Safeboda's Struggle in Nigeria & Uganda Ride-Hailing Markets

SafeBoda's Success in Nigeria and Uganda: A Ride-Hailing Story

On April 16th, SafeBoda, a ride-hailing platform specializing in two-wheeled transport and based in Uganda, declared the completion of 1 million rides within Ibadan, a city situated in southwestern Nigeria. While this number may not appear remarkable on a global scale, considering it took the company a year and two months to reach this milestone, it represents a significant accomplishment within African markets.

Expanding Operations in East and West Africa

Ibadan is one of the key cities where SafeBoda currently provides its services. The company, which initially launched its operations in Uganda, is actively reshaping the traditional, offline market for local motorcycles – known as boda-bodas in Uganda and okadas in Nigeria.

SafeBoda commenced official operations in Kampala in 2017, and almost immediately encountered competition from emerging ride-hailing services like uberBODA and Bolt boda.

Facing Established Ride-Hailing Giants

Uber and Bolt are widely recognized as leading ride-hailing companies in the regions where they operate. Uganda was the first African nation where these companies chose to pilot their two-wheel ride-hailing services, and it was also the second global market for Uber, following Thailand. Given the substantial resources and influence of these corporations, many predicted they would pose a significant challenge to SafeBoda. However, this expectation did not materialize.

According to Alastair Sussock, co-CEO of SafeBoda, who co-founded the company alongside Ricky Rapa Thomson and Maxime Dieudonne, SafeBoda was facilitating approximately 1,000 rides daily at that time. He contended that despite achieving impressive volumes, media coverage misrepresented SafeBoda’s position, suggesting it was not on par with other platforms.

A Drive to Prove Perceptions Wrong

“The prevailing belief was that Uber and Bolt would revolutionize Africa’s informal boda market,” Sussock explained to TechCrunch. “Other players were mentioned, some of whom have since ceased operations, but SafeBoda was largely overlooked, despite our considerable progress. This fueled our determination to disprove the perception that SafeBoda was not a significant force.”

Subsequent years saw strategic initiatives, dedicated effort, and a substantial Series B investment, solidifying SafeBoda’s position as a market leader in Uganda. Sussock stated that the company now completes around 80,000 rides each day, while Uber and Bolt collectively manage barely 10,000 rides within the country.

The Key to Growth: Localization and Community

What has been crucial to this expansion?

Prior to establishing SafeBoda, Ricky Rapa Thomson himself was a boda rider. As the company’s Director of Operations, he plays a vital role in ensuring that SafeBoda adopts localized approaches with its riders. Despite its advanced features, equipment, and safety protocols, SafeBoda’s ability to adapt to the boda boda community is a standout characteristic. This adaptability is responsible for the company’s current 80% year-on-year rider retention rate, as noted by Sussock.

“We prioritize localizing our product and adopting a local approach by hiring individuals from the community to join our team. They provide valuable on-the-ground insights, and the situation in Nigeria mirrors this approach,” the co-CEO added.

Strategic Expansion into Nigeria

When initiating operations in Nigeria, most two-wheel ride-hailing startups typically begin in Lagos, the nation’s primary center for commerce and transportation. In recent years, the city has seen the emergence of companies like Opera’s OPay, Gokada, and MAX.ng. These startups, similar to SafeBoda, are backed by investors from the U.S., China, and Japan, and have been competing to gain market share in Africa’s most populous country.

SafeBoda initially indicated a potential expansion into Nigeria in 2019. At that time, all the aforementioned ride-hailing companies were already established, leading to the perception that SafeBoda was a late entrant. However, according to Babajide Duroshola, SafeBoda’s Country Head for Nigeria, the team was confident in their ability to succeed despite the timing and competitive landscape. “For us, the decision to enter Nigeria was straightforward – to replicate the rapid growth and brand recognition we achieved in Kampala,” he shared with TechCrunch.

