Motorcycle taxis and the Digital Economy

Motorcycle taxi transport  is offering millions of Africans new and more effective ways of access and mobility. This transformative sector developed almost simultaneously with another transformative development in Africa: the role out of mobile phone coverage and rapid expansion and use of mobile internet services. In 2018 about 45% of people in sub-Saharan Africa had a mobile phone subscription and nearly a quarter of the population used mobile internet on a regular basis, with these percentages rapidly increasing further. Motorcycle taxi operators and customers feature heavily among these mobile internet users, with several apps and features, such as Mobile Payments and Ride Hailing/Mobility on Demand, further strengthening the impact of motorcycle taxis on livelihoods and development. Here, initial findings of a CHERISH-Digital Economy study are presented, based on an exploratory assessment of mobile internet’s opportunities and obstacles to support the motorcycle taxi sector, conducted in a two West African and two East African countries.

By Jack Jenkins & Krijn Peters

Digital Technologies and their potential for the African Motorcycle Taxi Sector

The world is undergoing a digital revolution. Technological innovation continues to accelerate and penetrate ever more industries and sectors, revolutionising how business is conducted. The “digital economy” – referring broadly to the range of economic and social activities carried out by people over the Internet and related technologies – has permeated multiple aspects of modern life, including retail, transportation, education and agriculture, and benefits consumers, businesses and governments. As Dahlman et al. (2016) point out, digital technologies and their attendant applications are reshaping whole domains of human activity, making this digital revolution “too important for any country to overlook”.

The capacity to link the physical world to digital networks – the Internet of Things (IoT) – is expected to deliver significant economic value over the next decade as the number of connected devices grows exponentially. For instance, a key priority area within the UK Research and Innovation Digital Economy Theme concerns developing the IoT to transform how industries including infrastructure and transport operate.

One of the areas impacted by the internet of things is that of payments. Different types of electronic payments have been commonplace for many years, for example PayPal, which was launched in 1999. In many ways, the phrase “cash is king” no longer applies in many contexts, as consumers are able to go about their daily lives without needing to exchange ‘hard cash’. In Africa, technological innovations have been introduced to great success. By the end of 2018 about 45% of people in sub-Saharan Africa had a mobile phone subscription and nearly a quarter of the population used mobile internet on a regular basis. For example, the mobile phone-based money transfer system M-Pesa was launched in Kenya in 2007 and spread rapidly. M-Pesa allows users to exchange cash for “e-float” on their phones, to send e-float to other cellular phone users, and to exchange e-float back into cash. Mbiti and Weil (2015) say that the combination of widespread cellular communication and the ability to transfer money instantly, securely, and inexpensively are together leading to enormous changes in the organization of economic activity, family relations, and risk management and mitigation.

In the area of transport, electronic payment systems have found wide-scale and long-lasting success, for example in Hong Kong (where the Octopus Card was launched in 1997) and London (where the Oyster Card was launched in 2003). Digital technologies now allow transport operators to incorporate new means of doing business, including receiving payment for their services. However, the extent to which operators and users are making use of digital technologies in their business operations is unclear across regions and countries. Here we seek to improve our understanding of the extent of uptake of digital technologies within the sub-Saharan African transport industry, with a specific focus on the Motorcycle Taxi (MCT) sector.

History shows that the MCT sector is highly dynamic and has rapidly grown to displace previously dominant, more conventional means of transport in countries across the continent. In the last 20 or so years MCTs – and more recently motor tricycle taxis (MTTs) – have fundamentally changed mobility and access in urban and rural sub-Saharan Africa. They have been able to satisfy unmet demand in the existing transport sector created by a lack of supply, insufficient settlement and transport planning, inadequate transport infrastructure, and unaffordable private vehicles. In urban and rural contexts, motorcycle taxis – often referred to as Okadas in West Africa or Boda Bodas in East Africa – are now responsible for the majority of transport movements of both people and goods, and provide hundreds of thousands of jobs to low-skilled or marginalised youth.

To explore the extent to which the digital economy has penetrated the African motorcycle taxi sector at this early stage, we asked a series of questions to our African Wheels researchers on the nature and spread of the digital technologies in the motorcycle taxi sector in their respective countries. All researchers had recently (2020/2021) been involved in two studies (HVT and Volvo) on urban motorcycle taxi riding, for which approximately 30 key stakeholders and 60 motorcycle/tricycle taxi operators were interviewed, and hence they had a good understanding of current practices.  This allowed us to compare and contrast the differences in adoption of digital technologies across countries and regions (West vs. East Africa).  

