Entrepreneurial insights from Africa
People at street level excel when they see opportunities and adapt technology to meet local needs
The series Innovate Africa: Entrepreneurial Insights From a Thriving Continent kicks off today. The series is a partnership between Business Day/BusinessLIVE and the African Management Institute, focusing on the entrepreneurs and business innovations that are accelerating economic growth and establishing sustainable businesses across Africa.
Apopular way to get from point A to point B in Kigali — even for business people — is on the back of one of Rwanda’s estimated 45,000 “taxi motos”. The low cost of using one of these 125cc motorcycles keeps conventional car-ride-hailing businesses out of Kigali.
You’ll find similar options in other African countries, such as Kenya and Nigeria.
One entrepreneur who has seen opportunities in this is Junior Kanamugire. His PikiWash offers a one-stop wash and service facility for taxi motos. He has imported an automated bike wash machine from India in a 20-foot container and has the rights to distribute these throughout Africa. The operation recycles up to 75% of the water used and the clean water does not damage bikes like the gritty river water used otherwise. He has 2,600 subscribed customers and revenue has grown steadily over the past year.
But it is his plans for the future that make this a potential business bonanza. With an established customer base, he is considering offering full servicing of motorcycles (oil changes and mechanical repairs), and sales of merchandise often preferred by motorcyclists. Future plans include up to three more locations in Kigali and a few more in secondary cities.
At the moment there is no successful ridehailing business model for taxi motos because the bikes are so ubiquitous that you can hail them live on the street without waiting.
“And the app company would take too high a proportion of the modest fare,” adds Junior. Here is one of the great advantages of local entrepreneurship: solutions found that match the need and prices set, in keeping with the local economy. Entrepreneurs on the ground can spot spin-off opportunities invisible to funders sitting in city office suites, like the smart Kigali entrepreneur who offers cloth head covers to keep customers clean when they don the moto taxi’s helmet.
With Africa’s urban congestion and poor or nonexistent rural transport infrastructure, “mobility” (moving people and products) is one of the continent’s big challenges, and so it offers enticing opportunities for innovation. The extent of this innovation was illustrated this year when Bosch Africa ran a competition to find Africa’s best smart mobility start-ups. It received 222 entries from 27 countries in Africa in a month.
The winner’s prize was shared by two smart firms. Hello Tractor, founded in 2014, is a Nigerian digital platform and farm equipment sharing app that connects tractor owners with smallholding farmers. This helps the farmers by providing access to tractors while giving the owners an additional income stream. The platform also tracks the tractor’s performance and location remotely, thus preventing abuse and fraud. Everyone wins.
The other winner, Kenyan-based BuuPass, founded in 2015, offers commuters an app on which they can book, pay for and receive tickets for different bus companies, all on their smartphones. So far it has sold 500,000 tickets on 115 routes for seven bus companies.
Start-ups in East Africa are particularly helped by the grandparent of tech innovations, M-Pesa. This mobile phone deposit and payment system has transformed payments in Kenya, Tanzania and beyond, and propelled mobile phone operator Safaricom to a dominant position in East Africa. MTN Mobile Money has had similar success in Rwanda, being the backbone of outside banks’ money transfers.
Mobile payments have transformed ease and security of payments for small businesses like PikiWash, which accepts payment only through Mobile Money. Oddly, MPesa has not thrived in SA, illustrating that innovation is often best when home-grown and thus able to accommodate local requirements and regulation.
Some mobility innovations have been around for many years. In Kenya most minibus taxis are bought through savings and credit co-operatives, or Saccos, which operate rather like SA’s stokvels, except they are formally registered as deposittaking entities and regulated through the Sacco Societies Regulatory Authority.
Uber is big in many cities and has spawned a number of local competitors. Enterprising drivers keep two or more ride-hailing apps on their phones to increase their customer base. At peak times they can also pick the call that pays them best, increasing competition between companies to attract the loyalty of drivers.
Is there a dark side to this? Uber is criticised in developed markets for treating its drivers as contractors rather than employees, thus reducing their rights. In Africa, most of the drivers I have spoken to regard Uber as a step up from poorly paid driving jobs in companies. They work long hours but can choose the hours and over a period of time draw on company schemes to work towards owning their own car. Some go on to own a fleet and employ new drivers, who in turn dream of owning their own car.
Inevitably Uber has generated a plethora of ride-hailing competitors, some imported from elsewhere, some begun by big African companies wanting a share of the business, and some by typically entrepreneurial individuals or groups that have skills in making apps. Safaricom, for example, has a stake in Lyft, which recently launched an SMS service for those who cannot access their app on a smartphone.
MOMENTUM
Any of these mainstream or alternative options could fail, but the momentum of innovation is good for economies.
Innovation requires both technical expertise and business savvy, so quite often innovative start-ups are created by people while they are in full-time employment. Junior holds down a fulltime job in training while driving PikiWash. Innovation and entrepreneurship are qualities that are difficult to train for, but each time we build capacity in business, whether in corporate or SME fields, we increase the capacity of Africa to innovate and create employment.
A last word from Junior in Kigali: “Finding home-grown solutions is a crucial component for developing countries. And this doesn’t necessarily mean reinventing the wheel.
“Finding solutions that work elsewhere in the world and adapting them to address local problems is the backbone of innovation.”
Cook is chair of the African Management Institute (AMI). The series Innovate Africa: Entrepreneurial Insights From a Thriving Continent is a partnership between Business Day/BusinessLIVE and the AMI, focusing on the entrepreneurs and business innovations that are accelerating economic growth and establishing sustainable businesses across Africa. For more information: http://www.africanmanagers.org.