Possible Reasons SafeBoda is Quitting Kenya Just After Two Years of Operation
Ugandan bike-hailing service, SafeBoda has announced that it is halting operations in Kenya from 27th November 2020.
In an official statement released via the company’s Twitter handle, Safeboda revealed that its operations in Kenya have been constrained by the economic impact of the COVID-19 pandemic in the country.
While Nairobi is seeing some economic recovery from COVID-19, boda transportation has been hit hard. This has meant our business cannot sustainably operate in this environment and unfortunately, the timeline for a full recovery is not certain.SafeBoda
“This decision is a hard one for SafeBoda to make. We know that this will negatively impact our community of boda boda drivers,” the statement reads.
SafeBoda’s Kenya exit comes after two years of being operational in the country. The ride-hailing startup had launched in the East African country in 2018, onboarding over 4,000 bodas and completing millions of rides.
The company has advised customers in Kenya to exhaust their remaining wallet balances on booking trips or delivering packages between now and November 26. However, SafeBoda has said it will send unused wallet balances to customers’ M-Pesa accounts.
Was COVID-19 Really Responsible for SafeBoda’s Exit?
SafeBoda explained that its decision to leave Kenya was brought about by the business-unfriendly clime in the aftermath of the COVID-19 pandemic. Although this may have played its part, there are other reasons that could possibly have forced the decision.
In early November, Kenyan authorities reimposed COVID-19 measures. This was after Kenya recorded a resurge of COVID-19 cases a few weeks after relaxing initial lockdown measures. In October alone, health officials reported 19,000 cases – half of the total 38,000 cases recorded between March and September.
While the government’s measures may have restricted movement due to a ban on public gatherings and enforcement of a night curfew, no lockdown has been imposed as of now. SafeBoda could easily be running, as it still is in Nigeria and Uganda where COVID-19 is also present.
It appears that the e-hailing company has been unable to generate sufficient revenue from its Kenya operations to keep running post-COVID-19.
According to the Motorcycle Assemblers Association of Kenya, there are close to a million motorcycle operators across Kenya. This shows how big the Kenya boda boda industry is, therefore drawing more scrutiny to the initiative behind SafeBoda’s exit.
SafeBoda Kenya Failed to Replicate Ugandan Success
SafeBoda seems to have been unable to cater to the transport needs of a large proportion of riders in Kenya over two years, as it has in Uganda. Though the platform says it has completed millions of rides, the Kenya boda boda market is populated with several competitors -including UberBODA, Bolt boda and Juu boda which would have significantly cut down SafeBoda’s market share.
In Uganda, SafeBoda is a household name when it comes to bike-hailing. With close to 10,000 drivers onboarded, the company has been able to gain a substantial market share in the country especially in the capital city of Kampala where it mainly operates.
According to SafeBoda, its drivers earn about 30% more than regular boda boda drivers in the country. This led to more motorcyclists joining the platform and perhaps influenced the Uganda government’s directive for all commercial bikes to join e-hailing apps in the country.
Even in Nigeria, SafeBoda in Ibadan is the number one bike-hailing app for residents of the city. In the absence of crippling regulations and serious competition, SafeBoda has carved out a niche for itself in Nigeria’s largest city.
It is indeed possible that SafeBoda could have halted operations due to the fact that it was not the major player in Nairobi’s crowded bike-hailing market, and was therefore not getting commensurate returns on investment.
In terms of profitability, it is an open secret that many e-hailing companies take a long time before turning a profit. Despite being valued at about $90 billion, ride-hailing giant Uber has never made a profit since it began operations 12 years ago.
Similarly, Oride in Nigeria failed to record a profit during its short albeit eventful lifespan in Lagos, a development which led to its quick demise soon after the Lagos government imposed a ban on bikes in the state.
While SafeBoda is a somewhat different proposition to Uber, both companies employ the same aggregation model. In Kenya, SafeBoda may have encountered the inherent challenge of not realising enough revenue to fully offset operating costs. The bike-hailing company was likely running at a loss.
Drivers Started Taking Offline Trips
Similar to what certain ORide drivers were doing before the e-hailing company’s eventual demise, SafeBoda drivers in Kenya were reportedly overcharging riders by going offline.
In a Twitter chat with Technext, a Kenyan rider Monday (original name withheld) revealed that SafeBoda drivers were obviously not content with what they are paid and tried to improve their pay by transporting riders without connecting to the SafeBoda app.
“Once I requested for a ride and the driver came but informed me that he’s not going to charge as per the app but his own price,” he said.
In March, drivers had complained about the low commissions they were getting from trips after SafeBoda slashed fare prices by 40% to attract more customers. Riders reported that many drivers had cancelled their orders on the app following the complaints.
This would have cut out a portion of the company’s potential revenue, as more drivers probably neglected the app and resorted to undertaking offline trips to raise extra money for themselves.
Monday also disclosed that SafeBoda drivers did not always show up after accepting rides and stated that some were unprofessional in their conduct.
According to him, this made a number of riders sceptical about booking SafeBoda rides and led to them patronising other transport services.
“At other instances, you’d request, a driver accepts but doesn’t show up. Other tend to be rowdy and even in some instances vulgar/violent.
After such, majority became apprehensive about the rides and started opting for other modes of movement.”
As a result, SafeBoda’s customer base in Kenya could have been significantly reduced.
What Next for SafeBoda?
Due to the absence of any detailed financial SafeBoda records, it cannot be clearly estimated how the economic impact of COVID-19 has hampered SafeBoda’s viability in Kenya.
That said, the bike-hailing company has stated that it will continue to focus on its growth in Nigeria and Uganda. Although SafeBoda is majorly focused on its bike-hailing operations and package deliveries in both countries, it already introduced a “Shop” feature which allows users to order for food products and grocery items via its plaform.
Uber Eats has been a massive success for Uber, and SafeBoda could gradually shift its focus beyond bike-hailing and expand its online food retail offerings in Nigeria and Uganda.
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