Commentaries | May 15,2021
Thousands of taxi drivers who have advanced hundreds of millions of Birr to a company offering to import vehicles remain disappointed a year after they were told to receive the cars.
Hello Taxi began offering to import and deliver disassembled vehicles last year, collecting up to 230,000 Br in advance payments and service charges from 5,000 drivers who signed up. Despite pledging to deliver within six months, the company has only managed to hand over 75 vehicles.
Established as a taxi-hailing service, the company forayed into vehicle imports last year. It wooed drivers in with an offer to import knocked-down vehicles, mainly from China, and assemble them locally in partnership with O'clock General Trading, founded by Ahmedin Abdella in 2006. It is availing vehicles for prices between 690,000 Br to 990,000 Br, depending on the model.
Hello Taxi's business model focuses on those looking to replace their signature blue-and-white LADA taxis. It coincides with the growth of ride-hailing services and the scramble to get involved in the lucrative business. There have been 40 ride-hailing companies, including Hello Taxi, over the last five years. Ride and Feres, the industry leaders, have enlisted more than 20,000 drivers.
Hello Taxi collected payments drivers who made down payments of between five percent and 25pc of the vehicle's value.
Mulugeta Dagu is one of the buyers left desperate after a year-long wait. He used to rent out his vehicle, a Toyota Vitz, to a driver on ride-hailing work. It brought him up to 15,000 Br a month for Mulugeta. However, when he heard tell of the opportunity offered by Hello Taxi, he sold his car and paid 25pc of the 690,000 Br. Mulugeta says Hello Taxi had an endorsement from the Ministry of Culture & Tourism convinced him it was a good deal.
"I'm losing hope," he told Fortune.
Many others like him have repeatedly approached the company, demanding information on the status of their vehicles but to no avail.
"Though we've asked the management to show us the bill of lading, they're not willing," said Tarekegn Ezezew, another buyer who has paid 235,000 Br.
The drivers wrote a letter to Hello Taxi two months ago. A petition with 68 signatures was also filed with the company but has received no response.
Daniel Yohannes, a founder of Hello Taxi, attributes the delays to the conflict in the north. He claims 200 vehicles were stranded in Meqelle, capital of Tigray Regional State, following the outbreak of civil war late last year.
"When the Ethiopian Defense Forces entered Meqelle, we requested the vehicles be transported with a military escort," he said. "But the fighting started again before this happened."
Daniel also claims 100 vehicles have been assembled, and the company is finalising paperwork before handing them over to clients.
"We'll deliver them in a week," he told Fortune.
The delivery deadline in the agreements signed with the clients is specific, but Daniel denies making such pledges. Hello Taxi has refunded clients who asked for their money, Daniel says; he declined to disclose how many refunds have been processed.
Yehualashet Tamiru, an adjunct lecturer of law at the Addis Abeba University, says the drivers have a few options. They can take the case to court seeking compensation for losses or ask for refunds.
"They may be entitled to compensation," said Yehulashet.
The conundrum the drivers find themselves in is not a new phenomenon in Ethiopia. O'clock General Trading, Hello Taxi's partner, had previously struck deals with taxi associations whose members were looking to replace their old blue-and-white taxis. The deal was for the clients to fork over 25,000 Br in down payments, and O'clock would deliver the vehicles in a few months. The months passed, and they were asked to pay an additional 260,000 Br.
Of the 200 association members who signed up, around 60 have received refunds, according to Shemsedin Abdurahman, CEO of O'clock.
Three years ago, Pick Pick Taxi proposed a ride-sharing taxi service where drivers could buy cars after signing loan agreements with a bank and then signing off the vehicle management rights to Pick Pick. In return, the company was to pay a flat rate of 7,000 Br to each car owner and cover the loan. The arrangement ended in disaster, leaving Hibret Bank, which had processed 70pc of the financing, to pick up the pieces.
The Bank decided to work with grieved clients and proposed three options to them.
A few decided to pay off the loan to gain ownership of the cars, and others opted to manage the vehicle themselves and pay off the loan with the revenue it generates. Others asked for a grace period to pay off their debt.
PUBLISHED ON Oct 16,2021 [ VOL 22 , NO 1120]
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