Batanai Matsika PIGGY believes that Vaya lift services have made a significant impact on small business owners and entrepreneurs in Zimbabwe. Vaya lift service is an Uber-type ride hailing service that can be easily booked by riders via the convenience of a mobile app.
The service is targeted at individuals and business customers. This development has largely been a result of the growing usage of smartphones and mobile apps. The success of Uber and UberEats in countries, such as South Africa and Kenya has been a motivating factor for Vaya in Zimbabwe. We note that Uber South Africa has seen huge growth given that the ride-hailing app now has over one million active riders in South Africa and over 15 000 active drivers.
In Zimbabwe, the Vaya app has been gaining traction amongst riders and several drivers have also joined the platform. The impact has been on creating income generation opportunities for individuals in a country with an unemployment rate of over 80%. At a time when the labour unions and other independent bodies have pegged the unemployment rate in Zimbabwe at between 80% and 90%, there is clear evidence that the major problem is joblessness.
According to the Intercensal Demographic Survey, 8,1 million people in the country are aged 15 and above and 60% of that population is economically active.
The largest proportions of economically active persons are in the age range 20-44 years for both males and females. With limited formal employment opportunities (especially for youth), there has been an escalation of self-employment with citizens moving into vending and small businesses.
It should be noted that Zimbabwe has gone through a period of economic stagnation over the past decades on the back of political instability. The result has been massive unemployment. EcoCash Holdings has therefore taken a leading role through impact investment initiatives. Vaya is not only a relevant product offering in Zimbabwe but is a platform for individuals to set up viable small businesses in the country.
According to a research paper done by Symbiotics and titled “Small Enterprise Impact Investing, Exploring the “Missing Middle”, more than 95% of registered businesses in the world are small. Together, they constitute the largest employer in any given private-sector economy, whether of high- middle- or low-income levels.
While Uber and UberEATS have done well in South Africa, there are some hurdles that Vaya would have to overcome for the service to expand across all major cities and towns in Zimbabwe.
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Firstly, major cities in Zimbabwe, such as Harare and Bulawayo are smaller in size when compared to Johannesburg, Cape Town, Pretoria or even Nairobi.
This presents a significant constraint in terms of pricing given the short distances as well competition from public taxi operators. For example, it costs US$1 to travel from a suburb like Mount Pleasant to the Harare CBD on a public taxi. Vaya would have to come up with economic fares (especially for the drivers) for the service to work.
Disposable incomes in Zimbabwe remain low and the introduction of new taxes such as the IMTT (money transfer tax) has a negative impact on the rider’s wallet.
Secondly, the increase in the number of imported vehicles (mainly from Japan) has led to congestion on Zimbabwean roads as well as limited parking spaces in major CBDs.
According to the Central Vehicle Registry (CVR) of Zimbabwe, the total number of vehicles and motorcycles registered in Zimbabwe have increased from 828 395 in 2009, 1,2 million in 2014 to over 1,4 million currently (35%-50% are second hand vehicles).
The number of vehicles has also increased carbon emissions as well as the demand for fuel (petrol and diesel) thus contributing to the country’s trade deficit.
Further, the poor state of roads is also a major contributor to congestion. Vaya would also have to explore the use of UberEats-type scooters so as to overcome some of the congestion problems. Thirdly, the use of mobile apps implies increased data usage.
According to the latest report by the Alliance for Affordable Internet, Zimbabwe has the highest mobile data costs in the region. This would also imply that the cost of using the Vaya service may be comparatively higher than other alternatives.
Despite the hurdles, we note that Vaya is gaining transaction in major cities such as Harare and Victoria Falls and is creating a viable income-creation opportunity for citizens in Zimbabwe.
A key trend that is noticeable is that there has been a strong demand for fuel-saving car models, such as the Honda Fit and Toyota Runx. Zimbabwe’s local automobiles market for new vehicles has shrunk over the years from the highest levels of over 20 000 units per year in 1997 to less than 3 500 in 2017.
This is because motorists have favoured second-hand vehicle imports due to the affordable prices which on average range between USD3 000 to USD7 000 in total to import into the country whereas new vehicles of the same make range from US$10 000 to US$20 000.
While car imports have been a contributing factor to foreign currency constraints, the advantage is that importing vehicles specifically for income generation ventures, such as joining the Vaya network could have positive spill-over effects in the broader economic environment.
Vaya has also seen phenomenal growth in tourist towns, such as Victoria Falls. The growth has also been attributed to a recovery in international arrivals post the Covid-19 pandemic.
This means that Vaya drivers operating in Victoria Falls have an opportunity to generate the much-needed foreign currency from international travellers.
In conclusion, EcoCash Holdings has indeed been very aggressive in terms of developing relevant products for its market and creating new opportunities for entrepreneurs and business owners through strategic partnership arrangements.
- Piggy rates the stock LT BUY! Get more tidbits on the stock market by joining a PiggyBankAdvisor WhatsApp Group (+263 78 358 4745). Get more tidbits on the stock market by joining a PiggyBankAdvisor Telegram Channel (+263 78 358 4745).
- Matsika is the head of research at Morgan & Co, and founder of piggybankadvisor.com. — [email protected]/ [email protected] or +263 783 584 745.