Carl Dahlman, Sam Mealy and Martin Wermelinger, Harnessing the Digital Economy for Developing Countries, (OECD, 2016)

GSMAIntelligence: The Mobile Economy. Sub-Saharan Africa, 2019. (https://data.gsmaintelligence.com/api-web/v2/research-file-download?id=45121567&file=2794-160719-ME-SSA.pdf accessed 6 May 2021)

Mobile Payments

In many African countries, mobile payments have become very prevalent in recent years. In Kenya, M-Pesa is widely used in daily transactions, including transferring money from one person to another, paying bills, and shopping. As one Kenya-based country researcher explained: [MCT Operators] use mobile apps such as M-Pesa to transact cash, i.e. receiving money from customers and sending money to others. The same also applies to the [MCT] users. This researcher also explained that there are now some apps which are used by both operators and users to borrow money and repay at a later date, which include Tala, Branch, Lion Cash, Kashway, M-Shwari, amongst others. Another Kenya-based country researcher further explained how mobile payments are being used in the MCT sector:

MCT operators also receive payments from clients via M-Pesa. However, this was initially hindered by some customers who would reverse the payments. Thus MCT operators only accepted mobile money transfers from regular customers who were known to them. The mobile payment provider Safaricom therefore created a mobile wallet from which payments could not be reversed. This has facilitated mobile payments for small scale traders, including MCT operators.

In Ghana, MCT services are also beginning to be paid for using digital payments. As our Ghanaian country researcher explained: [Motorcycle taxi users] pay for MCT services through mobile money tools such as MTN Mobile Money, Vodafone Cash, etc.

Our Tanzania-based country researchers felt that impacts of the adoption of mobile payments has been positive, as it has allowed operators to run their businesses more effectively. However, they also noted costs associated with this adoption, including data charges and transaction fees incurred while paying using ‘mobile money’. These charges are typically passed on to the customer by the MCT operator, who is asked to pay the cost of the fare plus the transaction cost of making digital payments.

In Tanzania, it was felt that digital payments are currently underutilised within the sector, with the majority of MCT operators still preferring to be paid in cash. One researcher explained: Perhaps [MCT operators] need to consider receiving payments via the mobile phone-based money transfer system from providers such as M-Pesa, Airtel Money and Tigo Pesa. Our other researcher in Tanzania believed there is an opportunity for further adoption of digital technologies, and noted that some MCT operators have already started tapping into this. One particular opportunity outlined by the researcher was the use of electronic payments to issue tickets, which is already being used by bus operators in the country, and may therefore be taken up by MCT operators in the future. 

In neighbouring Kenya, the banking sector has collaborated with the motorcycle taxi sector to further stimulate the adoption of mobile payments within the sector. One Kenya-based researcher outlined these initiatives:

Kenya Commercial Bank (KCB) have entered into a deal with the Boda Boda Association of Kenya (BAK) for a digital payments operation in which KCB customers pay for rides through digital payments. Payments can be performed via a mobile app or via USSD [Unstructured Supplementary Service Data] directly from a customer’s bank account. This eliminates the need for Boda-boda operators to carry cash, among other limitations linked to making cash payments.

This researcher stated that mobile money and Visa e-payments have contributed to financial inclusion by creating financial confidence and autonomy amongst those working in the sector:

Boda Boda operators have thus been empowered to take loans from banks and microfinance institutions. This has enabled more MCT operators to own motorbikes, and reduce reliance on hired motorbikes, which contributes to recklessness. Evidence suggests that MCT operators riding their own motorbikes are more careful on the roads as compared to those riding hired motorbikes.

The overall view of the adoption of digital payments in Kenya was very positive, with one researcher explaining that digital solutions have enabled operators to grow their business while cutting operational costs associated with handling cash, as well as allowing them to have complete control of their money such as trace payments from their customers and withdrawals from their accounts.

One the Kenya-based researchers expressed confidence in the sector continuing to adapt to the use of digital payments in coming years, perhaps as a result of increased regulation:

As technology evolves, MCTs will be able to adopt and use technology in new ways. For example, the government has in the recent past been advocating for cashless transactions in Passenger Service Vehicles (PSVs), and is in the process of developing regulations for the same. It is thought this will reduce corruption in the sector. This may be extended to the MCT sector in the future.

