How Uganda Became Africa’s Digital Transport Hub
It was just my second day in Kampala when I saw a professional biker and his passenger veer off the road at a major city intersection and crash into a street stand selling mobile phone cards practically in slow motion. Fortunately, neither one seemed to be wounded as they both stood up and dusted themselves off.
What surprised me the most was that I only saw one collision, considering the overwhelming number of motorbikes — known locally as boda boda — that traverse Kampala’s packed roadways, often traveling in the opposite direction on major streets. Depending on who you ask, Uganda has anywhere from 800,000 to 1.2 million boda bodas. It’s easy to believe since they appeared to occupy every nook and cranny of traffic and side streets in this 3 million-person metropolis.
Since the mid-1990s, the East African country’s boda boda business has grown to become one of the most significant employers of young men aged 21 to 35, second only to agriculture. It has also resulted in a sizable informal economy and ecosystem, which is estimated to account for 5% to 15% of the national GDP. The majority of the motorcycles are imported from India, and two companies dominate TVS and Bajaj.
The thriving Boda Boda industry explains why, despite Uganda’s considerably smaller local IT economy being much smaller than neighboring Kenya’s, Kampala is a bit of a niche among Africa’s tech ecosystems as a test bed for digitizing public transportation services using motorcycles and matatus (buses).
SafeBoda has been in the vanguard of the movement to digitize most of Africa’s big cities’ primarily semi-informal transportation networks. It was founded in 2015 with the goal of converting thousands of Kampala’s boda boda riders into a single digital platform, using a concept broadly similar to ride-hailing models pioneered earlier in the West, but with motorbikes. It had 25,000 registered drivers at its height. As the name implies, one of its distinguishing early selling factors was safety. By offering well-trained drivers, requiring helmet use, and registering drivers and their identities, it added a new layer of security and safety to an otherwise informal and chaotic industry.
But, before SafeBoda, there was Tugende, a 2012 asset financing firm that has financed over 65,000 transactions. Its main offering is a lease-to-own program for motorbike taxi drivers in Uganda and Kenya. Tugende has raised more than $50 million in stock and loan funding since its inception.
SafeBoda and Tugende’s early steps have inspired a variety of digital businesses in industries such as financial and agritech, as well as others in the mobility domain. “There’s been a lot of interest in the sector from investors,” SafeBoda co-founder Ricky Papa Thomson told me during a meeting. “People want to be successful where others are successful.”
According to Tom Courtright, a transportation expert specializing in East Africa, SafeBoda has helped increase awareness about Uganda’s technological possibilities. “With drivers, technicians, and engineers, some of whom have gone on to join Google and others,” he added, “SafeBoda undoubtedly has a genuine role to play in the local ecosystem growth.” “They placed Uganda on the map for investor types, which encouraged money to flow into other firms.”
But SafeBoda’s Thomson is keen to point out that “success” hasn’t been the boda boda sector’s narrative for the previous two years. Uganda had implemented one of the continent’s most stringent pandemic lockdowns, which had lasted almost two years. More significantly, the restrictions were strictly enforced to prevent boda bodas from transporting people.
“The economy was already hurting before Covid-19, and then it became a lot worse,” Tugende creator Michael Wilkerson said. Tugende found itself having to assist drivers who couldn’t make a livelihood early in the lockdown, paying 25,000 Ugandan shillings ($6.50) to each driver to help them purchase food. It was a difficult period for the organization since some of those drivers were unable to make loan payments on their motorcycles. Even with most limitations lifted, inflation has driven up gasoline costs by about 85%. “Our consumers are on the front lines of the economic slump here,” Wilkerson remarked.
The lockdown accelerated the use of digital services, as reported by Rest of World, and SafeBoda quickly added more services such as food delivery services, airtime purchase, cashless payments, mobile money transactions, and a savings scheme in which users are offered 10% annual interest on their savings. Tugende, which began with just financing motorcycles, today provides a wide variety of asset financing alternatives, from yachts to refrigerators, as well as insurance products.
“We didn’t intend to pursue this path yet, but the circumstances drove us to,” Thomson added, alluding to the “mega app” approach. “Even the industry titans in the United States and abroad have been unable to profit from ride-hailing.” SafeBoda’s income diversification strategy is supported by the development of its own mobile money ecosystem to promote cashless transactions.
However, there is still hope that digital platforms can help disrupt — or, in fact, do the opposite — by organizing and aggregating semi-formal, privately-run public transportation options in rapidly growing African cities. Easy Matatu, a three-year-old business, is attempting to do this with a simple app that enables suburban travelers to reserve a seat on local 14-seater buses that go into central Kampala.
After getting started, co-founder Andrew Lema and his team quickly realized that digitizing the service was the easiest part of launching their service. “We had to persuade both bus drivers and their bus owners to collaborate with us since they considered us as rivals at first,” Lema said. “Winning them over takes time.”
Eventually, both sets of stakeholders may recognize the benefits of being able to run the matatus more efficiently. “Previously, drivers relied on their intuition to choose where and when to run their routes, but now we have the data for them.” According to Lema, who is presently working on completing EasyMatatu’s initial fundraising round, they’ve even been able to establish additional routes.
When it comes to Ugandan mobility, though, much of the innovation stays on two wheels rather than four. One issue that has received a lot of attention is how to assist establish a more green transportation ecology, particularly as Uganda’s fuel prices rise. Zembo, a four-year-old firm that secured $3.4 million in November 2021 from Toyota and CFAO Group’s Mobility 54 Investment, DOB Equity, and InfraCo Africa, distributes electric bikes via its lease-to-own program. On SafeBoda, it has also collaborated with drivers.
According to co-founder Daniel Dreher, the firm now imports motorcycle bodywork from India and electric battery systems from China. The motorbikes are assembled at a tiny plant on the outskirts of town where they also repair rechargeable batteries for the bikes. In order to completely earn its “green” credentials, the business has created a network of solar-charging and battery-swapping stations around Kampala and adjacent cities.
According to Zembo’s Dreher, the firm has lately suffered due to supply chain issues, notably out of China. “It’s been a major issue.”
Given the high cost of petrol in Uganda, Courtright believes there is a huge demand for batteries and electric bikes among drivers. “The challenges are more technical,” he said, “but no one has done this before, and there’s still a lot of R&D to accomplish.”
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