April 3, 2019

Is Volkswagen’s Entry In Taxi Business ‘Killing’ Other Taxi Companies?


Move Ride and YEGO Cabs, the two competing taxi services in Kigali

Taxi driver Moise Karangwa has been dosing off in his car for more than 6 hours. He arrived at the taxi parking yard at Kisimenti area of Remera, Kigali, at 9am.

Karangwa has to patiently wait in line behind fellow tax drivers who arrived at the stage before him for his turn to get a client. As we speak, he starts his taxi to move forward, as the other taxis at the front responds to a client’s call, and drives away.

Karangwa is among more than 850 Taxi Drivers who operate as part of the “YEGO Cabs”─a taxi service operating in Kigali City. It was introduced in September last year.

With its network of white cabs with the signature yellow line, the words: “YEGO Cabs”, is written on each of them, plus a toll-free number 9191.

The moment you hope into the cab, Rwf1,500 ($1.6) will automatically appear for the initial one kilometre displayed on a gadget called the Intelligent Connected Fare Meters (ICFM). Throughout your journey, Rwf500 will be added for every other kilometre afterwards.

An Indian-owned firm, Yego Innovation Limited is behind this cab service.

But even before the service got on the roads, trouble was already set in motion.

There was uproar over the percentage each driver is supposed to pay to the parent company per client that uses the cab. According to the initial contract signed between cab owners and Yego Innovision Limited, each driver was to pay 10.5% of the total amount they generated per day and payment be made within 24 hours.

As The Chronicles reports however, the fight over payment of this taxi is only a small piece of a very complex set of challenges the cabs are facing. We spoke separately to ten (10) cab drivers, and all said they were seriously considering selling their taxi cars and find alternative business.

Two of them said immediately they get a buyer for their cars, they will use the money to leave the country to start business elsewhere. One mentioned Zambia, another said Malawi.

What exactly are their concerns?

All the drivers we sampled said they are finding it difficult to make ends meet from their jobs especially due to reduction in passengers and the 10.5% levy imposed on them per passenger they get or the total amount of money they get daily.

The total revenue they used to generate in a month before the YEGO Cabs arrangement, has dropped by between 40-60 percent, as they each gave different numbers but within the same range.

It is mandatory for ALL cabs in Kigali to belong to YEGO Cabs. However, the vehicles are owned by the drivers or belong to other third party individuals; not this company. It is this that makes many wonder why they must pay a lot of money to this company daily for as long as they operate taxis; besides paying other taxes to Rwanda Revenue Authority as required by law.

Before September last year, the cab drivers said they earned between Rwf 1.2m-1.5m (about $1,600) every month. From this amount, they paid various expenses associated with the business such as repairs, taxes, stage fees, washing bay fees; fuel and others.

After every expense had been covered, a driver took home at least Rwf 500,000 ($550) per month.

However, more than seven months later as of March 2019, their revenue has dropped significantly. For those we spoke to, the most they make is Rwf 800,000 per month – and sometimes much less.

Given a list of expenses they have to settle, the drivers are today going home with between Rwf150,000-200,000 ($220). It this amount they have to use to take care of their families for a whole month; including paying school for their children and rent.

The Chronicles sought for a list of all the car-associated expenses from the drivers to be able to determine on our own how much was their exact take-home today compared to the past. We have considered a driver using someone else’s car – meaning they have to make a monthly payment to the owner.

We used the maximum total collection of Rwf 800,000. From this money, the cab driver pays the following:

From the above numbers, a cab driver spends more than 70% of their revenue on car-associated expenses. It’s important to note that these expenses do not include the Rwf 15,000 paid every six months for Controlle Technique (Vehicle Inspection by Rwanda Police).

The taxi drivers’ troubles do not end there. If a cab driver is caught with their meter switched off, they are fined Rwf 200,000.

All the ten drivers told us they have found themselves in breach of this rule; for different reasons. Some said they paid the fine, others said they pleaded for forgiveness and the fine was eliminated.

According to Karangwa, and the others, the meter automatically goes off when car battery level is below 45%. This means, the meter can easily go off without warning. The drivers also claimed the meters regularly malfunction.

When YEGO Cabs was unveiled, a media hype that came with it touted the service as bringing sanity to what had been a chaotic, and many times, unreliable industry.

But taxi drivers under YEGO Cabs are crying foul.

“To be honest the taxi drivers in Kigali are like orphans without help”, is how one of them put it. Another added, “It seems like the cars are not ours, since we even have no right to offer rides to our families.”

The Chronicles agreed not use their names to allow them speak freely, otherwise none was willing to be interviewed.

All of them mentioned a common issue they said was a major challenge but which they said many feared to mention. They said the coming of Volkswagen’s ‘Move Ride’ was doing them more harm – despite the advantages it brings to clients.

“We are not getting the passengers as we used to since we now have a competitor known as Volkswagen which is supported by the government. We have been told they will not be paying taxes for about five years,” said one of the drivers.

