A Complete Guide to Start a Taxi Business in Africa

Africa has been going through continuous urbanisation in recent years, and it presents many opportunities for people who wish to start their own venture, one of which is the taxi business.

This is because the taxi business is one of the industries that is much needed in Africa.

For entrepreneurs looking for a business with minimal requirements but a significant demand, the taxi business is an excellent choice.

Want to know why? keep reading.

In this blog, we will explain why the taxi business is a lucrative venture in Africa and also offer a step-by-step guide on how you can start a taxi business on the African continent.

Why Taxi Business is a Good Idea in Africa

There are several reasons why Africa is a good place for a taxi business.

First, there are fewer personal cars in Africa than in other parts of the world, so people mostly rely on public transportation and taxis to get around. This creates a big demand for reliable and accessible taxi services.

Also, the cost of entry into the taxi business in Africa is relatively low. All you need is a car and a driver. You can even begin with just one vehicle. This makes it an easy and affordable option for new business owners.

Getting in and out of the taxi business is also comparatively simpler than in some other industries. If an entrepreneur wishes to stop operating, they can sell the vehicle and transition out of the business.
The relative ease of entry and exit makes the business attractive for those looking to try something new.

However, there are some challenges to consider. Some areas may have underdeveloped roads and infrastructure. This can make vehicle maintenance and ensuring passenger safety challenging.

Additionally, local laws and regulations can vary, so entrepreneurs need to be diligent about following them.

Overall, the high demand for taxis, low start-up costs, and easy exit process make starting a taxi business a good opportunity.

So, if entrepreneurs find out how to take advantage of these benefits and overcome the challenges, they can build a profitable business in Africa’s growing transportation market.

Types of Taxi Businesses in Africa

Regular taxi cabs are not your only option if you want to start a taxi business in Africa, as people in Africa use different types of taxis for commuting.

Here are some of the most common taxi businesses in Africa:

1. Traditional Taxi Services:

These are regular metered taxis that operate in major cities and towns, offering services that can be hailed on the street or booked through a central dispatch centre.

2. Minibus Taxis:

Also known as "matatus" in Kenya or "combis" in South Africa, these are shared taxis that operate on fixed routes. They are highly popular due to their affordability and accessibility.

3. Motorcycle Taxis:

Known as "boda bodas" in East Africa, motorcycle taxis are a common mode of transportation in urban areas, especially where traffic congestion is heavy.

4. Airport Taxis:

Many major airports in Africa have designated taxi services for passengers travelling to and from the airport. These services are often regulated with fixed fares and licensed drivers, providing a reliable option for travellers.

These types of taxis are the most common and widely used in Africa, making them good options for starting a taxi business. However, these aren't the only types available.

Water taxis are popular in coastal regions, and motorised tricycle taxis are favoured in urban areas as alternatives to regular taxis and motorcycles.

So, when you're starting your taxi business, find out what type of taxi service is in high demand in your location. This will help you decide on the best type of taxi business to start.

Steps to Start a Taxi Business in Africa

When you want to start a taxi business in any place, not just in Africa, there are a few steps you need to take to get it up. Let's find out what they are.

1. Performing Market Research
2. Creating a Business Plan
3. Registering the Business
4. Obtaining the Licenses and Insurance
5. Acquiring a Fleet of Vehicles
6. Hiring and Training Drivers
7. Marketing Your Business

Market Research For Your Taxi Business

Before you start your taxi business, you need to perform market research.

First, assess the demand and competition in your area. Then, find out what customers want. Also, check if there are any regulations you need to follow.

Look at the economic background of your target audience. Good research helps you understand the customers and stick to the guidelines.

By doing thorough market research, you can carry out the next step which will help you ensure the longevity of your business.

Crafting Your Business Plan

With the information you learned in the previous step, write down a clear and thorough business plan for your taxi business.

Set both short-term and long-term goals to guide your journey effectively.

A well-structured plan should include a concise business description, clear goals, thorough market analysis, and financial projections. These elements ensure you're well-prepared to navigate the complexities of managing a business.

When you have a solid business plan in hand, you can be poised to take the next step in officially launching your taxi business.

Registering Your Taxi Business in Africa

To legally operate a taxi business in Africa, you need to register with the Companies and Intellectual Property Commission (CIPC).

You can register your business under one of the following business types:

• Sole Proprietorship
• Partnership
• Private Company
• Closed Corporation (CC)

Each business type has its own implications for liability, ownership, and taxation, so choose the structure that best suits your business needs.

The cost of registration varies depending on the region and the chosen business type, and validity periods may differ accordingly. So, check with your state's website or local authorities for specific guidelines.

Permits and Insurance for Taxi Businesses in Africa

To operate legally, taxi businesses in Africa require specific permits and insurance coverage. These typically include:

• Public Operating License
• Public Driving Permit (PrDP)
• Permits from Local Municipalities

Insurance requirements also vary across regions but commonly include liability insurance to protect passengers and third parties, insurance for taxi vehicles, and employee insurance to cover drivers and other staff.

Check with local business personnel to find out the exact requirements for a license and insurance.

Building Your Taxi Fleet

When starting your taxi business, don't feel like you need lots of cars right away. Begin with what you have and expand gradually using your profits.

When choosing vehicles, pick ones that are reliable, fuel-efficient, and comfortable for passengers. Consider all the costs, like buying, maintaining, and insuring them.

While not mandatory, it's often better to use the same type of vehicles in your fleet. This makes things easier to manage in different situations.

