Radar | Jun 12,2021
Before joining the taxi-hailing business, Abraham Temesgen, 33, spent his days working as a technician for a radio station based in Addis Abeba. His earnings were not enticing enough to keep him from joining the rapidly expanding pool of part-time taxi drivers. His parents came in handy.
Abraham bought a 2003 model Toyota Corolla sedan and enlisted with Ride nearly three years ago. He has been at the job since, but not limited to what is one of Ethiopia's first taxi-hailing companies. He now offers his services on other platforms like Feres (Horse), one of the hailing gigs that proliferated in less than half a decade. Early in the morning of a workday last week, Abraham received a ping from the Feres app as soon as he had left his house in the Ferensay Legation area. His passenger was waiting a few hundred metres away, near the Italian Embassy.
It was a routine call, something Abraham had grown used to. However, picking the client up proved a lot more difficult than he had anticipated.
Abraham had to confront a group of blue-and-white Lada taxi drivers to get through. The long-serving taxis, once a hallmark of the capital's roads, have been experiencing a devastating decline in business due to the growing popularity of taxi-hailing platforms. Hence the animosity.
They threatened him not to pick up passengers in their neighbourhood. It was not to be the first encounter. Abraham and tens of thousands of drivers like him involved in the taxi-hailing industry are seen flourishing, a source of envy and misgivings to the "Lada" taxi drivers as they are often called. Abraham generates close to 2,000 Br a day, though much of this goes to fuel expenses and commission payments to the companies managing the platforms.
Nonetheless, the income is triple what he used to earn working as a technician. The proliferation of ride-hailing platforms has also been a plus, enabling him to pick and choose the best rates and routes.
Abraham works with half a dozen of these apps. He recently signed up as a driver for Wez, a new entrant to the gig. He joined its fleets two months ago after a salesperson approached him while sitting in his car waiting for a ping around Bole Medhanialem Cathedral. His Toyota is one of 10,000 vehicles registered and providing services under Wez, according to Nardos Addis, founder and chief executive officer (CEO).
According to the CEO, the Wez app was developed in-house in partnership with a tech firm at the cost of around 250,000 Br. It works much the same way as the platforms offered by Feres and RIDE, allowing users to connect directly to drivers without the need to ring call centres. However, those who prefer can make use of one the company operates.
Wez takes between five and 10pc of drivers' payment as commission, depending on whether the client ordered using the app or if the driver happened to pick the passenger upon the road impromptu. The company has served close to 300,000 passengers in the six months since its launch, generating over 54 million Br in transactions, its half-year report published last month revealed.
It is not the only one looking to get a piece of the lucrative ride-hailing pie. The number of platforms offering the service has nearly doubled to 40 over the past two years. Three companies, including Kenya-based Little Cab and Sunshine Investment Group's SunPick, have joined the fray in the last few months alone.
Most drivers work with as many as five taxi-hailing services, though Feres and Ride are the most common platforms. The former has gained huge market share since it began operations in early 2020.
Sunshine, a conglomerate best known for its flagship construction company, looked to register 10,000 drivers on its SunPick app when it launched earlier this year. The platform comes equipped with features that enable drivers to share their route and location with their peers or call centres when they feel unsafe. Little Cab is in a trial stage, already registering close to 8,000 drivers, according to Mehari Ayele, marketing manager at Little Technologies. Last year, his firm partnered with Little Cab and its holding company, Craft Silicon Ltd., to bring the Kenyan ride-hailing platform to Addis Abeba. Little Technologies' executives claim the company was incorporated with 120 million Br in the capital.
For the time being, Little Cab is not taking commissions from drivers whose rates are 10 Br a kilometre after a 75 Br booking fee. Mehari says they have recorded an average of 1,000 trips a day over the past six months. Backed by the telecom operator Safaricom, Little Cab, incorporated in 2016, operates in four African countries, including Tanzania and Uganda.
The newcomers are looking to give industry veterans a run for their money. Emulating the global leader in ride-hailing, Uber, the practice was introduced to Ethiopia in 2017 when ZayRide established itself as an e-taxi company. Incorporated with Habtamu Tadesse as its major shareholder, ZayRide broke the ice for app-based taxi-hailing businesses by providing the capital's residents with the option to call a taxi through their smartphones. It was a novel idea then.
The industry has since boomed.
Ride, co-founded by Samrawit Fikru as a subsidiary of Hybrid Technology, and Feres have emerged as the industry's top players. Others like Ze-Lucy Meter Taxi and Seregela Transport Services control a fair market share.
Incorporated in February 2020, Feres has become customers' favourite due to its rewards programmes. When it kicked off operations, it began offering users the All-In-One Feres Miles package for the first two months. The company gives bonuses to anyone who downloaded the application and booked three rides using its app. It also offered gifts to those who downloaded the application by recommendation and travelled using Feres. It is a gimmick that paid off.