Choosing Ibadan: A Masterstroke

When the time came to select a launch city, SafeBoda chose Ibadan, rather than Lagos. This decision surprised many and initially drew criticism. However, in December 2019, the Lagos State government introduced new regulations that effectively rendered bike-hailing operations unviable. Consequently, for several months, SafeBoda became the sole reliable provider of two-wheel ride-hailing services in the country. While other companies were forced to shift their focus to asset financing for bikes and logistics services, SafeBoda continued to thrive with its ride-hailing operations in Ibadan.

Within its first five months, SafeBoda completed over 250,000 rides and onboarded thousands of drivers. Once again, a localized strategy and community engagement proved essential to the seemingly modest, yet rapid, growth experienced in a market that had not been thoroughly tested by other companies.

The Importance of Local Integration

“A key differentiator for us was our localization strategy. Our ability to connect with and employ local okada drivers, integrating them into our operations team, was crucial,” Duroshola explained.

The country manager further emphasized that SafeBoda’s success demonstrated to other two-wheel operators that viable markets existed outside of Lagos. “Lagos is the commercial hub, with significant wealth and high household income. However, it doesn’t accurately represent Nigeria as a whole. We recognized that if we aimed to scale nationwide, Ibadan was an ideal starting point due to its diverse population, reflecting the broader demographics of Nigeria.”

A Favorable Business Environment

The ease of conducting business for a ride-hailing platform in Ibadan is also greater than in Lagos. The latter is known for its endorsement of NURTW, a transport group with a reputation for legally extracting payments from riders on a daily or weekly basis. Such practices are prohibited in Ibadan, providing SafeBoda with a smoother path to achieving scale and enabling its drivers to operate efficiently.

Continued Growth and Future Plans

After a year in the city, the company has amassed over 2,500 drivers and 40,000 customers. Collectively, they have completed more than 750,000 trips, a number that has now surpassed 1 million.

SafeBoda’s achievements in Uganda and Nigeria position it as a prominent player in Sub-Saharan Africa. The company has completed over 35 million rides across both countries, with more than 25,000 registered riders. It also claims to hold over 80% market share in both nations.

Lessons Learned from Kenya

Despite this success, SafeBoda encountered challenges in its third market, Kenya – a market it entered and subsequently exited before focusing on Nigeria. The company had onboarded over 1,500 riders in under a year, but growth did not meet expectations. The pandemic exacerbated SafeBoda’s difficulties, and reports indicate that rider dissatisfaction with pricing led to disruptions that ultimately prompted the company’s withdrawal from the Kenyan market.

Sussock also noted that Kenya’s motorcycle taxi market was not as densely populated as those in Uganda and Nigeria, which contributed to the decision to exit.

Focus on Core Markets and Super App Development

“We were the market leader in Kenya, and we were completing the most rides there. But the overall volume was still relatively small compared to Uganda. And we were aware of the potential in Nigeria, which we hadn’t yet explored at that time. Therefore, it became clear that Kenya, while technologically advanced and with a high per capita income, was simply difficult to scale in terms of motorcycle taxi transportation,” he explained.

SafeBoda is not dismissing a potential return to the East African market. However, with its focus shifted away from East Africa for the time being, it can dedicate its resources to strengthening its ride-hailing operations in Uganda and Nigeria. The company’s ultimate objective is to expand its “super app” functionality.

This initiative is already underway in Uganda. SafeBoda currently offers on-demand delivery services for food, groceries, pharmacy items, essentials, and beverages, with over 500,000 orders completed to date. This model is inspired by Go-Pay at GoJek, where two-wheel ride-hailing served as an entry point to frequent wallet spending.

The Asian multi-service company is an investor in SafeBoda through its GoVentures arm. Other investors include Transsion Holdings, Beenext, and serial entrepreneur Justin Kan.

Dominating the Market and Expanding Services

Currently, SafeBoda faces limited competition in the bike-hailing sectors of Uganda and Nigeria. The company’s primary challenge remains the large informal market, where over 1.5 million rides are completed daily in Uganda alone. SafeBoda’s strategy is to convert more of this base to its online platform. Additionally, it aims to expand into peer-to-peer payments, merchant payments, bill payments, and grow its on-demand business in Uganda. In Nigeria, the plan is to maintain its core transport business before venturing into payments and deliveries.