation to nearly $100 billion and further ignited interest in the service across Africa’s largely untapped market.
Paris-based Heetch, with operations in Morroco and Ivory Coast, announced in May that it was targeting the francophone market on the continent. Singapore’s tech startups, attracted by Africa’s 1.2 billion demographic, are eyeing the ride-hailing and e-commerce market on the continent.
Another area of opportunity for taxi-hailing services in Africa is the low internet penetration and wide use of feature phones that are not able to utilize existing apps.
In a continent with less than 20 percent internet penetration, with many people in Africa using feature phones, telecom-backed ride-hailing startups are using USSD-run apps that allow users to access the taxi service via SMS, a feature Uber and Bolt still do not have.
Users in Kenya can hail a taxi on Safaricom’s Little Cab by dialing *826# on their phones and sharing their location. This has given the startup an advantage in expanding to townships where smartphone-use is not as high as in cities.
Others like Nigeria’s Afro and Oga Taxi let their riders haggle over prices with drivers. This ensures that the culture of bargaining for the best price between the seller and buyer is not lost in the app process.
“Haggling is a common practice in Nigeria, particularly in marketplaces where customers and sellers bargain over wares instead of paying a set price for things,” Harriet Kariuki, a specialist on innovation and Africa’s informal sector, said in an analysis.
Increased competition has seen fares among taxi-hailing operators drop over the years, to the chagrining of drivers, as companies try to retain users on their platform.
The prices, however, started flattening out at the end of 2018 and are picking up as these tech firms attempt to meet drivers’ complaints of low payments with modest price hikes.