It’s a good time to invest in Urban and Rural transport services
Not every African can afford a private car. Even if we all could, not everybody will find an inch of space on our roads to ride on. As a result, transport services (like taxis and city bus services) are cheaper, flexible and more convenient for people who wish to avoid the hassle of driving around town and worrying about parking space. For these reasons and more, the market and demand for both urban and rural transport services has become a huge business in many parts of Africa.
Motorcycle taxis and tricycles (popularly known as auto rickshaws‘ or tuk-tuk‘) have become very common and popular with low-income classes in many urban and rural areas across West, Central and East Africa, due to their affordability and flexibility in navigating traffic and bad roads. Taxis and buses are also a very common means of mass transport within cities and towns. There is also a rising trend of corporate‘ taxis and car hire services that target corporate customers and middle-income consumers.
In coastal areas and places with navigable inland waterways, water transport has become a fast-growing alternative to the already congested road transport networks. Governments and private businesses are already exploiting the huge potential in this area.
Business Concept
There are many ways to start a profitable business in the area of taxis and vehicle hire.
The BBC reported in January that the motorcycle rental in Kampala, the capital of Uganda, was growing exponentially. The long hours people spent in traffic have caused such businesses to grow. Motorcycles – in the region known as boda boda – are rented at around $40 per week, which means that you could make US$ 45,000 in annual revenue if you own 20 motorcycles. This is a model that could be replicated elsewhere in Africa, possibly with greater profits. Unfortunately, accidents involving motorcycles have also increased.
The Star reports this month that the vehicle and equipment company Car & General made a 18.5 percent increase in profit last year mainly through a growing business selling boda bodas and the three-wheelers known as tuk-tuks, so it is a business concept that can certainly work for you.
But have a look at our success story below if you want to explore different business concepts in this area.
Niche Idea
Limousine and car rental for weddings and diplomatic delegations.
Top Countries & Policy Guidance
A car business would work best in Africa‘s fastest growing cities where you have enough traffic and spending power. Africa‘s fastest growing cities are:
Dar es Salam (Tanzania), Nairobi (Kenya), Kinshasa (DRC), Luanda (Angola), Addis Ababa (Ethiopia), Dakar (Senegal) and Lagos (Nigeria).
Inform yourself about the import regulations in each country and the time it takes to clear imported goods, as they can vary considerably.
Action & Tips
There are some very creative car rental concepts available both in Africa and in the West. What about looking into the feasibility of such concepts for African countries where the market demand would certainly be there, but where such business models have never been heard of? Pulling it off would be a challenge, but be ensured that the competition will almost be non-existent.
The rental of motorcycles is very good business in some African countries, but non-existent in others. There may be room for you to replicate the concept in those countries.
Success story
Bankole Cardoso – EasyTaxi (Nigeria)
25- year old Bankole Cardoso was inspired by the efficient taxi services in the UK and US where he studied, and was determined to bring such efficiency into Nigeria. He moved back to Nigeria and started Easy Taxi Nigeria in 2013, a free smartphone taxi app service. The business is aiming to change the overall perception of taxis as being unsafe and unreliable modes of transport. Easy Taxi is actually a global company, and the app was launched in Brazil in 2012 by German incubator, Rocket Internet. Since Bankole‟s launch in Nigeria, the app has also been launched, independently, in Egypt and Ghana.
Here is how it works: The actual app service is free, and Bankole, for example, says that Easy Taxi Nigeria uses existing infrastructure (such as the taxis already operating in the city). Certified taxi drivers are recruited, trained in using smartphones and maps, and Easy Taxi links them with customers in their vicinity. The service charges drivers a 10 percent fee of every transaction they make from a customer they found through Easy Taxi. Is this something of interest to you to start in another country? Do so before others will!