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Africa’s Transportation: How Uber Wants To Embark Africa

The Californian giant goes into high gear. Its drivers already operating in twelve cities and should invest twelve cities by the end of the year.A race against time to be able to develop a viable business, but also an obstacle course to adapt its model to the continent.

A promise is due. In October 2015, Travis Kalanick, boss and co-founder of Uber, the US giant linking of passenger cars with driver (VTC) and their customers, announced his intention to lead, this year, a ” Big push “in Africa. In recent weeks, this desire for conquest is specified in the field.

In June, Uber launched its platform in Kampala, Arusha and Accra, bringing its African presence in twelve cities in eight countries – South Africa, Kenya, Nigeria, Egypt, Morocco and now Uganda, Tanzania and Ghana. “Our launch in Accra was a huge success. Since our beginnings in the continent [in South Africa, in 2012], it is the city which recorded the strongest growth in a month of activity,” says full enthusiasm, Loic Amado, head of the African expansion of the Californian group, but without giving figures.

Eight weeks to install!

While its presence arouses everywhere a fierce contestation of traditional taxis, Uber wants to accelerate this continental offensive. “We think we can settle in twelve other African cities before the end of this year”, says Alon Beds, its director of operations in sub-Saharan Africa. In his sights, Angola, Rwanda, Mauritius, Namibia as well as Côte d’Ivoire, Cameroon or Senegal.

The start-up, valued in December 2015 to 62,500,000,000 dollars (59 billion euros) at its last fundraiser, will go fast. For this, it has a proven, which allows it to engage in about eight weeks in a country. “We go on site to conduct ourselves a market study, analyzing the prices of taxis and try all existing modes of transport. And we discuss the authorizations with policymakers [ministries and municipalities],” said Loic Amado who just returned from Abidjan, where he was prospecting.

Once the group has decided to enter a team of three or four people is made, supported by local transport specialists. These help create the on-site network drivers and users.

A profitable model faces obstacles

The ambition of Uber’s as simple as titanic ?: offer its services in all cities of more than 200? 000 having both a mobile network reliable enough, a map and a GPS service that allows users and drivers to locate and platforms to make payments online.

Embark quickly on a market is one thing. Reaching there develop a viable business is another. Completely dematerialized (the company does not own fleet) and based primarily on the management of a platform linking supply and demand – skimming off a commission of about 25% – the economic model Uber has been duplicated successfully in America and Europe.

But he still has to prove on a continent where 3G coverage is still limited, where physical addresses do not always exist and where electronic payments are uncommon. The challenge is even more difficult than the markets are very different from each other and that the same model can be duplicated everywhere.

“What works in Johannesburg do not necessarily march in Lagos,” says Justin Coetzee, CEO of GoMetro, a South African application that allows users to plan journeys on public transport. Even within countries, operating conditions can change from one city to another.

Lack of electronic payment,The challenge here is important, because to cover its operating costs, which can be very high at startup – Uber then not hesitate to subsidize the races to make competitive rates – the start-up has to reach a critical volume transactions. She must find a formula capable of reaching the largest number of African customers. Electronic payment is still not widespread on the mainland, the group recently decided to expand the cash payment to all sub-Saharan cities where it is present.

“These tests will give us an overview of how customers and partners drivers adopt and use a combination of electronic payments and cash, that change in behavior, etc. This will allow us to establish a better product, provide a better experience and create a sustainable business, “says one to the south African leadership Uber. Adding that in countries where species are predominant, the group could deploy alternative payment methods.

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Under these conditions, what about the collection of the commission charged by Uber ?? “The service fee for the races settled in cash may be deducted from the pay of drivers, they receive at the end of each week. For cases where this payment method dominates, there are several collecting funds from structures drivers, varying from country to country, “we says one. The US giant maintains that the introduction of the cash payment has boosted demand in the countries concerned – in Kenya, the number of courses has tripled.

But the model Uber faces another limit. “Do not hold a car park, it must find a sufficient number of drivers with vehicles that meet its criteria [comfort, safety, etc.]. In Africa, these are few and often belong to the middle class. this means that they already have a job and they use their cars for other purposes, “says Vangsy Goma, the founder of Africab, a VTC company that develops Ivory Coast with a fleet own 70 vehicles, and in which it has already invested 1 billion CFA francs (1.5 million euros) .

Financed auto and motorcycle races

On that ground also, the company – which lifted early June $ 3.5 billion from the Saudi sovereign funds to finance its expansion – adapts its strategy. Contrary to what it does in America and Europe, the continent, the group is involved in the formation of the drivers park. He signs such partnerships with local banks to allow drivers to obtain loans on favorable terms.

“In Kenya, we found an agreement with Commercial Bank which allows those who are rated by customers [at least 4/5] to obtain financing without having to provide a guarantee. And at a rate of 10% instead of 18% applied to the market, “said Loic Amado. Similarly, the group does not hesitate to pay cash bonuses to attract new drivers. In Morocco, it has successfully integrated its offers some red taxis. Moreover, according Vangsy Goma, “private actors invest in fleets, drivers and recruit sign a partnership with Uber.”

Obsessed by the need to achieve the critical mass of users and transactions allowing it to have a viable business in Africa, the California group wants to cast a wide net. While the deficit of infrastructure and congestion in some cities may limit its growth, prepares an offer which made recipe in Indonesia and India ?: l es motorcycle racing . It could be launched before the end of this year in Rwanda, Tanzania and Uganda.

From Abidjan to Nairobi, many competitors in ambush

In early July, the powerful Kenyan telecom operator Safaricom, 40% owned by British Vodafone, has also launched a matchmaking application of VTC drivers and passengers, called Little Cab. With a model identical to that of Uber. In an interview with Reuters, Bob Collymore, CEO of Safaricom, said the company, launched jointly with the local developer of Craft Silicon software, will offer a wifi connection to passengers, offer lower fares and donate drivers a largest share of sales.

It was enough to put in all its the small world of the African e-commerce, which already sees in this new application a serious rival to the US giant. With its network, the most used in Kenya, and its mobile payment platform M-Pesa, which has over 20 million users, Safaricom has serious advantages to win.

In Africa, other players already competing Uber, whose EasyTaxi Brazilian, developed by Rocket Internet incubator. A pioneer in online taxi services in Latin America, it is active in Egypt (Cairo, Marina), Kenya (Nairobi), Nigeria (Abuja, Lagos) and Ghana (Accra). Several local applications, smaller, have also increased recently ?: SnappCab in South Africa, Kenya and Maramoja SafeBoda Uganda, specializing in motorcycle taxis and claiming 12? 000 passengers per day.

This effervescence won the Ivory Coast where, in the wake of Izicab, born in 2015, TaxiJet, Drive and Africab have launched. Like its competitors, Africab its salaried drivers and has its own fleet (70 cars) – he claims to have partnered with car dealers to enlarge rapidly.Vangsy Goma, its founder, defends a pan-African strategy. It is about to conclude its first franchises in Lome and Cotonou.

 

Source: JeuneAfrique.com

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Written by How Africa

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