In many parts of the world, ordering a taxi from your smartphone is the new norm.
Until July 2016 though, this was not possible in the country of Ethiopia, Africa’s second most populous country.
There are several nuances about Ethiopia which made it difficult, and it was only once Habtamu returned to his home country after several years away that the capital Addis Ababa now has this service.
It’s worth saying that Ethiopia is distinctly different from the other countries featured so far on this podcast. The ruling government runs a relatively closed economy, and there are strict regulations on anything involving interaction with the international business community.
In this interview, Habtamu and I discuss just this, and some of the workarounds that he has had to develop in order to operate in Ethiopia.
We cover how people have debit cards, but can only use them to withdraw cash, national company ownership for particular industries, and also how unlike other countries that Uber and the like work in, it’s illegal for private drivers to earn money giving rides.
There’s lots in this episode around doing business in a difficult place, and the strategies to overcome it, and so beyond just leaning about Ethiopia, I have no doubt you’ll get a lot from it.
Born in Ethiopia, raised in Boston
I returned to Ethiopia after working for Uber in Boston with a view of bringing the idea Addis Ababa. Only 4% of Addis population have private transport so there’s a big need.
We’re better than Uber
Mainly because the internet is poorer than elsewhere we have designed our app to better fit the environment. Namely compressing the app size (because of 2G connectivity) and having a call centre.
Logistics companies have to be Ethiopian
Owing to the regulation a logistics business has to be Ethiopian, meaning Uber/ international companies couldn’t operate here. This is aside from the technical difficulties.
We went to the Ethiopian CIA
The equivalent government entity were required to sign off on signing up ZayRide. They were concerned with the safety of passengers which was all sorted.
July 2016 was the first ride
The first customer didn’t realise that he was the first customer. The passenger was a US expat who heard about it on the radio. He had a great experience.
We partner with bars on Friday nights
ZayRide gives 15% off on evenings when people may have been out drinking. There will be a partnership where the bar will include a code at the bottom of the receipt
You pay cash to the driver
It’s not possible to use international credit card processors. There are no ways to process debit card payments. People have plastic cards, but it can only be used to withdraw cash.
We’re building our own payment processor
There are costs involved with paying cash in our business. ZayRide doesn’t want to wait for someone else to build it, and so they are doing it themselves.
Essentially it works by transferring money from one account to another. From the users’ perspective it feels the same as paying with a debit card, except that they’ll swipe it at the end of the trip.
Ethiopia is way different from Africa
In Ethiopia businesses are wary of anything too automatic. Having a physical device so business owners can “feel” the money they’re receiving. They want it to be tangible, and so don’t trust mobile money as much.
Government official’s phone number
It’s normal to take the personal number of the officials that you work with. You’ll call them up at night, it’s normal here.
Limousine fleet in Boston
A lot of the taxi drivers in Boston are Ethiopian and so I was able to sign them up on behalf. I could see that it would be a big opportunity.
Series A funding
To date it’s been funded by Habtamu’s Ethiopian restaurant. For the next level, investors are from Kenya, London and the US.
Personal cars not allowed to give rides
The regulation prevents private drivers from giving rides to people. The rationale is that it would take business from taxi drivers who have invested in their car. ZayRide have overcome this by having a crowdsourcing scheme.
Increasing supply is important
Currently there are 8,000 cabs and there should be 40,000 cabs. The market hasn’t corrected itself as Ethiopians don’t view taxi driving in a positive way. Drivers make lots of money though, which isn’t always seen.
Looking after our drivers
This is pressing for us. Maintaining a good relationship is key for us – we meet with the Taxi Associations every fortnight so that they feel part of the decision. Everyone is happy.
100,000 customer base
This is a big target for us. Partly through partnerships with hotels and NGOs. This will be done partly through offering tablets to the hotel lobbies so guests can hail a ride easily.
A dying tribe…
Is the inspiration for the name of ZayRide. They live on an island and the population has now dwindled to 5,000. ZayRide is named this way to give them recognition.
Social Media Follows etc.