What is blowing the flame out of transport disruptors?

A rider carries a passenger during the good old days of the ride hailing application. Initially companies charged riders as low as 5 per cent off a trip. That rate increased to 10 per cent and eventually settled at 15 per cent. PHOTO/Eronie Kamukama

What you need to know:

Ride hailing companies grew very fast as demand for riders sometimes overwhelmed their supply. With time, complaints popped up on the customer end. From riders starting trips before reaching customers, to riders opting for longer routes outside the Google maps, to reckless riding and surges in transport rates, Eronie Kamukama analyses.

They came. They disrupted. They painted our intersections with orange, black, blue and green helmets and reflectors. They offered a semblance of structure in a very informal and unregulated sector.

To riders, they gave easy access to customers. That meant more jobs and better income. The ride hailing services that use smartphone applications came in phases. Homegrown SafeBoda arrived earliest in 2015. The year 2018 shrunk SafeBoda’s monopoly and ushered in its most difficult time since launch.

Four months after launching its cab hailing service, Estonia’s Taxify now known as Bolt sought a share of the market in February 2018. American technology company Uber expanded its transport services in March 2018 and three months later, entered, Dial Jack. YellowBird was visibly the last to hit the market in 2019.

The perks

In their marketing, they seduced customers with a promise of safety, helmets, no price bargain, transport rates as low as Shs400 per kilometre, free rides, discounted rides, cashless payments and best of all a bodaboda at your doorstep just by “confirming a ride” on your smartphone.

“That was a great time. I remember saying bye to ordinary bodaboda guys because I knew who I was dealing with this time. I would be ridden safely but most interestingly, I could go to new places without stopping to ask for directions because the rider uses Google maps to find any location,” Mariat Kiseeka, an ardent subscriber to bodaboda applications, says.

Kiseeka has since fallen off the subscriber list. These companies grew fast in terms of riders as well as demand that sometimes overwhelmed the supply of riders. With time, complaints popped up on the customer end. From riders starting trips before reaching customers, to riders opting for longer routes outside the Google maps, to reckless riding, to surges in transport rates.

At their peak, these ride hailing apps generated income for 100 to 20,000 bodaboda riders from respective companies. Like many startups, they seem to be falling on hard times. Some have lost most of their riders. Some have shed off their workers. Other apps seem non-functional.  Take for instance Dial Jack or Yellow Bird. You could go a day or week without seeing a single rider from either company. Dial Jack famed itself as the revolutionary bodaboda when it hit the market in 2018. The app is currently downloadable but a new user can attempt registration but not succeed. Its Facebook page was last updated in 2019 and its known phone numbers are either switched off or unavailable.

A rider wears a Bolt helmet. Most riders have since abandoned doing business on the applications and only wear the helmet but not the reflector jacket.  PHOTO/Eronie Kamukama

Bolt

When we called the phone number on Bolt’s website, its owner said he had left the company and barely had an idea of its current location. The first five Bolt riders interviewed for this article wore numbered helmets but said they stopped using the app and had no idea where the current offices are.

“I only know where I was onboarded from when Bolt had just come. I have no idea where they are now. Times really got hard during 2020 and I sold off my smartphone,” Karim Wasajja says.

For Barnabas Twehamye, it was the company that pushed him out. “I stopped using their app. How can’t you see how dormant the company has become? It lost all the fire it had at the beginning,” he says.

Rider

Peter Kakembo no longer wears his SafeBoda reflector jacket. He has also defaced the helmet to disassociate himself from the company. He wants nothing to do with the company that drove him to abandon a bodaboda stage and be on the move with lots of customers on the app in far areas he had never ridden to.

“They call once in a while to ask what happened. The best thing Safe Boda can do is to call everyone so we can let them know what our needs are. I left because it was no longer comfortable for me to work on the app,” Kakembo says.

“You would do very many trips, make money but lose it because they remove their cut and that depends on their commission and how much debt you have because you get a helmet and phone which you pay back slowly. Honestly, if you look at the terms, Safe Boda was the only one making a sensible return and us, low returns yet we must service these motorcycles, buy fuel and earn an income. So I left.”

Kakembo says he looked at Uber as the ideal app to use but it has its list of issues including higher transport rates in the market. This has been blamed for its few customers.

The rarity of most of the ride hailing services that once wowed the streets and stirred spite among ordinary bodaboda riders almost shows a return to an analog era.  Riders are no longer interested in cashless transactions especially those looking for quick money as well as evading loan payments. You will hear a rider say “if you are using cashless option, I am not taking you anywhere.” Too often, riders ignore the estimated transport rates on the app and demand to bargain for better prices.

