In our series of letters from African writers, Zimbabwean Andile Masuku looks at why venture capitalists are getting excited by motorbike taxis.

Traffic jams are the great waster of time across Africa.

Having had the pleasure of hopping on the back of a motorcycle taxi in Rwanda’s capital, Kigali, I can attest to the appeal of a street-smart driver zipping me through peak-hour gridlock.

Although illegal in countries like South Africa and Zimbabwe, these taxis are popular across much of East Africa, where they are known as “boda bodas”, “moto-taxis”, or simply “motos”, and in parts of West Africa, they are called “okadas”. Young men with no jobs got the industry going – and now provide a service to millions of people.

They have their fair share of detractors on the continent though, with complaints about dangerous driving.

In Ghana, a debate is raging about whether to ban them, yet when the Rwandan government did so a few years ago, it famously back-tracked on the decision after the streets of Kigali ground to a near halt.

Rwanda is now encouraging start-ups to take up the challenge of helping the government regulate an industry in which most riders are self-employed.

As older motorcycle ridesharing brands like SafeMoto and YegoMoto intensify efforts to become household names in Rwanda, a firm called SafiRide, founded by US graduates, has launched electric motorbike taxis – promising not only to vet their drivers but also to cut down on pollution. Their e-motorbikes can be hailed by roadsides or via an app in five Rwandan cities.

Some estimates suggest sub-Saharan Africa’s motorbike taxi market could be worth around $80bn (£62bn), and investors are keenly backing start-ups committed to advancing “Uber-isation” within the sector.

A case in point is Nigerian ride-hailing start-up MAX.ng, co-founded by Adetayo Bamiduro and Chinedu Azodoh, alumni of the MIT Sloan School of Management.

It recently raised $6m from equity investors and $1m in grants to build up its operations in Africa.

That is not a lot of money by Silicon Valley standards, but it is significant given how, relative to start-ups based in comparatively-sized markets in other parts of the developing world, African tech ventures typically struggle to attract investors.

In June, MAX.ng, which currently operates in Lagos, also secured the participation of Yamaha.

The Japanese motorcycle manufacturer had already invested $150m in the Singapore-based transport company Grab last year.

The MAX.ng deal represents Yamaha’s second strategic move to back a ride-hailing firm serving emerging markets.

Race to build Africa’s super app

Nigerian Osarumen Osamuyi, a former venture capitalist and a frequent motorbike taxi user who lives between Nairobi and Lagos, agrees that there is great potential in Africa.

He recalls passing up the opportunity to invest in a promising motorbike taxi start-up while working for a venture capital firm a couple of years ago – it went on to raise a sizable investment sum at an attractive valuation.

Read more

Just how effective are retailers’ branded mobile apps in boosting the frequency, quantity, and monetary value of purchases?

According to a new study published in the INFORMS journal Marketing Science, branded mobile apps not only boost sales and purchase frequency on a retailer’s website, but also in its physical stores.

Unnati Narang and Ventakesh Shankar, both of the Mays Business School at Texas A&M University, modeled the relationship between a retailer’s mobile app launch and the frequency, quantity, and monetary value of purchases in its online and offline channels, as well as product returns.

The researchers leveraged data on a large retailer’s launch of a mobile app and used a difference-in-differences approach to see how mobile app adopters differ from nonadopters in their shopping outcomes.

The results of the study revealed:

• App adopters buy 33% more frequently, buy 34% more items, and spend 37% compared to non-adopters in the period after app introduction.
• App adopters return 35% more frequently, 35% more items, and 41% more in dollar value.
• App adopters spend 36% more in net monetary value.
• App adopters’ purchases in both the online and offline channels increase after app launch.

“Overall, we found that retail app users are significantly more engaged at every level of the retail experience, from making purchases to returning items,” said Narang.

“Interestingly, we also found that app users tend to purchase a more diverse set of items, including less popular products, than non-app users. This is particular helpful for long-tail products, such as video games and music.”

“For the retailer, the lesson is that having a retail app will likely increase customer engagement and expand the range of products being sold online and in store,” added Shankar.

“We also found that some app users who make a purchase within 48 hours of actually using an app, tend to use it when they are physically close to the store of purchase. They are most likely to access the app for loyalty rewards, product details and notifications.”

Contrary to what one might expect, ten out of the top 50 cheapest countries in the world for mobile data are in Sub-Saharan Africa. This is in stark contrast to the cost of broadband on the continent, which is almost universally very high or non-existent.

Rwanda and Sudan feature in the top ten, with 1GB of data costing just $0.56 and $0.68. Sub-Saharan Africa also lays claim to the most expensive nation in the world for mobile date: Zimbabwe, whose average cost for 1GB of mobile data is an eye-watering $75.20, while its most expensive gigabyte is an even more shocking $138.46.

According to a recently released survey by Cable.co.uk, in contrast with the cost of broadband on the African continent, 10 out of the top 50 cheapest countries in the world for mobile data are in Sub-Saharan Africa.

Also, seven Northern African countries included in the report appear higher up the table than the majority of countries in Sub-Saharan Africa, although none of them is among the top ten cheapest in the world.

The report includes data from 6,313 mobile data plans in 230 countries around the world between October 23 and November 28, 2018. The average cost of one gigabyte (1GB) of data was then calculated and compared to create a worldwide “mobile data pricing league table”.

The report also reveals that the price of mobile data is dependent on ubiquitous 4G infrastructure, heavy reliance on mobile data where there is little or no fixed-line broadband, limited consumption of data, and a wealthy economy.

In Africa, which is the poorest continent by GDP per capita, countries in the southernmost part of the continent pay the most for 1GB of data.

Zimbabwe pays the highest price both on the continent and in the world ($75.20), followed by Equatorial Guinea ($65.83), Saint Helena ($55.47) and Djibouti ($37.92).

According to the report, mobile data is more expensive in countries like Equatorial Guinea and Djibouti because although it is widely available and SIMs are relatively cheap, the available infrastructure is overburdened.

Consequently, data bundles are predominantly available in small amounts with single-day validity.

“When multiplying such quantities to figure out the cost of 1GB, then such countries tend to find themselves at the expensive end of the table.”

On the contrary, Rwanda ($0.56), Sudan ($0.68) and the Democratic Republic of Congo (DRC) ($0.88) have the cheapest mobile data in Africa. With DRC and Sudan being two of the poorest countries in the world, it comes as no surprise that mobile data in these countries would be as cheap as a number of the population can afford.

In Northern Africa, Egypt has the cheapest average cost of mobile data at $1.49, followed by Morocco and Western Sahara, both at $1.66 for 1GB of data.

In Africa’s largest economies, Nigeria and South Africa, the average cost of data is still relatively expensive at $2.22 and $7.19 respectively.

In contrast, the 2018 edition of the Inclusive Internet Index by the Economist Intelligence Unit (EIU) released last year ranked Nigeria as number one in Africa and 17th in the world, with South Africa, Morocco and Egypt, following in that order.