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World Cities Day: Growing Sustainable Cities through Impact Investment
By Julienne Gage | Mon Oct 31 2022
Innovations like ridesharing apps improve traffic, safety, time management and the environment
Any public transportation user in Kampala, Uganda has gone through it. They head out for work or a meeting, knowing they must plan ahead for busy traffic and other sprawling city logistics. A broken and outdated transportation system is one of the biggest obstacles to getting anywhere or anything done in an efficient fashion, and sometimes it’s downright dirty and dangerous.
It’s common for commuters to walk down a muddy footpath following a massive rainstorm to catch the commonly used Ugandan taxi after hours of waiting inline, a 14-seater ride-sharing minibus, only to find issues such as broken windows letting the wet weather pour onto a seat that was already covered with years of dirt and grime. Nobody wants to show up in their work clothes looking damp, dirty and unkept, and it's even harder for people traveling with children in the tropical germ petri dish this mode of transportation can be.
In theory, these kinds of taxis are more efficient than regular buses or individual cabs because they are relatively affordable and they go to many parts of the city. However, in a system where drivers are often undertrained, underpaid and under pressure to meet revenue quotas, they tend to overload the vehicles and drive too fast, ignoring traffic laws. It doesn't help that the vehicles they’re driving are often in dangerous mechanical condition. By the time commuters arrive at their destination, they’re likely to show up tired, tattered, distracted and probably even late to their appointments.
To round it off, the threat to one's personal security is always a cause for concern. As with many parts of the world, long-standing misogynistic attitudes make women especially vulnerable to predatory behavior, which is largely unmonitored and unregulated in the transportation network. Before boarding, they often take extra precautions such as writing down the license plates and sending them to loved ones, as well as making a mental note of the driver and every passenger with whom they will travel.
As cities grow, the pressure on public transport is evident, especially across East Africa, where much of the road network is still under development. October 31st marks the United Nations’ World Cities Day, which aims to promote and inspire action around sustainable urban planning by advancing international cooperation and addressing the challenges created by the rapid growth of cities. This year’s theme is “Act Local, Go Global.”
That’s a concept Renew Capital is embracing in Kampala with a recent investment in Easy Matatu, a ridesharing app that connects commuters in Africa to safer, more reliable and cleaner transportation, allowing them to book rides in advance on better-maintained minibuses at their closest pick-up location through a mobile app or offline through a USSD code. Easy Matatu also takes alternate routes to avoid the traffic.
Andrew Lema and his co-founders created the company while reflecting on their own struggles getting from Kampala’s outskirts to its city center for work. The team realized that they could digitize this part of the economy not only to solve their own need, but to help other public transport users as well.
“Eighty percent of transit rides in Kampala and in most African cities happen in informal transport. In Kampala, that’s two million people every day; in Nairobi, that’s three to four million people a day that are using informal transportation,” Lema told Renew Capital.
Through their initial market research, the founders discovered that the drivers want a better system as much as the people they transport.
“Once we started speaking with [minibus drivers], we realized that the whole ecosystem is a mess. They pretty much live hand to mouth and all these things affect how they behave,” Lema explained. “We realized that what we needed to do was beyond just building an app that connects people from point A to point B. Public transportation as a whole in Africa's cities needed to be reformed or disrupted, and technology really presented the best tool to do that.”
Easy Matatu’s initial engagement with Renew Capital began in April, advancing to an official investment from the firm in August, and Lema confirms this entire process has helped the ride sharing app plan and scale in a quicker, more efficient manner.
“Renew Capital is impact driven, and really understands the impact Easy Matatu can have on Africa’s cities, on millions of people, millions of commuters, millions of drivers,” Lema said.
A Popular Alternative for Women Riders
Easy Matatu’s data already shows that women are among the most common users, and also the ones experiencing the biggest social impact. Eight out of 10 of their repeat riders are women who have embraced the transportation option for its reliability in providing a safe and more convenient ride at a fixed price.
“It just eliminates that whole safety issue for us because now I know that there are people looking out for me,” said Pamela Kaliisa, Easy Matatu’s head of customer experience, noting that safer and greater freedom of movement is just one of the ways her company helps to liberate women.
Even though Easy Matatu might carry a higher fare than some public transportation, the fixed prices contribute to its reliability, helping her to budget for what she also considers an investment in time gained from a shorter commute. That appeals to African women who generally carry the bulk of childrearing and household duties alongside their jobs.
