Finnish electric taxi company grows in Kenya

16 December 2020

EkoRent, founded in 2014, was the first Finnish company to offer fully-electric cars for hire in Finland. The service was well received, but the limited opportunities for growth in Finland made moving the business activities abroad a more attractive prospect.

The company founder, Juha Suojanen, says that the idea to move business activities to Kenya arose when looking at the world’s megatrends and the problems associated with them.

“Large cities that are growing as fast as those in Africa need new solutions to reduce traffic jams and pollution. It occurred to us that replacing old diesel and petrol-engined taxis with emissionless electric taxis might be a good option.”

 

Finnpartnership’s seminar encouraged the move to Kenya

Three years ago, Suojanen took part in Finnpartnership’s Doing Business with Finland seminar in Nairobi. The conversations there supported the idea that Kenya would be the most natural place to begin business activities in Africa.

“The Kenyan economy is growing rapidly, and many Kenyans speak English. Kenya is also technologically aware and a forerunner in things like mobile payments. What’s more, if the company succeeds in Nairobi, it is in a good position to succeed elsewhere in East-Africa as well,” Suojanen explains.

In his view, the greatest challenge was financing the move. It took three years to collect the investments needed for the pilot project and gather the funds to launch business activities proper.

“When a Finnish startup wants to launch business activities in Kenya, investors don’t line up at the door. Having made countless pitches, I can tell you that the competition is fierce. It’s easier to get the funding when you’re starting business activities in a region that is more traditional and familiar for Finnish businesses.”

 

Africa’s largest electric taxi company

EkoRent founded a subsidiary in Kenya and started by testing the profitability of the concept with three electric cars. In 2019, the venture found a growth financer in the form of the German non-profit Atmosfair, which invests in renewable energy projects in developing countries.

“With this investment, we were able to buy more vehicles and raise the number in our fleet to 30. To my knowledge, we are now the largest fully-electric taxi company in Africa,” Suojanen says.

EkoRent’s NopeaRide service looks a lot like Uber’s ride service. The customer orders a ride on the mobile app and pays for the journey at the destination with either a mobile payment or in cash. In early December, EkoRent also launched the Nopea Xpress transport service that makes use of existing cars and charging stations.

“The new service offers additional earnings to Nopea drivers, particularly in conditions that disrupt markets, such as the coronavirus pandemic.”

According to Suojanen, the NopeaRide service offers rides at a competitive price. What’s more, drivers are also paid a fair wage and they no longer need to pay for fuel. Recently, the company also hired their first female driver, which is still rare in the Kenyan transport industry.

 

Interest in expanding to other locations in East-Africa

According to Suojanen, growth targets have been frozen during the pandemic, but the groundwork has been laid for future growth by developing functions and searching for new investors.

Particular attention has also been paid to staff training. EkoRent has received Business Partnership Support from Finnpartnership for this purpose.

“We wanted to make sure drivers got systematic training in things like efficient driving, proper use of charging stations and good customer service. This way, we ensure we get capable and motivated drivers.”

The training also covers the six-person team of the partnered electrical contractor, which is trained in installing charging stations and performing various maintenance-related tasks.

According to Suojanen, public support is necessary for small companies, but Finnpartnership’s involvement also increases the company’s credibility in the eyes of investors and other important actors. EkoRent also made use of Finnpartnership’s human rights consultancy, through which EkoRent received training from an external consultancy on the possible social and human rights impacts of their activities in Kenya. According to Suojanen, the resulting report that summarises the conversations had with the consultancy is a valuable tool for the project going forward and serves as a proof to investors that the various considerations around the project have been looked at from different perspectives.

Recently, EkoRent received important additional financing when the British company InfraCo Africa made a capital investment in the company. The investment company specialises in developing infrastructure and reducing poverty in developing countries.

“With this investment, we will be able to increase the number of vehicles we operate in Nairobi to one hundred by the end of next year. At the same time, we will be expanding our network of charging stations. Once the pandemic has eased up, we intend to gear the company towards growth once again. Our goal is to expand our activities into other large cities in East Africa in the coming years,” Suojanen says.

 

Picture: EkoRent