SafeBoda retreats from Nigeria to “double down on profitability” in Uganda
SafeBoda, the Ugandan bike-hailing startup, is leaving Nigeria to focus on “bringing the company to profitability by deepening its core transportation offering” in Uganda, its largest market.
This is the second time SafeBoda is exiting a market since its founding in 2017. In 2020 SafeBoda exited Kenya after extending its services to Nairobi less than two years prior. The company said it exited Kenya due to the negative effects of COVID-19 on its business.
SafeBoda had an impressive run in Ibadan. In just a little over one year since launch, the startup crossed the one million rides milestone, growing at an impressive 150% MoM. In another 11 months, it tripled its traction to three million completed rides, cementing its dominant position in the region.
But it is leaving Nigeria because the okada (a local term for motorcycle taxis) industry “in its current state is not economically viable and unfortunately requires significant investment at this challenging time in the global economic landscape,” the press statement read. A company spokesperson told TechCabal via text that the Nigerian market for its operations was “unprofitable”.
Only two months ago, SafeBoda announced car-hailing pilots in Kampala. At the time, Olaoluwa Arokoyu, Nigeria’s country manager at Safeboda, told TechCabal that, “The product is already going through a series of iterations in Uganda, and when it’s done, we’d run a quick one in Nigeria and launch.”
To support the company’s path to profitability, SafeBoda has secured additional funding (whose cheque size or terms it did not disclose) from Yamaha Motor Company and existing investors, including Unbound, Allianz X, and JAM Fund. According to the company, this new financing will help it deepen its core transportation offering “while continuing to build its payments and financial services in Uganda”.
“In Nigeria, the core unit economics of the okada business were very challenging, they were positive, but the margins were too thin,” SafeBoda CEO Alastair Sussock told TechCabal via text. In Uganda, however, the ride-hailing firm is closer to profitability. “Uganda generates significant cash flow and is moving quickly to full profitability. The unit value of our services are significantly higher than Nigeria and our brand has deep roots… Uganda is a huge market with over 1.5 million [boda] rides happening every day in greater Kampala alone.” Sussock added.
SafeCar, the company’s new car-hailing product is still in play. In a statement shared with TechCabal, SafeBoda said its car-hailing business has grown 40% weekly since its launch in early September. “Our SafeCar service is growing very fast and our drivers love the new car community we are building,” said Sussock.