Fistum Tadesse, 31, ventured into the taxi-hailing business three years ago, driven by a desire for safety and autonomy. His previous stint as a cross-border driver left him vulnerable to unsafe routes between Shasemene and Adama towns in Oromia Regional State, prompting him to seek refuge in the capital, where he could also set his hours and be his own boss.

"It was unsafe, and I had no leisure time," Fistum said.

However, his seemingly stable and predictable job environment was shaken one night. Fistum found himself in a police station at midnight, after picking up two men and a young woman from a neighbourhood near Hana Mariam Church in the Nifas Silk Laphto District. During a heated dispute over taking detours inside the shabby neighbourhood requested by the passengers, a group of police officers approached his vehicle for a sudden inspection, which turned left.

"Apparently, they were wanted criminals," Fistum said.

Left to fend for himself in a murky legal situation, Fistum found little support from the company that dispatched him. He was disappointed by their lack of concern for his well-being and decided to abandon nocturnal shifts altogether.

"I have to protect myself," he said.

The rise of taxi-hailing companies in Addis Abeba over the past six years has been a double-edged sword. While these services provide much-needed transportation solutions and job opportunities, the rapid growth has outpaced government regulation, safety measures, and affordability for customers. The City Transport Bureau has registered nine new companies this year, raising the total number of companies to 42.

Ethiopia’s app-based service began in 2015 but slowly gained popularity over the years. ZayRide, an earlier electronic taxi booking platform, still operates under ZayTech IT Solutions while the trendsetter Ride under Hybrid Designs Plc, has made its brand a household name for the service itself.

Feres Transport is a late entrant into the taxi-hailing industry. It has managed to carve a sizeable market share from early pioneers. The company was recently subjected to a social media backlash after a known musician shared her experience, alleging a sexual assault by one of the drivers. It was a point of contention as the response from the company was not satisfactory for people demanding immediate action against the driver, prompting a campaign to use other alternatives.

Abebe Mulu, CEO of Feres, said the company takes each report seriously, from customer service complaints to inappropriate advances, and pungent smells. He claims that they take measures ranging from suspension to blocking the driver from associating with the company.

"Potential threats increase in proportion with the number of trips," Abebe told Fortune, "but it remains insignificant."



Abebe noted Feres's mobile app has features where drivers can share locations with nearby colleagues in case of danger, quickly link to their emergency contacts and connect to police officers.

"Customers can report to police in case of any issues," he said.

Abebe said deals made under the table without logging in to the company's system exacerbate the situation, exposing both passengers and drivers to unknown dangers. He believes that the taxi-hailing service industry is still largely untapped in the country, with sufficient room to accommodate several companies that can offer customised services.

The two apps (Ride and Feres) account for the bulk of the market share, each with over 100,000 downloads of the drivers’ applications. The ability to work under multiple companies has made drivers content with having alternatives.

Sisay Worku has worked under these two apps for the last four years. He was fortunate to be linked with a bank loan after saving up 270,000 Br to buy a Toyota Corolla. For him, the soaring cost of fuel is the major headache that impacts his earnings, while paying a bank loan.

He said both apps provide convenience to customers while safety is largely a matter of personal vigilance. Sisay became extra alert over his pickup and dropoff locations after sundown as stories of drivers being robbed, stabbed and, in some instances, killed became common.

"I never go for pick-ups in unfamiliar neighbourhoods," he said.

The industry has also generated sizable revenues for the City Revenues Bureau. From four taxi-hailing companies over 7.45 billion Br income was registered last year. While most drivers work for multiple companies simultaneously, the Bureau collected 341.79 million Br in income tax from 33,450 drivers.


Hayru Hassen, the Bureau's tax assessment team leader, said far below the accurate amount of tax is collected. He points to a serious lack of information on the number of companies, the total number of trips, and the total revenues generated.

"We are losing out on income taxes," Hayru told Fortune.

He said they have already dispatched forms for eight taxi-hailing companies in preparation for the tax season, a month away.


Taxi-hailing companies have several alluring qualities to prospective investors, including exemptions from turnover and value-added taxes (VAT) since last year, following a decision by the Ministry of Finance.

Leveraging this, G2G IT Solutions, the local company behind the Shuufare app, partnered with Russian-based Yango to provide affordable taxi-hailing solutions. The company, which offers a take-off price of 30 Br less than most companies, has registered 40,000 drivers.

Tewodros Mehari, G2G's Chief Technology Officer (CTO), said the company can remain profitable without increasing its starting rates. He also believes that a major part of the taxi-hailing industry remains untapped. He foresees a growth potential for the company regardless of increasing fuel prices.

"We are finalising major safety protocols," he said. "There are a few regulatory hangups."

According to Reqiq Data Insights, an estimated 180,000 service requests are made daily within the 11 operational companies.

Customers raise safety as an issue while finding the service a comfortable alternative. Being the top transport option during night-time, a financial strain is also introduced as a concern. Coupled with the increasing fuel costs, the initial price has soared from 50 Br to over 100 Br over the years, with a kilometre-based price accompanying it.

A 27-year-old bass guitarist Estifanos Castro has to rely on taxi-hailing services to make it to his home around Atlas after midnight, after live performances hopping from one nightclub to another.

"It’s taking most of my earnings," he told Fortune.

After six years of dolling out payments, which add up to nearly 5,000 Br a month, the musician developed a preference for the Russian-made blue taxis “Lada” scattered across the capital. He said it cost him and his heavy guitar case an average of 100 Br less each trip.

"Affordability matters more to me than safety at this point," he said.

Addis Abeba's transport demand is far from met, with around 800 public buses and a single railway system connecting parts of the city. A sharp rise in population, ageing transport infrastructure and a lack of diversified public transport options have left a sizeable portion of urbanites opting for taxi-hailing companies' services.


The City Transport Bureau has initiated a revision of the four-year-old directive regulating taxi-hailing companies to address the consequences. Ashenafi Seyoum, head of Dispatch at the Bureau, said regulating the companies is an uphill battle, with only four renewing their licenses this year.

The Bureau issues operator permits to companies with a trade license, functional software to supervise trips, approval from the Ethiopian Communications Authority, and a registered phone number for dispatch with one of the two telecom service providers.

Safety concerns have also been recognised.

Worqu Desta, deputy head of Service Research at the Bureau, said one of the main reasons for the reports of elevated criminal behaviour is the loose regulatory environment and outdated directives.

"There is a poor exchange of information," he told Fortune.

He said all functional companies would soon have to re-register under a new directive they have been working on.

“It would make follow-ups easier,” he said.

Worqu said trips would be traced simultaneously by the company and the Transport Bureau under the system being developed, which he hopes will lower the danger potential.

Urban transport management experts like Sofonias Mehari question whether taxi-hailing services can be affordable to the majority of people while underscoring the need to enforce Global Positioning Systems (GPS) and cameras as mandatory requirements in each vehicle.

"It still supports thousands of livelihoods," he told Fortune.

Sofonias recommends that the City Administration invest in buses that can operate at night to keep transportation costs at reasonable levels.



PUBLISHED ON Jun 08,2024 [ VOL 25 , NO 1258]


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