TechCabal Daily – Uber is expanding its logistics footprint into Africa

The expansion of Uber Connect is part of a new strategy at Uber, as COVID-19 has forced the company to rethink its business direction. With millions of people isolating at their home and others concerned about the health implications of sharing rides, Uber’s core ride hailing business has suffered. In the first quarter, its ride-hailing bookings were down 80% from Q1 2019.

As Uber’s passenger transport business suffered, deliveries are soaring. At the end of March, bookings on Uber Eats, Uber’s fastest growing business, was up 50%. Now, the company is doubling down on its diversification plan pivoted on logistics. It wants to become the “Amazon of logistics,” or an “everyday service” as Uber’s chief executive, Dara Khosrowshahi said on a call with investors.

Since April, Uber has made strategic moves in this direction. It launched two new consumer-facing delivery services: Uber Direct and Uber Connect. In July, it completed a $459m deal to acquire a majority stake in Latin American grocery startup, Cornershop. Uber also acquired on-demand delivery service, Postmates for $2.65 billion. While these acquisitions were in the works, Uber also struck deals to provide delivery services in countries such as the UK, Portugal and France.

Now, by expanding Uber Connect to Kenya, Uber is signalling its interest in Africa’s delivery market. And the choice of motorcycles for deliveries is interesting and hints that it could use this strategy for other African countries. But how would it do it?

In Kenya, Uber Connect is benefitting from the presence of
Uber Boda which launched in East Africa in 2018. The bike hailing service is available in Kenya and Uganda but Uber has been slow to expand it to more countries. In June 2019, Uber’s Global Head of Business Development, Brooks Entwistle told TechCabal the company will consider regulatory issues before making any expansion.

Unlike passenger transport, regulations for logistics services are more straightforward in many countries, including Nigeria, Africa’s biggest market.
In the West African country, motorcycle-based delivery services are already witnessing serious growth as
e-commerce makes a resurgence. For example, Gokada, the former bike hailing service, pivoted to deliveries in February. By May, it told TechCabal its daily delivery volume could soon surpass its ride-hailing business. Uber could be looking to enter this market. But how would it do it?

The first route would be to simply expand UberBoda into Nigeria and onboard as many bike riders as possible. That won’t be an as easy task as government regulation in places like Lagos has forced many riders to leave the city.

An acquisition is a second option. Services like MAX, Gokada, Kwik
and Dellyman have on the ground operations that Uber could benefit from. Rather than build a new service from scratch, why not acquire one of these operators?

As Uber deepens its focus on logistics in Africa, these options may come up.

After trying to find a developer without success, Nwobi ran into a fresh graduate, Oletu Godswill who had never even written commercial-quality software. However, Godswill had been training himself in software engineering using internet access at the local ISP where he was working as a network engineer.

Six months later, Godswill joined Nwobi’s company MTech, self-taught, and built MTN MLife — the first mobile content and email service in Nigeria using open source tools.

Nigeria’s technical talent industry, which comprises organizations and initiatives that recruit, train, and supply developers and other technical talents, has come a long way since Nwobi’s developer search 19 years ago. There are at least 25 key players in the
industry.

But the industry’s history precedes the award of GSM license in 2001 or Andela’s famous launch in 2014 and goes as far back as 1963 when IBM set up its Africa education center.

In our two-part series, put together in partnership with Tek Experts, we track the industry’s history and map the key players. Read it here and here. Get more TechCabal reports and send us your custom research
requests here.