Also, it's smart to buy new vehicles for your taxi business. While old vehicles are cheaper upfront, they often need more repairs.

New vehicles, with good maintenance, are more reliable in the long run for your taxi business.

Hiring and Training Taxi Drivers

When hiring drivers, aim for experienced ones whenever you can. They usually come with the needed licenses, and insurance, and know how to handle a difficult situation on the road.

For new drivers, give them thorough training. Teach them how to handle common challenges they might face while driving passengers or dealing with car issues.

Even though there aren't clear guidelines for these situations, preparing them with some basics to help them make smart decisions.

Marketing Your Taxi Business

Taxi businesses often rely on people hailing them on the street, so they don't need as much marketing effort as most businesses. Still, good marketing can help for another reason.

Taxis are also booked through dispatch services, where customers call the company to arrange pickups. These services usually cost more than street hires because of their convenience.

Here are a few marketing suggestions that may work especially well for a taxi business:

1. First, hand out coupons to customers that would help them avail of special discounts on their next ride. Include your contact information on the coupons.

2. So, when these people need a ride again, they will contact you to make use of the coupon.

3. Second, distribute flyers in busy places where people often need taxis, like airports, malls, and other crowded areas. This can generate immediate calls from potential customers.

4. Other than these, you can try partnerships with local businesses like mechanic shops, where people leave their cars and need a ride often. You could do the same with hotels as well.

5. Offers can help you get repeat customers, and eventually, you may even get word-of-mouth referrals.

How To Improve Your Taxi Service with Technology?

Once you spend more time running the business, you’ll surely want to grow your taxi business and take it to the next level. Here’s one way you can do that.

As we mentioned in the previous section, the taxi business mostly works on street hires, yet it also works by serving people who contact them for pick-up and drop-off, and these types even pay more.

So to make it easier for people to book the taxi service, you can facilitate the use of a digital platform like a mobile app.

The Benefits of Having a Mobile App for Your Taxi Business

Uber and Bolt are popular ride-sharing platforms in Africa, and there’s one major reason for their success—the convenience of their apps.

If you can offer similar convenience through your service, you too can aim for significant growth in your business.

To achieve this, there are two options you can try:

1. Build a custom app that supports your traditional taxi business/revenue model.
2. Adopt the existing ride-sharing model and generate revenue through platform commissions.

You can choose the option that is more suitable for your business goals.

Now, let’s see how you can develop a taxi-booking app for both of these business models.

Custom Development

The first option, suitable for both business models, is custom development.

In this approach, you define the app's requirements, hire a development firm, and build the app from scratch, where you incorporate all the features and functionalities you need.

The process involves:

1. Wireframing: Creating a basic visual guide to outline the structure and layout of the platform.
2. Designing: Adding visual elements, such as colors and images, to the wireframe, creating an appealing user interface.
3. Developing: Coding and building the app’s functional aspects based on the design.
4. Testing: Checking for bugs and other issues to ensure the platform works properly.

As you can see, this is an extensive process that requires a significant investment of both time and money, but in the end, the app will have exactly what you wanted.

That’s one way to build your app for either business model. However, if you choose to adopt the ridesharing model, there’s another option—a ready-made app solution.

Readymade App Solution

A readymade app solution is a pre-built app that includes essential features for a business app.

Many providers offer these readymade app solutions for businesses that follow the ride-sharing business model, and allow you to quickly enter the market.

When you choose a readymade app solution, the process involves:

• Purchasing the readymade app solution.
• Rebranding the app to reflect your brand, typically at no additional cost.
• Customizing for unique features (if needed).
• Getting your app live and operational quickly.

As you can see, there is a significant difference between custom development and readymade app solutions.

Readymade solutions are also cost-effective and faster to launch due to their pre-developed nature.

Now you know the two options for building your app. You can decide how you build it according to your own requirements and budget.

If you happen to decide on a ready-made app solution, you can take a look at our taxi-booking app solution.

With our solution, you'll get:

• Android and iOS apps for both riders and drivers.
• Admin panel to help you manage the platform.
• Free tech support, which covers white-labeling, server installation, app launch, and support following app rejection.
• 100% source code, so you may change its functionality if necessary.

Differences In Running Taxi Business Across African Countries

Many people wonder if there are any differences between starting a taxi business across African countries, and the answer is yes; there are a few.

Earlier in the blog, we mentioned that the legal requirements, like licenses and permits, you need to operate a taxi business vary from one region to another.

Another aspect that changes apart from the legalities, is the type of vehicle used for taxi services.

In some African countries, larger vehicles, such as minivans or SUVs, are commonly used for taxi services, while in others, smaller sedans or hatchbacks may be preferred.

Even with regular cars, some countries have specific types of cars that are commonly used as taxis.

For example:

• In Nigeria, the common taxi car is the Toyota Corolla.
• In Ghana and Cameroon, it is the Toyota Yaris.
• In Kenya, the Toyota RAV4 is popular for taxi services.

This variation doesn't stop with the type of car; the colour of the taxi also matters. For example:

• In Ghana, taxis are orange.
• In Cameroon, they are yellow.
• In South Africa, taxis are typically white.
• In the Ivory Coast, they are green.

Each region has its own designated colour for taxis, so make sure you get the right type of car and paint it the appropriate colour.

Conclusion

To summarize what we saw, the taxi industry in Africa has great growth potential. You don’t need a large fleet to get started—begin with a few cars and expand over time.

Whether you operate with the traditional model or choose to work with the ridesharing model, you can get a foothold in the taxi industry if you approach the business thoughtfully and with the right strategies.