In Liberia, the adoption of digital technologies in the MCT sector is at a much earlier stage, as explained by our researcher:

In Liberia, the adoption of digital technologies in the MCT sector is at a much earlier stage, as explained by our researcher:

However, it appears that stakeholders within Liberia are beginning to look into how the transport sector might be assisted to make greater use of the technologies now available:

A workshop was conducted by [telecoms provider] MTN (Lonestar) with MCT operators in central Monrovia on the introduction of mobile money payments to take effect. MCT operators who attended the workshop were given free phones and asked to register for [the company’s mobile phone-based money transfer service] Mobile Money.

The trajectory of the uptake of digital technologies in countries such as Kenya and Tanzania may offer insights into how greater uptake of these technologies may change the motorcycle taxi sector in Liberia. As our Liberia-based researcher explained, these should be seen as a positive example: MCTs are not an exemption from these opportunities of utilising electronic payment systems. There has been wide-scale utilisation of this mode of payments by other African countries and they have proven to be successful and effective in business operations.

Ride Hailing Apps/Mobility on Demand

Mobile phones have been a key component in the operation of the African MCT sector for over a decade. Our Ghana-based researcher explained that phone calls are still the main way of arranging mobility ‘on demand’, particularly in rural areas. In recent years, operators have begun to use instant messaging apps in addition to traditional phone calls. As illustrated by one of our Kenya-based researchers:

The operators and the users are able to get in touch with one another easily. A number of users have their preferred motorcycle operators whom they are able to call and come at their doorstep as opposed to going to where they park. This has made the operations quite fast and easy for both the operators and users.

According to the Tanzania-based researchers, because motorcycle taxi operators do not always have neither a central office nor company representing them, they often rely on the mobile phone to communicate with their customers. Additionally, instant messaging apps have become a major way to exchange information among the MCT operators themselves.

However, new technologies have the potential to bring even greater efficiency in connecting operators to users. Ride hailing apps such as Uber and Lyft have become essential components of the urban mobility landscape across much of the globe. In Africa, ride hailing apps are also making their mark in many countries, where they are often used to connect passengers with motorcycle taxi operators as well as the more traditional car taxis.

In Kenya, Bolt and Little Cab have launched motorcycle services to complement their offerings. Other organizations such as SafeBoda solely serve Boda Boda (MCT) customers. These apps have brought gains in terms of efficiency: Digital technology has enabled MCTs to operate more efficiently, connecting with customers easily through hailing apps. Some regular clients also call MCTs to pick them up them from specific places, contributing to efficiency.

Both Tanzania-based researchers explained that the majority of motorcycle taxi operators own mobile phones and often use them for calling or receiving calls from passengers to collect them from specific areas. However, the use of ride hailing apps is still very low in Tanzania. A few operators use Uber and Bolt in major cities, for example Dar es Salaam, however the use of these apps has not yet reached small towns and secondary cities. Some operators also use instant messaging services such as WhatsApp and Telegram to link with friends and colleagues.

Nevertheless, ride hailing apps are increasingly reducing the above-mentioned reliance on phone calls and instant messaging apps. For example, our other Tanzania-based researcher explained that digital technologies have changed the modus operandi of the sector, especially with the uptake of apps such as Uber and Bolt: Instead of having to walk to the MCT station, a customer may request to be picked up from wherever he or she is. Some operators solely rely on their phones to get passengers and do not have to compete for passengers with other operators at the station. Clearly, mobile phones first brought change to the sector by allowing operators to communicate directly with (known) clients, allowing them to request a pick-up without having to go to the MCT station. With the increasing use of ride hailing apps, this pattern is being taken further, as potential passengers previously unknown to the rider can request a pick-up from wherever is convenient for them.

One Kenya-based researcher explained how some operators may not see just positive impacts of the adoption of digital technologies:

[The impacts of the adoption of digital technologies] are both positive and negative. Positive in that the users can get the services quite fast and at their convenience but negative in that those who are not able to embrace technology cannot cope, and are thus unable to make profits. This reduces competition but it is also a way of ensuring that all the operators embrace technology.

The Digital Economy: Opportunities and Limitations

As shown by the responses presented here, digital technologies have been adopted by the motorcycle taxi sector to varying degrees in a number of African countries. An interesting comparison can be made between the countries in East Africa, where digital technologies are already being used and continue to grow, and Ghana – arguably one of the more developed countries in West Africa – where motorcycle taxi transport is officially banned. While Ghana almost certainly has the infrastructure to support the use of digital technologies within its motorcycle taxi sector, which plays an important role in the  country’s overall transport sector, the adoption of technology has almost certainly been held back by the sector’s prohibition. As our Ghana-based researcher explained: There are opportunities for the use of mobile phone apps in the near future, depending on whether or not the ban on the commercial use of motorcycle taxis is removed. This researcher also identified another potential constraint on the adoption of digital technologies arising from the demographics of motorcycle taxi operators: Since motorcycle taxi operators also include school drop-outs or illiterates, there is the need for education on the use of such digital technologies which can enhance the services of motorcycle taxis.