Feres immediately rose to challenge Ride's market hegemony. The company takes eight percent in commission fees from its drivers, lower than Ride's 12pc. Many drivers prefer it for its lower commission, even though many got started in the business with Ride.
Abraham earns over 70pc of his income from Feres, while Ride accounts for most of the balance. Yet, Feres sees most customers continue to order rides through call centres instead of the app. Nonetheless, the company's management is bullish about its prospects going forward.
“We give the drivers as much freedom as possible,” said Yeshiwas Abate, operations manager at Feres.
Its driver-friendly policies include little to no scrutiny when drivers remain out of service for extended periods of time.
This is part of why Feres is the platform of choice for Yoseph Woldemichael, who owns a seven-seat yellow-and-black metre taxi. Yoseph is also head of Glory Addis, a taxi association with 60 members.
He and his peers formed the association after their deal with Resel Pick Pick ICT Technologies Plc went sour. Close to 300 drivers worked with Pick Pick Taxi, a company incorporated in 2016. The company proposed a ride-sharing taxi service wherein the drivers were to buy new cars after signing loan agreements with banks and then signing off the vehicle management rights to Pick Pick. Pick Pick was to pay a flat rate of 7,000 Br to each driver and cover the loaned amount.
The loan agreements were processed through Hibret Bank, but the company could not service payments, leaving the Bank and the drivers in limbo.
Nonetheless, Yoseph and several others like him found a better alternative in Glory Addis, which is one of five taxi associations established a year ago with the support of the Addis Abeba Transport Bureau. He and the other members began looking for businesses themselves.
Ride, Feres, and ZayRide were their choices when they began business 10 months ago. However, Yoseph has recently stopped working with Ride, opting for Feres instead.
“The bureaucracy with Ride is so tiring,” he said.
Yoseph's advantage is that the city Transport Bureau recognised his association as a legal metre taxi service provider. Two years ago, there were only 16 metre-taxi associations engaged in the taxi-hailing business after registration by the Bureau. The number of associations has since increased to 45, each comprising 55 vehicles.
However, the Bureau does not recognise the vast number of companies engaged in the taxi-hailing business. The only time its officials meet with them is when there is a need to work together, such as during the Diaspora Homecoming, according to Aregawi Maru, communications director at the Bureau.
Three years ago, the Transport Bureau had issued a directive that reserved taxi-hailing services for vehicles with license plate code "01". The directive required taxi service providers to obtain an exclusive license from the Transport Bureau before operating. However, the directive was suspended a month after it was issued.
“No government body regulates app based taxi-hailing services,” said Aregawi. “It became impossible to bring them under the legal oversight.”
However, officials are well aware most members of these associations work with companies like Feres and Ride, labelled "illegal" by the Bureau. According to Mehari, the lack of a legal framework impedes the prospect of the business.
“It's a resource shared service," he said. "It should be legally recognised by the government and provided the necessary support."
Mehari says other factors, such as low technology adaptability, hinder Little Cab's efforts to launch its services at full scale. Unlike other advanced economies, the payment system here is cash-based, and the services are mainly dependent on call centres.
Engida Tadie, a lecturer of urban planning and transportation management at Kotebe Metropolitan University, believes that the government should find a way to accommodate these forms of transportation and prepare a legal framework to govern them. The expert recommends a separate body be established to regulate the taxi-hailing industry.
“Because they are fragmented, the government cannot audit them or control their operations,” he said.
Engida observes that metre taxis and ride-hailing platforms serve mostly high-income individuals, and their contribution to the capital's mass transport needs is inconsequential.
“Most commuters certainly don’t see their relevance,” he said.
City officials seem to agree, focusing on encouraging mass transportation instead of regulating these services.
The Transport Bureau details that 10,131 mass transport vehicles provide services, up 28pc from last year's. However, the growth falls short of the targeted 11,000 vehicles on 387 routes to serve three million residents. Close to 2.5 million commuters make use of mass transport each day. Over 210,000 of the 710,000 vehicles in the capital are registered privately, and though they account for a significant portion of the vehicles on the capital's roads, their transport coverage covers less than two percent of all residents.
Though there is ample room for the ride-hailing industry to grow further, the prospect is marred by a decision the Council of Ministers passed earlier this year, including the services in the one-year phase-out of government subsidies on petroleum products. The decision means drivers like Abraham will be forced to bear the full burden from global fuel prices come July 2023.
What that means for their livelihoods remains to be seen. However, the absence of legal recognition does not augur well for them.
PUBLISHED ON Mar 26,2022 [ VOL 22 , NO 1143]
Radar | Jun 12,2021
Fortune News | Mar 17,2021
Commentaries | May 29,2021
Fortune News | Mar 13,2021
Digital First | Mar 17,2020
Commentaries | Dec 19,2021
Viewpoints | Jul 23,2022
My Opinion | Dec 25,2021
Fortune News | Mar 23,2022
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