The Rideshare Opportunity in Kenya and Across Sub-Saharan Africa

Posted by Ben Price on Jan 16, 2018 4:04:51 PM

nairobi-traffic.jpgNairobi, Kenya, the hub of East Africa, is a bustling city marked by contradictions – for example, it houses a combination of highly developed corporate high-rise offices and traditional African trade markets consisting of temporary kiosks and relatively permanent dukas. A more tangible contradiction is in transportation. A recent boom in automobile sales has plagued the city with horrendous traffic due to poor road infrastructure. Yet for those many who cannot afford to own a vehicle, transportation comes in the form of taxis, mutatus (buses), and Uber.

The Current Landscape

Kenyans use ridesharing. The most common form of shared transportation is via mutatu, a van altered to add additional benches so up to 20 people can fit. Mutatus are operated by a driver and sales person standing on the side bumper so as to not take a seat that can generate revenue. The sales person will negotiate and take payment from riders. Mutatus do not have a set route but stop in certain areas regularly and pick up everyone from students to commuters. The ride is often very hot and packed with people as it bumps through the dirt, pot-hole ravaged Kenyan roads.

Kenyans typically use MPesa, a mobile application, for payments for goods and services. MPesa is the largest mobile payment platform in the world, supported by the country’s high mobile phone penetration rate – more Kenyans (~85%) have mobile phones than do people in the United States (~82%). Additionally, mobile internet speeds are faster in Kenya than in the U.S. Because of this widespread acceptance of mobile payments and the widespread use of and reliability of mobile phones, Kenyans present a market opportunity characterized by low friction to adoption.

The Issue:

While a few small rideshare players do exist, the most prevalent option is Uber. An Uber costs less than a taxi and slightly more than a mutatu, with the only current option being Uber-X. The most significant issue facing Uber in the region, similar to other nations, is poor consumer sentiment. Culturally Kenyans are very prideful and carry a strong element of nationalism, and people do not hesitate to speak out against foreigners exploiting local people. Uber is seen by Kenyans as an American company exploiting the people of Kenya by taking too much off the top. According to Kenyans with whom I spoke, this attitude was spurred by changes in the payment structure that Uber instituted without articulating its rationale.

Many large Kenyan companies have a single figure head who prominently leads them. Because Kenyans are used to this dynamic, many can be found to blame ‘Mr. Uber’, in their eyes the greedy American tycoon who sets Uber prices and exploits the local people. This animosity leads to constant protests and boycotts of Uber. It is not uncommon for drivers and passengers to organize protests that span a full week, and these demonstrations can occur as often as once a month.

In the United States, we are used to shrugging off qualms we have with companies with which we may not be morally in agreement. Travelers fly with United Airlines if the fair is cheaper, order Uber despite the latest scandals, and eat at Chick-fil-A despite ideological divergences. Kenyans have collectively shown that they are likely to act more assertively. Uber boycotts, national shut-downs, and work closures for political demonstrations are prime examples.

The Opportunity

Ridesharing is ready to take off across Kenya and the rest of sub-Saharan Africa. Rather than an uncomfortable mutatu with a sales person hanging on for dear life, an automated and organized method to pick up and drop off people will optimize routes, pricing, and rider experience. Ridesharing could indirectly influence Kenyans to not purchase vehicles, in turn decreasing road congestion. If a rideshare company were to work with drivers making them feel like partners, and invest in fostering a positive community perception, the business opportunity would be enormous. Uber has proven the basic concept, but fell down on the brand-related and community-related aspects. If the correct steps are followed and users are suitably engaged, the next large rideshare company has an opportunity to own the market. Lyft’s international expansion cannot come too soon.

We have seen development of autonomous rideshare vehicles. Sub-Saharan Africa does not have competing public transportation infrastructure or regulatory reasons to resist rideshare adoption, whether autonomous or in person. The connectivity is there, the consumer readiness is there. The question is who can win over the local sentiment?

Topics: Competitive Intelligence, Product Roadmap, Brand Insights, Scenario Analysis, Competitive Strategy, Early Warning

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