Most of us who follow technology and crazy business valuations are already familiar with Uber, the on-demand service that allows anyone to get cab transportation at the tap of a button.
The disruptive app started in the United States and but spread virally to the rest of the developed world. 60 countries and a $68 billion valuation later, the startup has revolutionized the way millions of urban dwellers travel from point A to B.
Uber in Africa
The service is already in Cape Town, Abuja, and Nairobi, close to our own borders; but so far, nothing has materialized on the Zimbabwean market – even as we have seen related concepts, like ride-sharing ventures (an example of which is the Zimbabwean SmartGo App, covered here in January.) We’ve also seen GTaxi Zimbabwe, an app which allows cab-hailing via Android – using only real taxis but without allowing regular drivers to sign up for the service to offer supply.
However the Uber model, catering purely to on-demand cab-riding needs using the internet, has simply not arrived in Zimbabwe.
There are two ways the model could be implemented in this market: one is if Uber itself opened shop. The other is if local entrepreneurs used the model to launch a homegrown service.
Why is an entry by Uber itself a bad move?
Uber depends on affluence and a ‘highly cashless’ economy
The two things needed to use Uber’s service are a credit card and a smartphone. In San Francisco or London, everyone has these things.
In contrast, smartphone and internet penetration in Africa is low. Zimbabwe, in particular, lags behind the likes of South Africa and Kenya in terms of connectivity.
Per-capita income, which gives insight into how much disposable income people have, is also lower in Zimbabwe than these peer African countries.
Uber’s Zimbabwe entry would thus be a somewhat unjustified move as the demographics look forbidding (see heading below). This, however, does not take away the fact that local players can come up with ground-up solutions to meet the needs of what is still a small and niche market of upper-middle class urban folks wanting to tap a button and get a cab. So, if one such start-up came up, what should it look like?
It would have to be Zimbabwean, not American
Uber is in Kenya, South Africa, and Nigeria. Here’s what those three countries have in common that Zimbabwe does not; a high population and relatively stable macroeconomic conditions.
A small population like Zimbabwe’s implies low volumes (and revenue) to the point where normal Uber margins become impossible. What’s left – a breadcrumb niche market with the potential to grow, suits only a homegrown startup using the same model.
It would have to be cheaper than Zimbabwean taxis
An analysis of how middle-class Zimbabweans travel bears interesting facts. Let’s use the example of a journey from Harare’s business district to a suburb like Marlborough (which is 10 km away)
It costs a small car owner $2.50 to make that trip. A cab owner charges at least $10 for the same distance. That there is a $7.50 pricing cushion where drivers in an Uber-like network can come charge less than normal taxis, but higher than kombis.
My analysis also showed that a lot of travelers use the kombis while detesting the experience simply because the next best alternatives – cabs – are way too expensive. An Uber-like service would become the perfect in-between option.
It would have to market aggressively to target owners of under-utilized cars
Most hard-working, middle-class Zimbabweans (entrepreneurs, college students, pensioners) own small vehicles (think “ex-Japanese” imports) Most of those cars are under-utilized, sitting in the garage and hardly doing any day-to-day work. A Zimbabwean cabbing app would depend on these small car-owners joining its network and that would take care of the supply-side of things.
It would have to work with local payments platforms like Paynow
Uber uses a cashless system. No cash payment (or tip) is given to the car. You simply tap buttons, sit back and enjoy the ride, and move on. The computer deducts payment using credit card information stored in the system, saving travelers hassles of having to carry cash. Translating that into the Zimbabwean situation, where ‘credit card penetration’ is still low, means playing ball with local payment platforms that use mobile money (like Paynow and Pay4App.)
An opportunity too small for Uber, but big enough for locals
Uber would thus face too many strategic and viability challenges if it came to Zimbabwe, a country whose economic and demographic fundamentals are not exactly conducive on the Uber scale.
But the company’s model is welcome in Zimbabwe, and must be implemented bottom-up by local entrepreneurs who understand what they must do, taking a leaf from the few local players who have already entered the space with their own remixes of the Uber model, such as GTaxi and SmartGo App.