Another reported that “Move Ride” was charging far less compared to YEGO Cabs, which is actually true.

Volkswagen is cheaper

A ride in any of these nice VW Move Ride cars is much cheaper compared to other taxi services

Volkswagen Rwanda had been, until March 1, when the ‘Move Ride’ service was officially unveiled, operating a fleet of many cars for several months.

Starting March, Move Ride deployed a fleet of vehicles assembled at Volkswagen Rwanda’s assembly facility in Kigali─such as Polo, Passat and Teramont SUV.

A ride in a Teramont costs as low as Rwf 600 per kilometer. Previously, riding in such huge luxurious cars would not go below Rwf 10,000 for the same distance from private companies operating such services.

In short, a Teramont SUV is cheaper than a YEGO cab – some of which are often not in good mechanical conditions.

Move Ride App works on Apple iOS and Android smartphones. The App operates similarly to popular international taxi hailing platforms which use GPS location. Customers are able to track and monitor requested journeys as well as pricing.

“With Move Ride, people in Kigali will enjoy a convenient, safe and fully transparent A to B transportation,” said Michaella Rugwizangoga, CEO of Volkswagen Mobility Solutions Rwanda, at a press conference on March 1 at the launch.

“Our Move Ride service will be available 24/7 and will complement existing modes of transport in Kigali. It will help to improve road safety whilst giving our customers a personalised service offered by our App. We want our customers to enjoy a service that allows them to move at their own beat,” she added.

As of March, Move Ride had more than 13,000 registered users with over 9,800 rides requested since the pilot launch in October 2018. Since December 2018, Move Ride has averaged 120 rides per day, says the company itself.

Move Ride was born from a joint venture between the Government of Rwanda and the German carmaker Volkswagen. The first phase of the investment saw the German carmaker spend up to $20 million (about Rwf17b) in investment to have a production capacity of 5,000 cars annually, according to its business plan.

Beyond setting up an assembly plant and service centre, the firm has, for the first time, globally rolled out a mobility solution service.

VW is rolling out a community car sharing service. There are few cars now, but it is planned to have about 250 vehicles.

By the end of this year, the public car sharing model will be followed by a shuttle service and later a peer-to-peer car sharing where car owners can give their cars for use and earn money in the process.

VW has created up to 1000 jobs in the first phase.

Amid all the hostility of the YEGO Cabs drivers, the industry controller Rwanda Utilities Regulatory Authority (RURA) is not moved – even as some accuse it of handling some of the cab drivers like criminals.

For example, one of the drivers told us: “One day, I was driving my car without any problem. As I approached Kacyiru; I met the RURA inspectors. They ordered me to get out of my car and took it. I tried to ask what crime I had committed, they just left me there.”

At the time of publishing this story, it was three weeks and he had yet to get his car back.

While repeatedly admitting that some drivers have deliberately displayed hostility towards YEGO Cabs, a system that is said to bring order, RURA has preferred to maintain the positive message.

Engineer Emmanuel Asaba Katabarwa, RURA’s head of the transport department said at the launch of YEGO Cabs that it was indeed a valuable addition to improve service delivery in transport.

“There is no need to negotiate fares as the taxis have meters that automatically calculate the prices. It is clear indication that technology can be used to transform livelihoods. It is a good investment…,” he said.

Curbing Crime in the taxi industry?

Karanvir Singh, the Chief Executive Officer of Yego Innovation Limited

Local media has for years ran stories of women raped by cab drivers. Some of the cabs were covers for illegal activities like transporting criminals and drugs. There have also been cases of clients robbed.

Today, all cabs are monitored from a central office in Kigali. There are virtually no cabs that can legally operate today when they aren’t members of YEGO Cabs. This means that if a crime is committed by a cab driver, it can easily be traced back to the suspected driver.

Karanvir Singh, the Chief Executive Officer of Yego Innovation Limited said the service would eliminate unscrupulous drivers who over-charged clients. “Our system comes for safety and easy transport in the city,” he told a local press in September.

Previously, taxis clients were at the mercy of cab drivers. They threw any price at you. And if you were naive, you paid more than required.

Moto taxi operators are also “crying”

Today, moto riders commonly known as “Taxi Moto” are also complaining. Many of their prospective clients are choosing to take a taxi, instead of moto. The reason is simple; the cost.
When other factors such as comfort, safety and convenience are put in play, some clients have chosen to take the cab, which would not have been possible previously due to higher taxi charges.

For example, journey from Remera to the city center (central business district – CBD) goes for up to Rwf 1,500 on a moto while in a YEGO Cabs, it could be about Rwf 3,000, or even less in the Move Ride.

For one YEGO Cabs though, their worries go beyond: “My hope is something is done with our situation. How can I drive safely while am in this state of misery. Please we need help.”

About seven months ago, you could not easily determine a taxi and private car as there was no sign. Today, all vehicles meant to be taxi cabs have that yellow line, word ‘Taxi’ and toll-free number

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