Grace Ashiru
Since it began operating in Uganda seven years ago, the Ugandan bike-hailing firm known as SafeBoda has retained its position as the market leader in that country.
It has duplicated the same stride in Nigeria since it began operations in 2020, despite opting to commence in Ibadan, a town with a slower pace, instead of Lagos, the country’s commercial capital.
Now, it is increasing the territory in which it operates while simultaneously introducing a new service vertical in the form of car-hailing. After several weeks of beta testing in Nigeria and Uganda, the public version of Safeboda’s car-hailing vertical, dubbed Cars by SafeBoda, was released to the public this month.
The company conducted a beta test in Kampala, the capital of Uganda, for two months, during which time they gathered input and improved the product. After that, they conducted a beta test in Ibadan for one week.
According to Olaoluwa Arokoyu, Nigeria’s country manager at Safeboda, who spoke to TechCabal during the testing, “The product is currently undergoing several modifications in Uganda, and as soon as they are finished, we plan to publish it in Nigeria once we have completed a quick test there.
Arokoyu told TechCabal in a call that the constant demand from their customers made them believe that there is still room to play in the car-hailing sub-segment, even though it is a saturated market.
Over the years, customers have asked us for car-hailing services over and over again. “I’m glad we finally gave them an answer,” he said.
It would appear that Safeboda is expanding how its mobile money can be used with the launch of this new vertical.
The start-up company stated that all trips on Car by SafeBoda would be cashless, eliminating the problem of having no change.
“We are delighted to launch Car by SafeBoda in our amazing app with a safer, more convenient alternative than what is now available in the market,” says the company. SafeBoda co-founder and director Rapa Ricky Thomson stated in a statement.
We’ve had conversations with passengers and drivers, and we’ve put our product through its paces; as a result, we’ve decided to fully eliminate the need for cash in the transportation system in Uganda.
The SafeBoda Wallet can be used to pay for trips. Users can add money to their wallets through mobile money, agents or by giving the driver cash to help them load.
In this scenario, the driver also serves as a secret agent. all customer balances in their safeboda wallets are eligible for interest payments through the savings program. For now, only users in Uganda would be able to use the wallet to its fullest extent because the wallet isn’t yet fully functional in Nigeria. At the moment, Nigerian users can only buy airtime.
SafeBoda’s goal for the past seven years has been to change transportation in all the markets it works in. The company has had to deal with many market forces to keep that goal alive. Uber and Bolt, the two largest ride-hailing companies in the world, have tested and challenged their dominance with their boda-boda verticals. First in Uganda and then later in Nigeria—but, despite their enormous fangs, they could not make a significant dent in SafeBoda’s market dominance.
Can SafeBoda maintain its position as the leading bike-hailing service in Ibadan, where it has led for the past two years?
The corporation has had more than its share of difficulties. It ceased all of its operations in Kenya in the year 2020.SafeBoda stated that COVID-19 was the cause for the cessation of service. However, it is likely that numerous precursors, such as insufficient traction and the high expense of operating a bike-hailing business in Kenya, were a more significant influence.
When Safeboda left Kenya, the average boda-boda ride cost KSh 221 ($2), making it cheaper to call a car than a bike. Some offline guys seemed easier (and cheaper) to deal with. Safeboda and other companies like UberBoda and BoltBoda gave discounts to users to attract more customers.
However, riders complained that the discounts cut into their profits. As a result, riders started to turn down orders in droves, which hurt the income of everyone in the subsegment. However, competitors with significant pockets, such as Uber and Bolt, had car-hailing verticals that could easily make up for losses incurred on the boda-boda side of their businesses. Safeboda only used bikes to take people places and deliver things.
Will SafeBoda make a comeback in Kenya now that it offers car-hailing? We don’t believe so. Ride-hailing companies are finding it difficult to operate in Kenya at the present because the government has shown a strong interest in placing a limit on the amount of commission that may be charged for rides. And the market has begun to respond in this direction.
For example, Little said it was fine with the new direction, while Uber took the government to court to argue that the low rate cut its profit margin and made it harder to cover its costs.
But based on the company’s strategy and answers in the two interviews TechCabal did, it’s likely not going to happen. Safeboda has been running in only two countries for the past seven years, building loyal communities and grabbing market shares. Because the company is so focused on gathering market knowledge, it currently has more than an 80 per cent share of the boda-boda hailing business in Uganda and Nigeria.
When asked about the company’s expansion plan, Aroyoku responded, “There’s still more to do in our existing market.” This statement was made without excluding the potential that the company will expand into new cities. There is a substantial possibility for expansion here.
To put this into perspective, Aroyoku claims that the share of the two-wheeler market in Ibadan that is accounted for by bike-hailing services is only 10%, while offline businesses hold the remaining 90%. Safeboda controls 9.5% of the total 10%, while the remaining 0.5% is split among several other participants.
This means that SafeBoda’s biggest rivals aren’t Uber or MaxNG but rather those who don’t have any tech.SafeBoda is trying to grow its bike-hailing side, but it now has to worry about its car-hailing side s well. Aroyoku is sure that their strategy, which he referred to as a “secret sauce,” will produce miraculous results like it always has.
But obviously, things will be different this time around because SafeBoda won’t be playing defence. Instead, they will be coming to play in a sector with two major market leaders. Earlier this year, SafeBoda celebrated two years of operation in Nigeria in March. At that time, TechCabal posed the following question to the company: “Can it sustain its lead in the market would appear that the company not only plans to maintain its position as the leader in the market for boda-bodas but also plans to give its competitors in the market for car-hailing services a run for their money.-hailing market a run for their money.