33 comments
“…The two things needed to use Uber’s service are a credit card and a smartphone. In San Francisco or London, everyone has these things…”
That statement is very wrong, you do not need a credit card to have Uber and not everyone have a credit card in London!! Do your research thoroughly please.
You are right Macd Chip. In Lagos and Mumbai, Uber has specifically created a cash-based service in order to fit into the popular mode of transacting there
The reference was for Uber in USA. Glad to learn about the cashless option that was allowed for some riders in emerging economies like India. Do they run the card/cash options in parallel?
Uber however remains a largely cashless ecosystem, and must probably be presumed to be such for purposes of discussing the MODEL
1. Actually, you *do* need a valid credit card or PayPal account to use Uber’s service. How else would the experience be cashless (ie no handing money to the driver, and no tipping.)?
2. “everyone” is used figuratively here to mean that the vast majority of the population in Western/advanced economies has access to card, plastic, or mobile money/payment options. Don’t take the word literally.
You don’t! You are confusing a debit card and a credit card, they are totally too different things. Almost everyone have a debit card not credit card.
What you need is a payment method. Both CC and DC will do for Uber, but “credit card” is the most usually used term to refer to either, and that’s how I used the term here (loose American-speak.)
Paypal also works for Uber.
Debit cards are hit and miss with Uber South Africa. For instance FNB Debit works, ABSA and Standard Bank Debit does not work.
Ecocash Virtual Card number does work though.
Sure credit card refers loosely to both CC and DC.
FYI Uber in Nairobi, Lagos and Abuja (Ihave used them) offers the cash option, so that model could work, other conditions being favourable.
thanks for bringing that up.
“In contrast, smartphone and internet penetration in Africa is low. Zimbabwe, in particular, lags behind “…. penetration is slow very true but do the stats on ‘who has’ and ‘who doesnt have’ these, you might just be surprised.
uber in south africa is available in Johannesburg, pretoria, durban and cape town.
uber doesn’t market that much, in sa they rely on referals. i doubt zim is even on the horizon for uber coz of the sanctions which is also the reason we don’t have google paid apps for developers in zimbabwe
u said the computer does what – lol
l once wanted to take Uber taxi from where l was to Zim(just checking for fun), the total cost to Zim was coming close to US $16 000 to get to Harare.
A very good article Dominic Mhiripiri. Articles like these should be read more for the principal idea than anything else… It is possible to miss the business opportunity under discussion over nit-picking some details. I am not defending “incorrect facts” but i think this is a well researched and well written piece. Cheers!
Exactly what I was thinking.
Thank you; I agree that discussing the issues raised here in a bigger picture of the business opportunity on the ground is more important than the nitpicking going around.
the devil is in the details. This is what undo a lot of our businesses. You ignore the little details thinking you have a bigger better view, only to be undone by things you thought were little picky stuff.
Although most of the minutiae you raised has been adequately addressed: the misunderstandings about debit/credit cards, and the correction about some Uber networks that are using cash, etc..
Check out the GTAXI page on Facebook
https://www.facebook.com/gtaxizw/
thanks; the mention in the article also links to the app on Google Play.
funny how you point out internet penetration being a disadvantage for uber but when its VOD services you say they are viable
The actual idea is great. Entrepreneurs can now hybrid this to the next stage. Go out of the box and think how to utilize even kombis into school run errands etc. Deep thinking always produces an answer or nit-pick today then watch Econet do it …then cry even louder that opportunities never come your way. Lets discourage the western-world blog style of being cynical and drawing out digital daggers and digital guns to shoot down ideas and steal time away from constructive discussion and implementation. Thanks Dominic…I await your next instalment
You may say what ever you want to say but the idea of Uber was conceived in Zimbabwe
Are you going to provide the evidence/explanation?
I like your article but your title is misleading. Uber now represents more than just what its actual platform does. It is now about a concept. When you say We dont need Uber in Zimbabwe, it reads easily as not needing a similar service as well.
You are advocating for a home grown solution, which is noble and i support that, perhaps your headline would have been more meaningful to have stated as much.
