Could this be the right time to invest in a boda boda business?

Jaluum Herberts

Many people have been asking me what I think about the boda boda business/industry as it stands now..

Should we sell our bodas with what's going on and what we are hearing or should we still hold them? Do you think the industry still has a meaningfully profitable future!?

I have personally been following what's going on in this industry.

Before Covid-19, we were planning a marketing campaign to create brand awareness and boda boda were part of our plan.

However we've had to hold our plans until we have clear clarity of what's going on and what's going to finally happen.

There's been some degree of uncertainty around the industry and this has led to many holding investment into the industry because uncertainty and investment aren't really the best of friends.

I also know some one who came from the USA and sold off over 50 bodas they had invested in.

This was partially because, according to them the industry was getting less and less profitable.The margins were dwindling.

Costs were increasing and revenues were reducing making the industry less and less profitable by the day.

The reason this is so, is because we have more and more people entering the business and this distabilises the balance of demand and supply which is a major factor in regards to pricing and hence profitability.

This happens with every newly born industry. We saw it with mobile money and now we are seeing it with boda boda business.

The more people enter into a business the more saturated the market becomes and less profitable it gets. Then in comes government and like Jack Ma loves to say, when government comes into something then know there's no longer money in it because government comes with regulations and taxes that further reduce the margins from doing a particular business.

For long, boda bodas have run with no or little government interference but by the look of things that may be no more. Government is looking to make sure they get their share of the business.

So if a boda guy would save say 30k daily now government will want 10K from that money. This is legally right because every one needs to pay a share of their incomes to government as taxes for the greater public good.

What happens is new industries take long before government intervenes because many policies need to be put in place to guide government intervention and this takes time giving early entrants into the business a lee-way to operate with minimal or no government intervention at all.

They are able to retain 100% of what they make from the business and running in whichever way they deem right.

Unfortunately it seems it's time up now as big brother seeks to intervene in way that will limit how boda bodas carry out their business. It won't be business as usual which is a good and bad thing depending on how and where you see it from haha..

In short what happened to the mobile money industry is going to happen to the boda boda business, that's more regulations and taxation. We shall also see more entries into the industry due to its low market entry requirements and high employment.

Those who entered the business early and made lots of money from it are lucky. Late entrants won't be that lucky and as the saying goes, late comers eat bones haha.The industry won't be as lucrative as it was 5 or 10 years ago.

For now all we know is there is a serious intention for government to come in.

Will everyone be forced to ride under boda companies where how much every rider makes can be tracked hence taxed or will riders be required to register and pay a flat rate (presumptive tax) regardless of how much they make!?

That's the debate in the corridors of power and until then we can't know what will happen.

We can only speculate something that creates uncertainty which isn't good to investment.

Jaluum Herberts Luwizza is a Speaker,Writer, Columnist with the C.E.O Magazine and Contributor with the Nile Post.He is also a Business Consultant with YOUNG TREP East Africa's No.1 Business Management and Consultancy firm that helps people start and grow profitable businesses.

twitter:jaluwizza

0700155232 | 0787555919 | whatsapp 0716223986.