While the adoption of digital technologies does not seem to have reached its full potential, it is clear that it is already changing both the ways in which operators provide transport and the ways in which users access transport. How the adoption of digital technologies might be furthered is therefore an important consideration. In the opinion of one of our Tanzania-based informants: MCT operators need to be sensitised to the importance and benefits of digital technologies if there is to be further uptake of digital technologies within the sector. This is because they still face the financial constraint of data charges, as well as reservations around the use of technology arising from the belief that ride hailing apps such as Uber are exploitative and take a larger share of fares than is paid to the operator. The other Tanzania-based researcher suggested that in order to encourage further use of payments via mobile money transfer systems, providers of these services could give operators a discount on transaction charges.

For Kenya the cost of digital gadgets is a limiting factor in the further adoption of digital solutions by MCTs.  It was suggested that MCT operators could be assisted in this regard by reducing taxes on digital gadgets e.g. smart-phones, to reduce their cost, or by putting in place schemes in which devices could be taken on loan and paid in instalments.

While digital technologies are increasingly being adopted within the urban motorcycle taxi sector, the penetration of these technologies has been slower in rural areas. One Kenya-based researcher offered suggestions for how uptake of these technologies could be stimulated in rural areas, including improving mobile signals and connectivity in these areas, as well as the construction of solar charging infrastructure in areas where the supply from the national grid is not available. Our Ghana-based researcher too stressed how extending telecommunications coverage to all parts of the country would allow motorcycle taxi operators to make use of digital technologies more widely.

An interesting point of note is how the sector used digital technologies to respond to the challenges presented by the Covid-19 pandemic in some contexts. In Uganda, MCT drivers in Kampala embraced e-commerce using mobile money to avoid direct financial transactions and to expand their clientele. Many MCT drivers who had telephone numbers of clients relied heavily on mobile money banking during the lockdown. During this period, the United Nations Capital Development Fund (UNCDF) partnered with SafeBoda in Kampala to promote the use of the SafeBoda App for online shopping by modifying it to include the capability of e-commerce. Besides this, MCT drivers with smart phones used online platforms like WhatsApp and Facebook to maintain business during the lockdown.

In addition to e-commerce and mobile money banking, some Ugandan MCT cooperatives e.g. KAMBE and SBBC, launched online Apps for e-commerce which they had been developing since before the outbreak of the pandemic. Based on this app, KAMBE Cooperative, for example, started its own delivery team of MCT drivers that distributed eggs to households during the lockdown. The app also has online cab hailing capabilities, and records the personal details of both riders and passengers, which has great potential to be used for contact tracing purposes. These technological adaptions employed in Uganda had great potential of reducing the spread of Covid-19, and exemplify the ability of digital technologies to enable the motorcycle taxi sector to respond to contemporary and future challenges.

Interestingly, given the uptake of a range of different technologies, one Kenya-based researcher noted that a longer-established technology – GPS – has not been embraced by MCT operators. They therefore felt that maps apps could be introduced more widely in the sector, enabling operators to reach destinations without having to ask for directions from passengers or passers-by. However, they also noted that operators would need training in how to use GPS devices and apps, such as Mobile Topographer, which can be downloaded on smart phones.

As explained earlier, digital technologies are not commonly used in the Liberian transport sector. This may be largely explained by the poor internet penetration in the country, which currently stands at 19%. Sarpong (2020) explains, “While the highest 20% of income earners on average pay 8% of their monthly income for 1GB of data, it costs the lowest 20% of earners a staggering 47.56% to access the same”. Our Liberia-based researcher predicted that the impact of the introduction of technologies in the sector may be mixed:

Mugisha M. Mutabazi and Krijn Peters, Accelerating COVID-19 related ‘best practice’ in the urban motorcycle taxi sector in sub-Saharan Africa: Uganda Country Report, (High Volume Transport Applied Research Programme, 2021) (Forthcoming)

There could be positive and negative impacts. Positive in the sense that it goes with the trend and it has been proven to have a successful impact on the business operations among MCT operators in other countries. This could also mean negative due to the prevailing state of internet access in Liberia. The negative effects of these changes are the additional cost and burdens of the MCT operators to incur additional expenses. In addition to the high cost of access, the quality and reliability of connections are a challenge.