It is also a poignant point that must not be lost that Uber accepts Debit Cards as well. This is very significant to Zimbabwe as debit cards are already on offer by companies like Econet with ecocash platform, however you point is valid, anyone who wants to get into this market has to take care of the payment side of the business to provide a trusted and fail safe transaction platform.
1. Misleading? My point was that we don’t Uber the American company, but the concept is welcome/necessary/viable if taken upon by local entrepreneurs using a local scale. Do tell, how should it have been phrased instead?
2. I already mention debit cards and credit cards as being accepted. See above.
Simple and possible headlines
“Why Zimbabwe needs a local Uber like service.”
“An opportunity for local developers to create an Uber alternative for Zimbabwe.”
The point is the opportunity that exists..rather than not needing Uber. Your subject was the opportunity but your headline subject was Uber..get it?
While I like your suggested headlines (I think the second one is great), I still stand by the original headline, especially on the charge that it is “misleading.” Not needing Uber does not preclude needing an Uber-like service, or a startup that uses a similar model. And this is exactly what the story goes on to discuss. When you say “opportunity exists” you’re not bringing any new points to the discussion, because the second half of the article is all about the opportunity that’s on the ground. Uber is mentioned because that opportunity could very well be siezed by Uber (they’re rapidly spreading) if locals do not exploit it. That’s why we needed that headline, even though your suggestions could have done the job as well.
It’s surely an overstatement to say that ‘Zimbabwe doesn’t need Uber’. There is definitely room for an online transport network like Uber in Zimbabwe, particularly in the urban areas. We already have ‘offline’ transport networks – kombis who rely on referrals to ferry school kids, churchgoers etc. Uber’s fundamental ‘principle’ – connecting drivers and customer. The working class, school children and those with portable business are potential clients for an Uber.
You mention that ‘Uber depends on affluence and a highly cashless economy’. This reasoning ignores the stratification that currently exists within UBER’s platform. There is Uber economy, premium, car pool ,and accessibility, which are all priced differently. The ‘Uber model’ can carry this economic inclusion in a market like Zimbabwe.
On the issue of a cashless economy : Although, for obvious reasons, the use of credit and debit cards in Zimbabwe is limited, the current mobile money platforms and existing fiscal changes make our economy ‘cashless’. If Uber were to come to Zimbabwe, it ‘might’ opt to partner with EcoCash or TeleCash.
Given the Harare’s current overpopulation and traffic problems, Uber would presents an opportunity to address challenges resulting from these structural problems. I am sure NO ONE enjoys walking from their work place to Copacabana or Fifth just to catch a ride.
If Uber were to launch in Zimbabwe, it faces a lot of engineering problems. Our current road network, especially in Harare, is a mess. The rampant disregard for traffic laws, frequent traffic jams, constant police presence, potholes and blocked roads makes selecting and estimating routes ,and travel distances extremely difficult. An ‘uber’ service will have to adjust to these differences negating some of the benefits commuters that Uber currently offers in other markets.
And then there a regulatory laws….
“the stratification that currently exists within UBER’s platform. There is Uber economy, premium, car pool ,and accessibility, which are all priced differently. The ‘Uber model’ can carry this economic inclusion in a market like Zimbabwe.”
Not only is there a lot of jargon here, but it is also very unclear what you are saying. Could you clarify this part?
This is the last time l will comment on a TechZim article. Dominic, it’s not beneficial for you to focus on the way l wrote my answer instead of my opinions and ideas. What is unclear about saying that a platform is ‘stratified’ and providing context for this stratification ? I am sure you could have used a dictionary.
I apologize, if you feel offended. That was certainly not my intention. I wanted clarity on something so that we could move the discussion on. Your contribution here is obviously valued, and I hope you’ll continue commenting on Techzim.
totally agreed on a Uber model already catering for a range of customer wallets from the Uber rich to the the more common man. I just think this is a very small market and Uber are likely after the big ones at this stage. But yeah, a local Uber that takes advantage of this to offer their something that addresses some unique aspects locally. There’s certainly a lot of frustration with kombi transport as it is; the trips to Copacabana, the bad treatment from kombi crews… so yes, opportunity. not an easy one but opportunity all the same.