Asset financiers to the rescue as Bolt plans to hire 200,000 new drivers in Africa to meet growing demand for ride-sharing services – TechCrunch
Lockthe Estonian mobility technology company which recently wrapped up a huge round, plans to onboard 200,000 more drivers in Africa this year as it kicks off expansion into more cities within its existing markets while responding to the growing demand for e-hailing services across the continent.
Bolt’s regional manager for Africa, Paddy Partridge, told TechCrunch that the ride-sharing company has seen an increase in on-demand ride-hailing services and current drivers — particularly in Ghana and Nigeria where “there are has a real shortage of cars” – are not enough to meet this growth.
Bolt currently has over 700,000 drivers serving around 40 million riders across its seven existing markets in Africa.
“One of the challenges we are currently facing with our growth is that, on the ride-hailing side, demand for our services is growing faster than we are able to onboard drivers, particularly in West and Southern Africa. We’re just not able to keep up with that growth because drivers can’t access vehicles at an affordable rate,” Partridge said.
“We need to find ways to really attract as many drivers as possible…like making their earning potential as good as possible so that we can bring people (drivers) to our platform…to solve this problem of access to cars.
Partridge said Bolt already has vehicle finance partnerships with banks in markets including Kenya, Nigeria and South Africa, and plans to form additional collaborations and explore expanding current collaborations to reach more markets and drivers.
The shortage, Partridge says, is the result of supply chain challenges brought about by the COVID pandemic, driving up the cost of vehicles. In addition, high inflation in some countries like Nigeria has undermined people’s purchasing power.
However, partnerships are planned to bridge the financing gap. In November last year, Bolt partnered with Metro Africa Xpress (MAX), a Nigerian mobility technology company, to extend lease-to-own financing to its drivers. The partnership with MAX will provide funding for 10,000 energy-efficient vehicles (both electric and gas-powered) providing much-needed support to drivers using leased vehicles or those employed to drive taxis. The taxi company has hinted that it will explore similar arrangements in other markets where MAX can deliver its drivers.
In South Africa, Bolt has entered into a similar agreement with FlexClub, a vehicle subscription marketplace, which allows drivers to enter the taxi business through a lease-purchase financing model. In October last year, FlexClub signed a partnership with Untapped Global (a smart asset finance institution) to provide credit for 2,000 electric vehicles (half of which are motorcycles) to gig workers using platforms such as Bolt and Uber in Mexico and South Africa.
These recent partnerships with electric vehicle dealerships add to the company’s long-term goal of increasing the number of clean-energy vehicles on board its platform as part of the company’s contribution to reducing carbon emissions from the use of gasoline and diesel. Bolt plans to enter into further agreements with electric vehicle dealerships in Africa.
“One of the partnership models that we are really developing this year is in vehicle financing. So basically finding ways to find vehicles and extend financing to drivers who want to drive on our platform… We have this partnership that we recently entered into with MAX in Nigeria, but we think we can partner to them in other markets,” he said.
“What we’re really trying to do is use our platform and our money to make these cars more affordable and reduce the risk for the people providing the financing, like the banks or the fleet managers. We also see how we can work with the players who are developing the charging infrastructure, reducing the risks to improve their economy (of scale) so that they can deploy it more quickly.
With rider demand for electric vehicles slightly higher than regular taxis, ridesharing had to conduct education on the value of owning one to increase adoption. Bolt shares driver data, including their payment history, to help financiers assess their creditworthiness.
The company plans to increase the adoption of electric vehicles across all of its categories, including four-wheel options, three-wheelers (tuk-tuks) and motorcycles (bodaboda/okada). As far as electric vehicles are concerned, the current focus is on four-wheeled vehicles, the adoption of which is still slow due to high costs.
Bolt told TechCrunch it needs more vehicles to support its growth plan for the region; that is, the planned expansion of its taxi business in its existing markets and the growth of its food delivery business across the continent. In 2020, South Africa was the top African market for the company’s delivery business, followed a year later by Kenya, Ghana and Nigeria.
Bolt, Uber’s main rival in Africa and Europe, also plans to enter at least two new markets in the North and West African regions before the end of the year. Its other current markets are Tunisia, Tanzania and Uganda.
The ride-sharing business seeks to tap into Africa’s growing smartphone penetration, drive to adopt new technologies, a young population and global demand for on-demand ride services.
Founded in 2013 by Markus Villig, Bolt has a presence in 45 countries and has recently shaped itself as a transport and delivery company, having launched car rental and 15-minute grocery delivery services. While Villig said in a previous interview that they would use their newly acquired funding of $709 million to fuel the expansion of these new ventures, it seems the focus on Africa for now will only be the food transportation and delivery companies.
“These two products kind of complement our portfolio of products that are basically designed to eliminate the need for people to own their vehicle. And we’ve seen promising results in the markets where we’ve rolled this out in Europe. And I think there’s a big opportunity for that in Africa as well. But we’re trying to savor this opportunity and see if it makes sense to prioritize now,” Partridge said.
Meanwhile, the growth of the global ride-sharing services industry is expected to more than double over the next seven years to $98 billion, as the sector slowly recovers from the ravages of the COVID pandemic that has crippled the industry. Globally, the industry is expected to grow 10% CAGR year-over-year according to this report due to a spike in demand as the world embraces the “new normal” which has seen business in industries like transport return almost completely in regions like Africa.
As the sector recovers, ridesharing companies operating in Africa and those looking to the continent have gained momentum in recent months, launching new products and expanding into new countries. Chinese Didi has finally made inroads in the rest of Africa after successfully operating in South Africa. Russian inDriver entered Algeria, while Uber introduced PoolChance, a feature that allows passengers heading in the same direction to get discounted rides when sharing taxis.
As international online calling companies tap into the African market, they also increasingly face growing competition from local e-mobility companies like Wasili and Little in Kenya and NextNow in South Africa. Public transport operators like SWVL, the Egyptian ride-sharing company operating in Africa, South Asia and the Middle East, are breaking down barriers by formalizing public transport in emerging markets.