Clearly, while there are an increasing number of software applications that have been proven to have utility in improving the efficiency of the motorcycle taxi sector in other contexts, the lower availability of sufficient infrastructure and hardware in Liberia relative to more developed African countries are likely to limit the speed of adoption of digital technologies within the sector.

Key findings and Further Research Needs

In the above, we have explored how the African motorcycle taxi sector has responded to emergent digital technologies, and explored levels of adoption across national and regional boundaries. Clearly, the African motorcycle taxi sector – itself a relatively new sector borne from greater availability of cheap imported motorcycles over the past few decades – has responded to emergent technologies in contexts where infrastructure and access to hardware allow. In East Africa, Kenya and Tanzania lead much of the continent in showing how digital technologies including digital payments and mobility on demand services may offer operators and users new ways of providing and accessing motorcycle taxi services. With the advent of ride hailing apps, mobility is now available on-demand, and can be paid for digitally using a variety of digital payments platforms, so that business is now conducted much differently than it was ten or even five years ago.

In the two West African countries studied in this paper, the degree of adoption of digital technologies is much lower, for different reasons. In Liberia, digital technologies have not been widely used within the transport sector as a result of low access to internet and hardware relative to many other African countries, and high costs. It is reasonable to assume that once internet availability and access is improved, so too will the adoption of digital technologies in the transport sector and within other sectors.  In Ghana, perhaps one of the most developed countries in the region, the freedom of operators to adopt digital technologies has been limited by the sector’s outright ban. As Oteng-Ababio and Agyemang (2015) explain, for some time now the Ghanaian government and sections of civil society have clashed over whether MCTs should be encouraged or not, with arguments chastising their role in increasing traffic congestion, endangering public safety and worsening environmental conditions being made against them. The complete ban on motorcycle taxi riding ignores the essential services they deliver and seem to be mainly a response to the rising number of traffic accidents involving or caused by motorcycle taxi riders.

It has been argued that given the importance of the motorcycle taxi sector in providing transport services to millions of Africans across the continent, governments and regulatory authorities should not outlaw or limit the sector, but assist it to grow. As our study has showed, in countries where digital technologies have been adopted by the sector it has led to improvements in the areas of efficiency – even at this early stage of adoption. Digital technologies offer the sector a tremendous opportunity to grow organically, and can potentially enable the sector to become more profitable for operators, more convenient for users, and more efficient overall. Given the projected strong growth of African cities in coming years, improved efficiency brought about by these technologies can only lead to positive benefits for rapidly increasing numbers of transport users across the continent. Further research into the how digital technologies are adopted, and how this adoption impacts operators and users, can offer valuable insight into how one of Africa’s newest and most dynamic modes of transport continues to adapt to the needs of users. As this study has showed, rates of adoption differ across national and regional contexts, with adoption of technologies happening much more rapidly in some countries relative to others. Research into how technologies are adopted in early adopting countries – including benefits, drawbacks, and constraints – can therefore be used to understand how the sector might be assisted to adopt digital technologies in countries where the rate of adoption is slower.

Martin Oteng-Ababio and Ernest Agyemang, “The Okada War in Urban Ghana: A Polemic Issue or Policy Mismatch?”, African Studies Quarterly, 2015, vol.15, issue 4, pp. 25-44

15 Lagos State Government, Lagos Enforces Ban on Okada, Tricycle Operations Within Island CBD, (Lagos State, 2019), Available at: https://lagosstate.gov.ng/blog/2019/09/30/lagos-enforces-ban-on-okada-tricycle-operations-within-island-cbd/ [Accessed 06 October 2019]

Bibliography

Dahlman, Carl, Sam Mealy and Martin Wermelinger, Harnessing the Digital Economy for Developing Countries, (OECD, 2016)

GSMAIntelligence: The Mobile Economy. Sub-Saharan Africa, 2019. (https://data.gsmaintelligence.com/api-web/v2/research-file-download?id=45121567&file=2794-160719-ME-SSA.pdf accessed 6 May 2021)

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Oteng-Ababio, Martin, and Ernest Agyemang, “The Okada War in Urban Ghana: A Polemic Issue or Policy Mismatch?”, African Studies Quarterly, 2015, vol.15, issue 4, pp. 25-44

15 Lagos State Government, Lagos Enforces Ban on Okada, Tricycle Operations Within Island CBD, (Lagos State, 2019), Available at: https://lagosstate.gov.ng/blog/2019/09/30/lagos-enforces-ban-on-okada-tricycle- operations-within-island-cbd/ [Accessed 06 October 2019]

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