Thought Leadership
August 15, 2021

The State of Mobility in MEA

Global Ventures

In our globalized world, mobility is a daily, systemic need. Whether on land, at sea or in the air, access to safe, frequent and convenient travel is an expectation for billions worldwide.

COVID-19 demonstrated firsthand the socio-economic consequences of disconnection, yet the challenges in mobility have existed long before March 2020. In emerging markets, mobility hosts a number of challenges including: astronomical levels of CO2 emissions produced by fuel inefficient transportation, inadequate connectivity for underserved populations caused by a lack of infrastructure, and increasing traffic congestion and road safety concerns due to an absence of cost-effective transportation alternatives. By 2050, when 9 billion people inhabit Earth (most of which in developing countries), and two-thirds of them live in towns and cities, the challenges in transportation will be magnified manifold.

The development of mobility tech is already playing a central role in addressing these issues. From the GCC to Sub-Saharan Africa (SSA), the region is quickly turning into an attractive landscape for investors and entrepreneurs alike.

Is MEA bracing itself for a mobility tech moment?

Towards Sustainable Mobility

In developing countries, the transport sector is estimated to account for 50% of emissions compared to 30% in developed countries. As consumers become increasingly aware of the damaging impact of conventional travel on the environment, so does their appetite for eco-friendly alternatives. A BCG Survey shows that, out of 6,000 adults in the GCC, 56% of respondents felt strongly about the need to adopt a sustainable lifestyle, and 80-95% of respondents report a willingness to start or are already taking action in response to climate change. In the shift towards preferences for sustainable alternatives, urban transportation solutions with low social, environmental and economic impact will play a pivotal role.

Sustainability is at the forefront of government agendas globally and MEA is no exception. The maps below outline regulatory pushes toward sustainability and clean energy, as well as a number of mobility initiatives across the region.

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The Quest for Accessibility, Quality and Affordability in Mobility

Traffic congestion, road safety and transport inaccessibility for underserved populations characterize the mobility landscape in emerging markets. Commuters in Lagos spend an average of three hours in traffic every day to cover a mere 10-kilometer distance. Road safety is also a growing concern as 40 of the 50 countries in Africa have the highest road-fatality rates globally, despite Africa accounting for just 2% of the world’s registered vehicles. In Sub-Saharan Africa, more than 60% of the population lives outside of urban areas, making rural connectivity crucial to socio-economic growth.

Inadequacies in rural infrastructure are a major barrier to improvement. While the abundance of solar energy in SSA creates ripe conditions for smart mobility solutions, these require commensurate government support.

Infrastructure is a challenge in the wider region as well. Even though 70% of respondents in the BCG survey agreed on the importance of reducing vehicle emissions, only 18% of daily trips in the UAE are made via public transport, compared to 46% in London. 43% of survey respondents point to a lack of charging stations and maintenance garages as the reason behind slower adoption of EVs in GCC countries.

Trends in Mobility Tech

Smart mobility technology offers part of the solution. According to a report by Strategy&, governments in the GCC could unlock $400b of socio-economic value through these technologies. Electric vehicles, ridesharing, and micromobility offer on-demand, digital alternatives to private modes of transport and allow for greater road safety through vehicle automation, decreased traffic congestion and lower emissions.

In SSA, the availability of renewable energy sources coupled with short travel distances and average speeds create the perfect conditions for electric vehicle solutions. The transition is already underway. Ampersand in Rwanda offers a fleet of electric motorcycles at a rate cheaper than the alternative. The product’s popularity pushed the Rwandan government to announce plans to transition the entire country to electric motorcycles. In Namibia, ebikes4Africa offers an electric bicycle alternative to traditional fossil fuel powered 2-wheeler options for deliveries.

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Ridesharing and ride-hailing mobility solutions such as SafeBoda, Uganda’s motorcycle hailing service, focus on easing traffic congestion and improving road safety by providing an affordable alternative to private transport. Buseet offers a ridesharing solution in Egypt, giving users the opportunity to book buses for their everyday commute. Similarly in the UAE, Fenix, an e-scooter subscription platform recently closed a $5million seed round and is set to become the first pan-GCC micromobility service by 2022. Shared transportation models and micromobility democratize transportation not only by extending access to a wider community, but also by providing cost-effective, sustainable options to private transport alternatives.

SSA is witnessing the evolution of its mobility sector with the ‘super app’ trend. Mobility startups are moving beyond their core offering of the movement of people and goods to offer a diversified range of services and solve a wider range of issues. Kobo360, a freight logistics service, has added financing for truck drivers to its product offering. Gozem, originally a motorcycle hailing platform, now offers grocery and food delivery services and, an aggregator of motorcycle riders, has also included financial services to its offering.

The Investment Landscape

The MEA region is leading a smart-mobility revolution with investments focused mostly on optimizing the use of existing road infrastructure through smart-tech solutions. Startups in the MEA delivery & logistics sector raised $50M in Q1 2021, the highest quarterly amount over the past 4 years. Total funding raised in Q1 2021 has already surpassed that of FY 2020 by $4M, with a 525% increase from Q4 2020.

The true scale of opportunity in Africa’s growing smart mobility sector was first evidenced in Q3 2019 when mobility & tech startups overtook FinTech as the most funded sector, capturing 80% of total funding raised in the quarter. The sector is also attracting steady international attention, with 25% investment from USA and Germany based investors in 2021, as compared to 13% in 2020.

The transportation and mobility sector in the MEA region has significant growth potential that can only be fully unleashed through supportive regulatory frameworks and infrastructure development, in parallel to technological advancements. With governmental support, smart mobility solutions will pave the way for a more connected, cost-effective and sustainable future across MEA.

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