What Will It Take To Disrupt SA's Public Taxi Industry?
And three startups that are taking a crack at the multi-billion Rand industry
Image Credit: NISSAN SA
The South African public taxi industry is a complex beast but for some brave startups it is a market that is ripe for disruption.
Reported to serve 15 million commuters per day, the multi-billion Rand minibus taxi industry is still largely unregulated, and has festered challenges such as unlicensed vehicles, violence, and the general safety of commuters, according to a Business Tech new report.
Although tech has had a huge impact on the metered taxi industry with startups such as Uber and Taxify making a significant impact, disruption in the public taxi industry has been rather elusive. But this is likely to change in the not too distant future, says Riaan Graham, sales director for Ruckus Wireless sub-Saharan Africa, manufacturer of wireless (Wi-Fi) networking equipment.
"There is a definite demand and key to the success is getting a business model that will work. In fact, the South African taxi industry is the most commonly used mode of public transport in the country which reportedly makes an estimated R90 billion annually," he says.
It is a massive industry whose potential for disruption is largely dependent on consumer-focused solutions that encompass mobile payments, information for customers, fleet management, revenue tracking and safety.
One example of these tech-based solutions in the sector, says Graham, can be seen in e-ticketing systems that are already being tested in taxis around Johannesburg with the hopes of making the payment process much easier for customers as well as easing the auditing processes for taxi operators.
With companies such as Kenyan taxi hailing solution, Little Cabs, we are most likely going to see a change in the industry, says Saidah Nash Carter, senior vice president of innovation, Africa at Thomson Reuters, a multinational mass media and information firm.
"There are a lot of startups coming out and causing a lot of discomfort in the industry which is most likely to cause a stretch in taxi industry's business models. However, this would be a much needed change in the industry given that a number of industries are already considering if not planning on moving certain services to a digital platform," Carter says.
Disruption Now Within Reach
There have, however, been a number of barriers that have made the industry difficult to disrupt. Uptake in smartphones has been a traditional barrier, says Graham.
"This is now changing rapidly with the increase of affordable smartphones being available to different LSM groups. Additionally, the cost per user is key as well and a dynamic pricing model will have to be used to ensure mass uptake. Currently there is a huge problem where consumers are struggling with the cost of data," he says.
Although many may consider a tech-savvy customer necessary for disruption, Graham however, says this doesn't play a defining role. The consumer should be the focus, ensuring they get a quality service at a really good price, he says.
Carter also adds that businesses should ensure that any technology that is implemented should not be a hindrance for the user.
"For example, the technology should be designed in a user-friendly manner where everything is literally spelled out for the user and to be quite honest – the customer is not really concerned about how payments are being processed at the back end or how the software needs to be configured in order for it to work, all they need is a mobile device and they are good to go," she says.
This means that entrepreneurs looking to enter the sector need to make sure they understand their users, Carter says and adds that if they crack that then it will be easy to design or create a service that is needed by the user and easy to use.
"In addition, they need to ensure that when pitching it to industry leaders, they need to make them aware of how their idea or product will benefit the business bottom line and benefit the customer," she says.
The potential for disruption in the industry is growing as more businesses begin to see the possibilities that lie in it, says Carter, and technology is the answer to a lot of commuters' problems.
"These solutions are perfect for the customer and the challenge now comes to getting the buy-in of taxi owners and showing them how this will also benefit them. At this point, I believe all these innovative initiatives have great potential, but we can only hope that they are embraced and their potential is seen," Carter says.
Here's a look at three startups that are taking a crack at the multi-billion Rand industry with the hope of improving customer experience as well as how the taxis are managed.
Founders: Itumeleng Lehabe, Mfundo Zondi
What they do: Ask A Taxi is an app that aims to bring information about taxi rank location to commuters' fingertips. The app also includes a Google Map link as well as information on the fare you will be required to pay. The app also shows the main stops the taxi makes along the route it travels.
The app is free and updates are automatically uploaded to the customer's app, at no cost to the user.
Founders: Sipho Kobue, Nathi Tshabalala, Obakeng Mathloko, Lawrence Matjeni
What They Do: Afta Robot is a platform that uses wireless technology combined with cloud support with the aim of improving the safety and efficiency for taxi operators and commuters.
The app gives commuters information about when they can expect to depart from or arrive at a particular place and enables queue martials to better plan and allocate taxis according to demand. It also enable drivers to locate passengers quicker by tracking users' locations which the drivers can see on their smartphones.
The app lets the owners know where taxis and commuters are which will allow them to plan vehicle availability that will increase efficiency by transporting passengers quickly and safely to wherever they need to be.
Founder: Brian Mbambo
What They Do: Amatekis describe themselves as the best-in-class solution for taxi operations management and allows taxi owners to gain key insights into actual income their taxis generate. They receive revenue reports throughout the day on their mobile phones via SMS.
The app also allows taxi associations to keep track of the members, their fleet and taxi routes and also allows taxi driver to report in real time when an emergency arises.