Driving home a point for digital public transport

On a trip to Zambia via Tanzania recently, business partners Francis Gesora and Michael Nguru found themselves in a tricky situation that usually faces seasoned travellers in East Africa.

In Dar es Salaam, they were conned out of about Sh25,980 ($300) in a deal with alleged transport operators that went sour.

“We were sold tickets based on an image of a bus that we later realised was Photoshopped.

When we went to the bus park later, the vehicle was non-existent,” says Mr Nguru.

This was about a year and half ago.

Today, Mr Nguru laughs as he narrates the story from a new office within a space owned by start-up venture capital firm, 88mph.

Mr Gesora and Mr Nguru’s place at 88mph has been earned by way of a business idea born of their ordeal in Dar es Salaam.

In September, they launched booknow.co.ke, a bus booking platform that ideally will protect passengers from incidences such as the one they experienced.

THE BEAUTY OF BOOKNOW

BookNow allows passengers to book seats and buy tickets on long distance buses plying regional routes.

Customers pay for their tickets using mobile money.

Authenticated electronic tickets are sent via text messages, which passengers are expected to present on boarding a bus.

The two business partners are walking down a path that is becoming relatively well trodden, with a number of local and international companies looking to the public transport sector for innovative revenue streams.

Kenya’s public transport industry has not always been the most welcoming to fresh investors, especially the matatu sector which, in some areas, is controlled by cartels.

UNTAPPED POTENTIAL

However, as government policy continues to push the sector towards a semblance of professionalism, tech companies are realising that public transport presents a well of untapped potential.

“BookNow’s niche is long distance travel. So far, the firm has signed up six bus companies serving various cities in the region, from Kampala to Dar es Salaam.

The company plans on bringing each of the 30 major long distance bus companies in Kenya on board.

Opportunities extend beyond long distance travel. In Nairobi alone, there are an estimated 60,000 matatus.

Given that commuting residents will each spend at least one hour in a matatu every day, this presents a large market.

MATTANGAZO

American multinational IBM recently set up its first African research lab in Nairobi.

One of the lab’s first projects is Mattangazo. This is a solution that allows small entrepreneurs to target commuters using wireless Internet in matatus with location-based adverts.

For instance, a small business in Nairobi could advertise its services to all passengers in matatus within a four-mile radius.

The technology is still in the pilot phase of development on matatus plying Nairobi’s Waiyaki Way route.

“To access traditional advertising channels, you need to have a reasonable amount of money.

Micro-entrepreneurs do not have the kind of liquidity needed to advertise on television and print,” noted IMB Research Africa chief scientist Uyi Stewart in a phone interview.

He added that application of technology extends beyond advertising.

Crucial health and agricultural information could be transmitted to specific audiences.

In a press statement released last month, IBM noted that analytics from Mattangazo could be used to create spin-off businesses.

IBM is responding to a growing trend among matatus to offer free wireless Internet to commuters.

In June, Safaricom launched the Vuma Online service that provides wireless Internet to matatu passengers at a monthly subscription cost of Sh2,000 on the part of matatu owners.

The value proposition is that wireless Internet will give the matatus a competitive edge.

In a statement sent to Smart Company, Safaricom said so far 1,600 public service vehicles had been fitted with Vuma Online against an original target of 350 vehicles.

By March 2014, the company wants to fit 5,000 PSVs.

It is estimated that 8,000 people use Vuma Online per day while data usage averages 1.5 gigabytes per PSV.

EXPAND REACH

“Our immediate goal is to expand Vuma’s reach to cover 80 per cent of all PSV routes, up from the current 60 per cent.

We are also looking to diversify our Vuma portfolio to include tax cabs, school/college buses, tour vans, etc,” said Safaricom.

Payment services in public transportation have also drawn the eye of the corporates.

Earlier this year, Google and Equity Bank launched BebaPay, services that use near-field communication technology for bus fare payments.

To complete the transaction, customers need a pre-paid BebaPay card while conductors need an NFC-enabled smart phone.

In an interview last month, Equity Bank chief executive James Mwangi said that BebaPay was averaging about 3,000 transactions of about Sh63 per day. 

The technology, he said, would help players in the matatu sector to seal revenue leakages.

These numbers are arguably relatively low for two firms of this calibre.

This reflects that investors in this new segment are concerned with getting a foot in the sector before fully exploring the commercial viability of their ideas.

Following the conclusion of the Mattangazo pilot on December 16, IBM intents to analyse the data collected with an eye towards developing the best business model for the product.