Agenda | Jul 20,2019
The Addis Abeba Transport Bureau steps up its exertions to bring the capital's ride-hailing fleets under oversight three years after a failed attempt by municipal authorities.
Dawit Yeshitla, head of the Bureau, disclosed vehicles with commercial license plates would not be excluded from providing ride-hailing services.
“But their operations will be monitored," he told Fortune.
The City Administration issued an ordinance in 2019, banning vehicles with commercial license plates (Code-3) from providing ride-hailing services, limiting it to transport cars with Code-1 plates. It imposed on ride-hailing companies to obtain licenses from the Transport Bureau before starting operations. However, it was suspended a month after the announcement, relenting to push back from ride-hailing companies and their users.
Thus far, no entity has been mandated to regulate the application-based taxi-hailing industry due to the lack of a legal framework. This began to change this year after the City Council legislated a proclamation granting the Transport Bureau the mandate. The Council passed the law during a rapid expansion in the ride-hailing business. The number of platforms has doubled to nearly 40 over the past two years. The Bureau has begun registering the companies.
“The intention is to identify those operating illegally,” Dawit told Fortune. “After gathering information, we'll formalise the industry."
The Transport Bureau thus far registered 17 ride-hailing companies, and officials say the Bureau does not recognise most companies in the business.
The former Addis Abeba Driver Vehicle Permit & Control Authority has been put under the Bureau following the restructuring of public offices under the administration of Mayor Adanech Abiebie. The reshuffling shrank the number of bureaus and offices down to 45 from 71. The city's Transport Bureau employs over 1,000 people.
Industry insiders agree that there is a need to establish a legal framework to supervise and regulate taxi-hailing services. There is cut-throat competition in the industry, according to Habtamu Tadesse, chief executive officer of ZayTech IT Solutions Plc, which operates ZayRide.
The industry pioneer, launched in 2016, emulating the global ride-hailing giant Uber, works with 7,000 drivers. Samrawit Fikru, who co-founded Ride as a subsidiary of Hybrid Designs Plc, followed suit. Ride began services in March 2017 with a capital of 40,000 Br. Samrawit inaugurated last week Ride's overseas operation in Djibouti.
“Most companies don't have standards when registering drivers and their vehicles,” said Habtamu. “Those who charge low commission fees are disrupting the industry."
Offering gifts, raffles, awarding miles to users, and cutting commission rates drivers pay are some marketing strategies deployed to win over users.
Incorporated in February 2020, Feres has emerged as one of the industry's top players, mainly due to attractive loyalty programmes and bonuses. The company offered its "All-In-One Feres Miles" package for the first two months of operation. The scheme offers bonuses upon downloading the application and booking three rides and gifts based on usage. The gimmick paid off.
Feres rose to challenge Ride's market hegemony, partly due to the comparatively lower commission fees (eight percent from each ride) it charged drivers, a rate four percent lower than Ride's. Users find Feres' app user-friendly, and drivers value its management's responsiveness.
Feres' Chief Operations Officer (COO), Abebe Mulu, insists his company is engaged in healthy competition.
The arrival of Feres spurred an industry rush, with startups looking to give pioneers a run for their money. In the past year alone, close to 20 companies joined the fray, eyeing a piece of the growing ride-hailing pie. Wez, Kenya-based Little Cab, and Sunshine Investment Group's SunPick, are among them.
“The market is far from saturation,” said Abebe. “There's room for more companies.”
Engida Tadie, a lecturer of urban planning and transportation management at Kotebe Metropolitan University, says new entrants can easily take up significant market share by cutting commission.
“But, unless the approach is complemented by quality service, the dominance won't last long,” said Engida.
Industry insiders contend that providers should meet standards to join the business.
Mubarek Musa is one of the founders of Ze-Lucy Meter Taxi, an operator with a fleet of green-and-yellow cabs. He argues that as drivers operate under several ride-hailing to survive in the face of competition, the companies should have to offer new features and services to gain an edge in the market.
“Requirements and standards are necessary to create an even operating environment,” said Mubarek.
Ze-Lucy joined the market three years ago with 751 metre taxis acquired from Yangfan Motors Plc, a local subsidiary of the Chinese Lifan Motors company. It resulted from an initiative by the former Federal Transport Authority to provide duty-free privileges for importing vehicles to replace old blue-and-white taxis in the capital organised under associations.
PUBLISHED ON Jul 02,2022 [ VOL 23 , NO 1157]
Agenda | Jul 20,2019
Radar | Jun 22,2019
Fortune News | Jun 26,2021
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