Forget Uber, Taxify is winning Africa – The Wall Street Journal

DUBLIN – It's no secret that I don't have a lot of faith in Uber as a business. I think that there is, as yet, no evidence that it will ever be able to earn enough profits to justify its sky-high valuation. I don't believe that it will do anything spectacular in the way of self-driving cars any time soon, and I don't see how – with its poor driver relations, safety issues, and unfortunate corporate culture – it is going to stay on top in a highly commodified space. This article underlines my lack of belief in the Uber story. It tells the story of how Estonian ride hailing company Taxify has managed to eat Uber's African lunch by being more responsive to local conditions. I may, obviously, be very wrong about Uber. There are plenty of investors who are much smarter than me that have bought wholeheartedly into Uber's story. But, as this article demonstrates, the ride hailing space is by no means a simple one and Uber's dominance is not guaranteed. – Felicity Duncan.Taxify Rides Motorbikes to Lead Over Uber in Africa.By Alexandra Wexler.(The Wall Street Journal) KAMPALA, Uganda—In the race to become Africa's dominant ride-hailing app, Uber Technologies Inc. is trailing a much smaller rival..___STEADY_PAYWALL___.Taxify OU has sprouted within just five years from a small Estonian venture into a so-called technology unicorn focused on Europe and Africa. The company, launched in 2013 by then-19-year-old Markus Villig, says it has 2.4 million active users in six African countries—Uganda, South Africa, Nigeria, Tanzania, Kenya and Ghana. Taxify defines an active user as someone who has requested a ride in the past month. Uber operates in those markets as well, claiming 1.3 million active users, or those who have completed a ride within the past month. It also operates in Egypt and Morocco..Mr Villig, now 24, said Taxify—which gained "unicorn" status in May with a $1 billion valuation after raising $175 million from investors led by Daimler AG DMLRY 0.34% —plans to spend "hundreds of millions" of dollars to grow on the continent over the next couple of years. Uber declined to provide specific figures for its Africa investment plans but said it has multiple vehicle-financing programs in several countries to help drivers.."Demand in Africa for ride-hailing services is a lot bigger than in the developed world and Europe because of the lack of public transport and low car ownership," Mr Villig said in an interview. "And due to high unemployment, people look for easy and flexible ways to make money.".Taxify's swift expansion in Africa shows Uber's vulnerability to smaller and nimbler rivals in some of the world's fastest-growing markets. In 2016, Uber gave up its costly battle for China's riders, swapping its local operations there for a minority stake in the country's homegrown champion, Didi Chuxing Technology Co. In March, Uber said it would sell its Southeast Asian operations to Grab Inc., its top competitor in the region, in exchange for a minority stake..Founded in 2009, Uber dwarfs Taxify on a global scale. Valued at $76 billion after a $500 million investment from Toyota Motor Corp. in August, the San Francisco-based company has more than 75 million active users world-wide. It operates in over 600 cities, compared with Taxify's approximately 15 million registered users in more than 50 cities..But smaller competitors are often able to localize their offerings more quickly, with such tactics as accepting cash payments in countries with low credit-card penetration and offering motorized-rickshaw rides in cities like Mombasa, Kenya..In Uganda, Taxify got a leg up on Uber by offering motorbike-hailing first. Motorbikes, known locally as boda bodas, are a popular mode of transportation for hire in cities such as Kampala, where cars get bogged down in traffic snarls resulting from poor urban planning.."Two million boda boda trips happen weekly in Kampala," said Alon Lits, Uber's general manager for sub-Saharan Africa. "If you've been there and sat in the traffic, you understand why.".Still, Uber waited nearly two years after entering Uganda with its UberX car service before adding boda boda hailing at the end of March. Taxify, which entered Uganda with car-hailing in late 2017, introduced its motorbike service in February.."Very quickly, we realized this is a boda boda industry and that there was a huge opportunity here," said Julian Byamugisha, Taxify's operations manager in Uganda. "We said let's do boda as quickly as we can do boda.".Uber says it had challenges getting motorbike drivers onto its platform initially. Those who showed up often didn't have licenses, smartphones or bank accounts. Now, account specialists from local banks sit in Uber's Kampala offices, ready to sign up new drivers..Taxify pays its drivers with mobile money, a technology popular in Uganda and other emerging economies because it allows people to receive and immediately store funds using a mobile phone..Uber has tried to distinguish its app in Uganda by offering more safety features. For instance, boda boda drivers are required to log into the app with facial recognition software to ensure the correct person is operating the motorbike. Taxify doesn't have that feature. And while Uber's insurance covers both drivers and riders, Taxify's policy applies only to its drivers.."Consumers will go to the [Uber] app provided it gives them more value or increased peace of mind," said Mr Lits. "The competition's healthy.".Taxify's Mr Villig says his company has gained ground by offering drivers better earnings. Across sub-Saharan Africa, Taxify takes 15% of a driver's fare, while Uber charges 25%. That makes a big difference in a country like Uganda where per-capita gross domestic product was just $604 last year..Drivers for both Uber and Taxify wear helmets and carry additional ones for passengers. They also undergo special road-safety training. Both companies say they haven't had any severe injuries or deaths since entering the boda boda market.."Taxify charges less commission," said Herbert Mubiru, 28, who joined Taxify as a boda boda driver in June. "It's the main the reason I signed up.".—Nicholas Bariyo contributed to this article.

Forget Uber, Taxify is winning Africa – The Wall Street Journal

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