Africa: Egyptian Ride-Hailing Service SWVL's CEO Mostafa Kandil On Democratizing Transport and Expanding Its Service to Kenya and Beyond in Africa

SWVL's bus ride hailing service is cleverly pitched between Uber's cab price and the cheap but sweaty and unsafe buses of Cairo. Russell Southwood talked to him about how the service works and its expansion plans in Sub-Saharan Africa.

SWVL's Egyptian co-founders were all appalled by the problems of safety on public transport. For women, it involves running a regular gauntlet of sexual harassment and for everyone it involves the discomfort of huge overcrowding. A bus designed for 50 people might end up carrying 200. The three co-founders used to study in Cairo and visit their families outside the capital on a regular basis:"Inter-city travel was even worse.

The answer to how they might tackle this problem came out the tragedy of the bomb attack on a Russian tourist plane. Tourism slowed right down and suddenly there were a lot of high-quality empty buses:"We thought why don't we get them to work?"

So SWVL was born in March 2017 aiming to democratize mass travel using high-quality, private sector buses:"The CEO of a bank can sit next to anyone." The ride-hailing bus service had four value propositions: affordability (not taking a large chunk of someone's disposable income), reliability (having a booked seat and being on time), comfort (air-conditioning and Wi-Fi), and safe (especially for women).

It works the same way as Uber, taking you from A to B but you might have a 5 minute walk to the pick-up point. There are both fixed and dynamic routes. In pricing terms, it sits between Uber and public transport. So for a trip you might pay US$8-12 for in an Uber and US60 cents for on a publicly run bus, the same trip on SWVL will cost you US$1.50.

Kandil arrived late for our interview, apologizing profusely about the traffic, which is worse than Lagos if you can imagine that. 30 million people can be moving around the city at some points in the day. So how do the buses keep to time?:"We're gathering an immense amount of data about traffic conditions in the city. It changes enormously during school term times. We now can be within 5 minutes of a time with 97% accuracy."

The users are a mixture of middle class users (earning between US$200-1,500 per month) who can afford slightly more and lower socio-demographic users who don't have cars and otherwise would be forced to take public transport. Based on World Bank data, it has been calculated that 11% of households create 67% of the traffic in the city:"If we can manage to convince people to leave their cars at home, we'll be contributing to solving that problem."

Cairo has a large population of the young and tech savvy and the city already has Uber and has spawned a local competitor called Careem. So the habit of ride-hailing had already become fairly familiar. So SWVL has 1.5 million registered users (including those in Kenya), who have largely downloaded its Android app. It has reached out to these customers by working with the mobile operators and the banks: for example, there are outdoor adverts from Orange promoting the service.

Its business model is based on offering efficiencies to the owners of the private buses. If they hire their buses out for tourism or school runs, they will work the buses only twice a day. Working with SWVL means they can operate more times a day and get more revenues. It also allows the bus operators to spread demand across the year, avoiding just being busy in the peak tourism season:"We buy capacity and orchestrate the network. Also we've just started branding the buses."

So how do users pay? In cash, of course, handing over the money to the driver. Only about 4-5% of Egyptians have credit cards:"We're integrating with the mobile money payment services but they are not yet widely used."

In February 2019, after scouting several African markets, SWVL rolled out its service in Nairobi:"Kenya was most ready for services like us. It's tech savvy and has an existing culture of ride hailing. The good thing about matatus is that they are all part of the SACCOs and we can help them tap into the market they lost to Uber and Taxify. The SACCOs invest and we have a really good ROI. We have convinced them to try new buses. The number of users has grown really quickly."

The SWVL users in Kenya are a mixture of professionals and students but they are also more price sensitive than users in Cairo. There is also a competing service from local ride hailing company Little. In pricing terms, if an Uber journey costs US$11-15 and a standard SACCO fare is US60 cents then the SWVL equivalent fare is US$2.

So where will it expand next?:"There's a huge product market fit in Africa and it will work well in other emerging markets like Latin America and SE Asia. There's a huge middle class and it will broaden the number of people who uses buses rather than cars. People are willing to pay for a slightly better service." Its next markets in Africa will be Uganda, Nigeria and South Africa. It raised capital from VC investors including Digame and is still looking for finance.

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