New ride-hail options could help Africa's traffic-clogged megacities
Africa is the world's fastest urbanizing region, but limited public transit in most cities has led to severely congested roads, creating an acute need for investment and innovation in transportation.
Why it matters: Traffic takes a toll on both economic output and quality of life in Africa's megacities. But with mobile phone penetration approaching 50%, new technology platforms could help motorbike taxis and other services bridge the gaps in the continent's urban transportation systems.
Context: The average commuter in Lagos, Nigeria, spends 30 hours a week in traffic, so it's no surprise residents there and in other large cities are looking for new options.
- Competition in car ride sharing is strong as local startups compete with Uber and Estonia's successful Bolt (Taxify), fueled by investments from Chinese ride-sharing giant Didi.
- For the upper middle class, these services have provided more transport options, but without meaningfully reducing congestion.
What's happening: Building on the interest in new mobility companies, investors are now backing new motorbike and bus ride-sharing start-ups that serve lower income customers to the tune of nearly $100 million.
- In Nigeria, GoKada raised $5.3 million for its motorbike transit business and announced boat service, and motorbike logistics company Max.ng is expanding into Ghana and Ivory Coast, after closing a $7 million investment round led by Yamaha. The Chinese company Opera launched its Oride motorbike service and Opay payment platform in Nigeria in May.
- SafeBoda, the Ugandan motorbike ride hailing company backed by the Indonesian giant Gojek, has closed another round of funding for its operations in Uganda, Kenya and Nigeria
- SWVL, an Egyptian bus technology company, closed an unprecedented $42 million round of investment last week.
Where it stands: Riders have been drawn to these companies, which offer a new measure of safety in the often accident-prone motorbike markets. They provide helmets, ensure drivers are trained and help if there is an accident — big steps up from the preexisting motorbike taxi market, which was informal and unaccountable — and many offer driver services such as insurance products and asset financing for motorbikes.
What to watch: The race among non-car based platforms will only grow more heated as they compete to increase motorbike ownership, provide maintenance, attract and retain both drivers and customers, master payment technologies and raise new rounds of funding.
Aubrey Hruby is a senior fellow in the Atlantic Council's Africa Center.