A new online-hailing matatu operator, SWVL, has secured Sh1.5
billion funding to finance an aggressive route expansion plan in
Nairobi.
The start-up, which was founded by Egyptian
operators and is already operational on multiple Nairobi routes, has set
a target to grow its network to 500 routes served by 1,000 buses.
The
app-based public service transport operator that launched in Nairobi on
a test basis seven months ago has already signed up 150 buses on 100
city routes.
“The investment will go into building the
ecosystem, including supply and demand, bringing in drivers and creating
awareness,” said SWVL co-founder and CEO, Mostafa Kandil, during the
firm’s official launch in Nairobi on Thursday.
The
firm, which started in Cairo, is seeking to take advantage of Nairobi’s
chaotic and largely unreliable public transport system.
“Kenya
is a market with a need for a stable solution for the perennial traffic
snarl ups and SWVL believes that we can be of great benefit to the
local consumer and the transport sector as a whole,” said Mr Kandil
The tech company leases the vehicles that currently include
11-seater and 14-seater vans as well as 22-seater shuttles at a daily
rate of $70 (Sh7,000) and $150 (Sh15,000) to ply the various routes. It
tops up the daily collection if the earnings for the day are less than
the daily leasing amount, but collects any income above the agreed rate.
The
app-based service allows users to book trips using their mobile
devices, which notifies them of the nearest pick-up point, price and
time by the bus.
The driver’s contact and registration
number of the vehicle as well as live map update appear on the app
interface for easy identification once the buses arrive.
“We’re
building a mass transit system. The investment will keep us going in
this market,” said Shivachi Muleji, SWVL general manager for Kenya.
The
firm says its popular routes include Ruiru to the CBD/Upper Hill, Karen
to CBD/Westlands via Upper Hill, Ongata Rongai to Westlands/CBD via
Upper Hill, Ruiru to Westlands, Ndenderu to CBD/ Upper Hill, and Kikuyu
to CBD/ Upper Hill.
According to Mr Muleji, the company
is in negotiations with local Ford dealers and a financial institution
to provide vehicles at 20 percent cheaper than the market rate as well
as financing options for drivers. This is aimed at growing its bus
network to meet the demand of the planned route expansion. The app
company, which has received pushback on some of its routes from PSV
(matatu) operators, says it is engaging some Saccos in the sector to
invest in the business.
The service currently charges a
flat rate of Sh200 but has plans to offer distance-based pricing at the
end of 2019 or early next year.
“Kenyans are picky consumers so you have to offer a premium service for the extra 10 percent you charge,” said Mr Muleji.
Tech-based
solutions in the transport sector have been causing a ripple locally
with Uber making its entry in the taxi business several years ago
despite protests by taxis at the onset.
Kenyan-based
Little Cab also offers a similar shuttle service in the market while
Safiri is still in the pilot stage of data collection.
No comments:
Post a Comment