“I have the passenger app and I know the app has shown you Shs5,000 but I will take you if you can pay at least Shs8,000,” some riders say. Riders have returned to old reckless ways of running red lights and speeding into accidents. But the people behind the companies are wearing brave faces and insisting they are not going anywhere.

SafeBoda co-founder Ricky Rapa is one optimistic man. The company recently came under fire for its new terms and conditions. To say that the company is not liable for any damages including bodily injuries, physical damages, death, or that it is not responsible for the actions of its users or service providers enraged passengers and drove some to delete the app.

In its defense, SafeBoda said it remains a legal statement aimed at protecting the company. In an interesting development, it insisted the clauses were misinterpreted and that the company would continue to support users.

On the other hand, these developments arrived at a time when the number of SafeBoda riders was slowly dipping from 20,000. Riders continue to face very difficult times due to the Covid-19 pandemic.


Earnings dip on Covid-19

Earnings dropped to as low as Shs10,000 a day during the 2020 lockdown. Today, bodabodas officially work till 6p.m. According to the company’s data, a rider who works hard is able to earn at most Shs25,000 daily, down from the Shs50,000 prior to the pandemic.

On top of the meager earnings, riders have been unhappy with the rate charged off every trip made and want consistency on price. Initially companies charged as low as 5 per cent off a trip. That rate increased to 10 per cent and eventually settled at 15 per cent.

“The reality is the percentage has always been there since inception. The 15 per cent came as a result of our first business model which was the weekly Shs10,000 riders paid to access the platform and be able to get every other thing such as a phone, training and reflectors. In 2015, the riders said that fee was expensive and suggested we go for a percentage to help us do what we do. SafeBoda has spent millions of dollars in the industry but has not yet been able to make any money. The furthest we can go is 15 per cent,” Rapa says about trends in the sector.

“It is very expensive to run a business like ours with employees, thousands of riders to provide with a pair of helmets over $50, a smartphone about Shs350,000, train them and continue to support them when these things get old.

Other top players have declined to offer clarity on their stay in the market. In an interview, Uber does not share current statistics on riders, subscribers. It attributes its current situation to the 2020 lockdown that limited bodaboda services to transporting packages and allowed for less working hours.

“For a company with the objective of moving people from point A to B, the lockdown disrupted how we operated. However, as 2021 is in full swing and the economy slowly adjusting to new realities, we are excited about the possibilities that lied ahead,” Lorraine Onduru, Communications at Uber East Africa, says.  The company did not respond to a second inquiry into whether it would resurrect its bodaboda business.

With the companies going silent, it is difficult to see how the remaining companies can avert the demise of their businesses.

SafeBoda exited the Kenyan market in 2020 but believes it will be here decades after this and will take its dream to other ten cities across Africa.

Anthony Kagimu is the Ventures Lead at the Ntinda-based technology hub Innovation Village. He believes what has happened in the ride hailing services sector is a case of the cost of acquiring customers. He likens it to the case of the chicken and egg. Which of the two came first? Businesses are bound to find difficult if they are with but without riders, it does not work. The supply side cannot also work without the demand.

“The struggle is trying to build both at once. You have to put in a lot of investment in the riders at the point when you do not have customers. Customer acquisition cost becomes much higher and the question is whether the market is ready to take on a higher service cost for you to recover the cost of acquisition. The cost was a bit high because whenever I took a SafeBoda, I would compare what is on my phone and the rider’s. Where you are charged Shs2500, a rider would earn Shs3000 which means the company gave them an additional money to sustain them hoping they would reach a point where customers make up for it. ,” Kagimu says. Also, with society that remains cash-based, players think that plays a lot into the companies staying afloat.

“Riders want to belong to a certain company by putting on the branding that gives customers the confidence but by insisting that the customer uses cash, they are creating a situation where the owner of the platform will not collect their share,” Kagimu says.

He describes it as a winner-takes-it-market so smaller players will collapse first and larger players will collapse later if they have enough cash-flow to go through a rough patch.

 “What is worrying for me is when the top players are struggling because in that kind of market, I expect the smaller players to be eaten up over time,” he says, “Incentives can be tricky. What makes someone want to use mobile money instead of cash and how do you do that without it costing you too much in customer acquisition costs? Finally, as a country, we need to move to electronic payments and normalize them more because they facilitate the entire ecosystem.”