“I can use that time to be more productive in my work or my personal life because I don’t have to stand by the roadside for two hours to wait for a vehicle to take me where I’m going,” she added.
Finally, she says she’s excited to be part of a start-up company that deviates from traditional ones by recognizing the value of offering professional growth to workers who are young, female or both.
“They truly empowered me,” she said. “This company is open to creating opportunities for people like me.”
The Private Sector as a Tool of Sustainable Public Transportation
As for his hope for the future of the transportation industry in Kampala in the next 10 years, Lema acknowledges that the sector will only be managed once the government creates a partnership with private actors for collaborative solutions. Such solutions will mean merging the current informal methods with modern technology to ensure a more efficient system.
According to the Uganda Bureau of Statistics, Kampala has a population of up to two million people in the daytime, owing to commuters coming into the city from surrounding districts for formal and informal business and school, among other reasons. It takes but a glance of Kampala during rush hour to note that the threat of over-pollution is imminent, not only from the number of vehicles and motorbikes, but from their mechanical condition as well.
Despite the complications the sector is facing, the government is continuously improving to meet the needs - and indeed, complement the work - of current actors in the sector, with the goal of furthering improvement in the sector, one small section at a time. This month, Uganda’s Ministry of Science, Technology and Innovation unveiled a plan to invest massively in electric transport, including buses and motorcycles, aimed at driving down emissions.
Cities as densely populated as Kampla would need bigger transit options such as metro and train lines to keep up with their growth, but Renew Capital Senior Consultant Andrew Larsen affirmed that electric motorcycles and ridesharing programs can still reduce greenhouse gas emissions and ease travel both within urban areas and in rural communities.
“According to the World Bank, 60% of sub-Saharan Africans live in rural areas, but infrastructure is going to grow from the cities out - that’s why electric motorcycles, small trucks and lighter vehicles, which are agile on unfinished or unpaved roads, are an important component for human mobility, small-scale deliveries and creating strong urban-to-rural market linkages,” he said.
Investing in transportation will be a consistent area of focus as Renew Capital expands the scope of its work. The firm currently has a presence in Ethiopia, Uganda, Rwanda and Kenya, and it aims to have a presence in half of Africa’s 54 countries by 2027. Easy Matatu, which also hopes to start services in other African countries, was one of Renew Capital’s first transportation investments.
“That includes human mobility as well as tech-enabled logistics,” said Larsen, noting that the firm is developing a range of potential investments in partnership with global development agencies such as USAID.
“Whereas Easy Matatu makes getting to work, school or other errands safer and more efficient, much can also be done to improve key supply chain issues like last-mile delivery of fast moving consumer goods (FMCG), business-to-business (B2B) logistics and even first-mile transportation.”
According to FAO, in sub-Saharan Africa 200M metric tons of food is wasted annually between farmers and consumers. About 18% of that can be attributed to poor logistics solutions. Reducing these logistics-related losses by just one percentage point has the potential to save an additional 2M metric tons of food annually. For context, USAID’s Bureau of Humanitarian Assistance distributed 1M metric tons of food to sub-Saharan Africa in 2021, according to the agency’s annual report to Congress. Improving logistics is not just about building more efficient commercial linkages, it also has the potential to increase food security throughout the continent.
“As the continent grows, logistics and transportation represent one of the biggest impediments to Africa’s economic growth, but they also represent the biggest opportunity for private sector innovation, especially because the governments will likely come up short in the near term in infrastructure development,” Larsen said. “They can’t move fast enough to meet the growing demands of the East African transportation sector. We can’t solve infrastructure problems in 10 years or less. These challenges will be overcome little by little. In the meantime the private sector innovators that can develop solutions without immense infrastructure development will be the medium-term winners.”
Looking to Africa’s Future
For now, Renew Capital is excited to see where tech platforms like this will take Africa’s growing population. With its upcoming plans for expansion to other African cities, Easy Matatu is already embodying this year’s UN World Cities Day motto of acting locally and thinking globally.
“What we are doing in Kampala and what we are working towards in other African cities is a solution that can actually help to resolve everything from pollution and congestion to safety, improved income resulting from the defined fixed prices and a better work-life balance that leaves time for one's larger ambitions,” said Kaliisa.
Renew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. For the latest on investing in Africa, subscribe and follow us at our social links below.
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