October 26, 2021
mygarage.africa is digitising how commercial transport vehicles are leased in Nigeria
Over the past few years, tech solutions such as ride-hailing, carsharing, and
vehicles-on-demand have helped to address
some problems created by rapid urbanisation in Nigeria’s
transportation sector. However, fundamental problems remain
in the commercial transport vehicle leasing market.
In Nigeria, owning a vehicle is a luxury that many can’t afford. Hence,
the majority of taxis and danfo—the privately run yellow and white mini
buses that serve as unofficial public transport in Nigerian cities—are
leased to drivers, who have to deliver rental fees to the owners either
daily, weekly or monthly.
Inefficiencies within the largely informal space allow for fraudulent activities, from drivers
defaulting on agreed payments to dubious investors leasing out unroadworthy vehicles.
mygarage.africa is an online platform tackling these challenges by digitising the
entire value chain in this market, from the way owners and verified drivers connect,
to how the vehicles are maintained and rental fees collected.
Typically, the average Nigerian wanting to go into the commercial transport vehicle
leasing business would rely on the recommendation of close acquaintances
and without any form of guarantee on rental fees to be paid.
“Most times it’s based on only trust and drivers that get the vehicles often
come up with excuses for why they can’t pay despite your agreement,”
mygarage.africa co-founder Sylvester Chude told TechCabal.
“We’ve seen an incident where a driver claimed his mother
died on two occasions just to avoid paying the owner.”
How mygarage.africa works
mygarage.africa was created by Envio, a mobility-focused software-as-a-service
(SaaS) startup founded by Chude, along with three other co-founders,
in 2018. Launched in Abuja last October, the digital platform allows
owners to create virtual garages to list vehicles for commercial rent
or vehicle finance lease and connect with verified drivers.
A telemetry device—designed by Envio, leased to car owners, and installed
by partner tracking companies—is fixed in the cars to generate data on the
maintenance and roadworthiness of the vehicles while in use. Periodically,
owners get automated reports on the inspections from support partners via
a mobile application.
In addition, mygarage.africa has a billing gateway that guarantees rental fees.
The system alerts the driver ahead of the agreed date for the next rental
fee to be paid. If a driver defaults on the payment, the telemetry device
disables the car engine and prompts the owner. But as soon as payment is
made, the engine is restored. Envio makes money by charging a platform
fee every time a car owner gets paid.
“Insurance can cover theft but won’t cover default on rental fees
or misuse of the vehicle by the driver.
What we’re bringing to the table is discipline, keeping drivers on
their toes and preventing investors from losses,” Chude said.
Before Envio, CEO Chude spent nine
years as managing director at CoTrac, one of Nigeria’s
largest vehicle tracking device makers.
Chude’s work at CoTrac opened his eyes to the possibilities
of developing home-grown vehicle monitoring solutions,
including the use of local servers and the manufacturing of tracking equipment.
But why start Envio, when there are several vehicle tracking devices flooding
the Nigerian market? Chude believes that while these products
have their entry points into the market, they do not fully capture
the entire needs of car owners and drivers like mygarage.africa.
“These days, vehicles have advanced computer systems from which
we can source data on their health. With that data, our advanced
system can shut down the vehicle or fine a driver if, for instance,
he drives against traffic or his license has expired,” he explained.
Expansion to Lagos and beyond
Having gained popularity in Nigeria’s capital city,
with the Envio device installed in over 1,000 vehicles so far,
mygarage.africa is launching in Lagos, the country’s commercial hub,
this month ahead of a planned nationwide and pan-African expansion.
“We’re very ambitious because what happens in Nigeria most likely
happens in other countries in Africa.
The majority of cars used for public transport aren’t
owned by the drivers,” Chude said.
However, in the way of mygarage.africa’s growth are significant
challenges. For one, Envio has had to grapple with the costs
associated with being a pioneer in the commercial mobility-focused
SaaS space in Nigeria. According to the CEO, the company is
currently raising $1 million to improve its technology and
inventory, due to the huge size of the addressable market.
“Considering we’re starting the journey in Africa,
it’s expensive for us as we make some mistakes but
eventually learn from them,” he said. “We’re currently raising,
and need to have as many of these devices as possible to give
out to many car owners.”
Being able to convince Nigerians to adopt the solution has also proved to be difficult.
This, according to Chude, is because it’s new and even harder for those
who have had a bad experience in the commercial transport vehicle leasing business.
A lot of consumer education is needed.
Regardless, Timothy Nunu, an early investor in Envio and co-founder, is upbeat
about the company’s prospects.
“This is a home-grown solution to a local problem, but it’s software and adaptable to several other markets.
We have very good traction, a clear revenue model, and the problem being solved is obvious.”
Timothy Nunu has more than a decade of professional experience that cuts across
the energy and financial services industries. He worked at some of the world’s
leading investment banks, including Morgan Stanley, Citi, and Barclays Capital
before moving on to found Timproxy, a Lagos-based energy company with a focus
on oil and gas, marine, and power industries.
Why the decision to pivot into the startup space, invest in Envio,
and even go on to oversee the startup’s strategy and operations?
The co-founder believes that Nigeria’s transport vehicle leasing business
promises a high and viable return on investment (ROI) for investors
willing to bet against the risks present within the sector and his
experience in other areas apart from technology has helped in building Envio.
“The only problem in the sector is the risk and our technology reduces
that exposure significantly,” he said. “In addition to the technology,
however, a lot goes into formulating strategy. There are issues of supply
chain and logistics, procurement, quality management, and other areas in
which I have experience and help the team with.”
Beyond serving individual drivers and car owners, Envio sees real growth
opportunities in working with transport unions, taxi aggregators, and
e-hailing startups such as Uber and Bolt. These can offer the
mygarage.africa technology on lease to car owners en masse while
platform fees will be shared between all parties.
“Taxi businesses and e-hailing can’t reach full potential
if downstream issues like fraudulent deals in car leasing
aren’t addressed. Our accelerated growth depends on
how many of these business partners we can work with,”
Chude said, likening his company to Microsoft that
provides software for laptops to function.
“We’re trying to create a standard, check fraud, bring
accountability and transparency in this space,” Nunu adds.
“It’s not just about flooding the roads with cars.
The quality of people that will drive them matters
and our system checks both the drivers and everyone in the system.”
Author: Michael Ajifowoke