Africa’s ride-hailing market
26 November 2019
Africa is digitising rapidly, Internet penetration is estimated at 39.5% as of June 2019, up from 13.5% in 2011. Further, smart phone penetration has increased from 15% in 2014 to 33% (2019) and is predicted to double by 2025. The rise of digital technologies is allowing innovative businesses to address massive unmet demand globally and especially in Africa, mainly via mobile phones.
Ride-hailing describes booking rides and paying for transportation services through a smartphone app with a transportation network company matching passengers with vehicles in the background.
Public transportation systems in African countries are still inadequate and poorly developed. Additionally, car ownership and cars per capita in Africa are among the lowest in the world. As a result, millions of people on the continent make use of informal transport services, offered by minibus and motorbike taxis, which they hail from the side of the roads, for their daily commute. Ride-hailing is big business that’s already ingrained in African consumer culture. The introduction of digital ride-hailing services by transportation network companies has simply formalised the sector.
The Middle East and African ride-hailing market is projected to grow at a CAGR of 21% during 2018 – 2023 to a value of $7.3 billion (Research and Markets). The growth is backed by ease of booking and enhanced comfort offered by ride hailing services, in addition to growing population and rising urbanisation. Other factors that will aid growth in the market are increasing air pollution levels owing to the rising fleet of automobiles; and supportive government initiatives to encourage use of ride hailing services.
Two-wheelers are becoming a key medium for transportation in urban as well as rural settlements. Africa’s motorcycle ride-hail market is worth an estimated $4 billion, according to Tech Sci Research. This segment of the ride-hailing industry has seen many local African entrants and a flurry of funding. For example, Nigeria’s motorcycle transit startup MAX has raised over $8.1 million, backed by amongst other investors, the motorcycle manufacturer Yamaha to expand its services and pilot electronic motorcycles.
We believe that African entrepreneurs have the opportunity to take the lead in the ride-hailing industry by introducing environmentally sustainable alternatives to petroleum-powered vehicles.