May 2021 –
Sir Torquil (who founded the Global Vehicle Trust) had many ideas, one of which was to develop a truck suitable for emerging markets i.e. suitable for bad roads, easy to maintain, cheap etc.
After designing and even building 4 diesel prototypes with the help of Prof. Gordon Murray (the designer of the McLauren F1). he went to automobile OEMs of the likes of Land Rover. They presented their design and suggested the use-case of providing it to the market of people who don’t currently use transport methods. But none of these OEMs were interested.
Then last year, there was a new trustee who came on board, who was an automotive expert for EY. Plus Simon Davis, the current General Manager and said: ‘forget diesel, now is time for the electric power train. Oh, and forget selling the truck, we’re going to own and operate them, wherever we are.
And this is where the idea of “electric mobility as a service” came in.
Earlier last year there were only two employees. I started helping them in May/June of last year while I was doing my dissertation. The key topic of my dissertation was: ‘How do how can somebody like a social entrepreneur from a developed market bring their innovation into a developing market’. So, I anchored my dissertation around the OX truck.
#registration #institutions We initially wanted to set up a subsidiary company in Rwanda, but we had some Covid-related delays on our side in the UK in terms of getting the documentation. So I worked closely with the Rwanda Development Board (RDB) and the Registrar General of the Notary public and they advised on what documents we could use and how to overcome the Covid problems in the UK to get the documents signed by all the relevant parties. They were really helpful.
Last year, we raised £ 1.2 million in grants and £ 350K in seed investment.
This investment was supposed to get the wheels turning on the first Electrical OX and put somebody into an emerging market to figure out what the business case would look like on the ground: figure out the income model, the go-to-market strategy, how to get paid, how to keep drivers safe. It’s also important to uncover what the price points are because when working in rural areas there’s often a cap as to how much people can pay for transport.
So, it’s an interesting case, in that you have a cap and then you have to engineer your costs based on that.
For us, the idea is not that we’re solely impact-focused or solely profit-focused. We have a triple bottom line for OX: the people, the profit, and the planet.
#insights #collectingMarketData
Honestly, they all happened at the same time.
In terms of the technology, it’s the first time we put a battery-electric truck into an area which doesn’t really have the charging infrastructure, the high-voltage, or even the local expertise. So, we have to develop a lot of it.
Plus, a lot of the time when you take a new product to market, you have to look for where the gaps are and try to find your niche. Oftentimes, however, there isn’t much data out there. Whether it’s Rwanda, elsewhere in sub-Saharan Africa, or other Emerging Markets. There’s not much data as to “who, what, when, how much” etc.
So, in order to be able to place an electric truck in a market, you need to understand the market, and for that, you need to be in the market. My own experience is that if you came in for a month and then left, you wouldn’t engender any trust. You wouldn’t get to know what people are doing in rural communities. So, you have to come and stay.With developed markets you can get a lot of data, with developing ones it’s much harder.
In our case, the electric OX has informed our business model by limiting the range of transportation that it can currently provide to about 120 km. So, we asked: ‘What transportation needs can we cater for up to 120km from this depot, or what can we do in a radius of “X”’.
And then again, having a depot there and physically having employees is crucial to uncovering what the market is like in these rural areas across different seasons, harvests, value chains, climates etc. All of this information then is invaluable in feeding back into the engineering of the OX.
For example, the Rwandan topography is a challenge for an electric truck. Especially for an electric truck carrying 2 tons… You have to go up the hill, in the rain, in the mud etc.
So, we also have trackers on the trucks that are uncovering what the typical drive cycle looks like. For example, thanks to these trackers, we realised that a typical day is about 84 km. This means that with a topography that’s roughly representative of Rwanda (taking into account that we’ve been operating in the rainy season) we get to understand the traction and how much fuel we’re using (which we can then translate into electrical energy).
Then through the depo, we can also understand things about the availability of electricity or how clean the supply is.
So, part of the role of the depot is also to uncover elements of the business model.
#collectingMarketData #startingStrategy
We currently operate 3 conventional diesel trucks in Rwanda.
In my first two months here I tried to find an “anchor customer”. A customer that I could anchor demand around. I eventually found that anchor customer in the Rwanda Trading Company (RTC).
We’re currently serving 4 of their coffee washing stations doing the “first-mile” pick up along the coffee value chain. Taking it from the customers’ site collection points and on to the washing stations. This process takes up between 3 p.m. and about midnight.
Our drivers – which we call “Drivers Plus” because they also do some of the business development, they help us get paid, they do the dispatching, the mechanics etc. – are really entrepreneurial people. Their job is to look out for work in the mornings and uncover what the local demand looks like.
So, again it’s a case of the business case informing the truck and the truck informing the business case. Which is something you can do with anything.
Now we’re getting a Foosa because there is demand for larger quantities of 10 tons.
Right now, I’m looking at the parallel cash flow. Looking at the daily revenue from each truck, the costs of the depo (i.e. employees, salaries, rent, electricity, water, internet – which is a big one) and then it comes down to gross-profit level. Then, we also have the net profit which factors in the cost of the truck and the fuel.
Then if we consider that we’re running with a Toyota Dina (diesel truck), and estimate the cost cuts incurred when using the electric OX instead, our bottom line looks positive: The moment we’ll have introduced the electric OX we’ll be profitable.
#insights
Back in early 2020, we were looking into how best to place this truck in the market. We talked to a consultancy, that one of our trustees knew, and they recommended a few options including Rwanda, Kenya, and a couple of other countries too. Then we looked into it in more depth with some of my colleagues and Rwanda seemed to make sense.
Though Rwanda is tough with topography, it has the advantage of being stable with climate. Since we’re running batteries and charging infrastructure temperature was quite key. So, despite testing the drive cycles in difficult topography, mud roads, rain etc at least that means that we could keep the temperature constant for now. Later on, we’ll have to figure out how to better cool the batteries for when the truck operates in warmer climates.
#institutions
Another crucial point in choosing Rwanda was its ease of doing business. Rwanda is famously a great market for proof of concept and prototyping. Companies like Zipline or Ampersand are a great demonstration of Rwanda’s enabling environment.
For us, this has been proved out in retrospect too.
#institutionsI honestly can’t think of another country where 7 months in we’d have a company, we’d have bank accounts, I’d be working here with a decent visa, we’d have 5 employees, we’d have leased trucks, and we’d be running around making money and paying taxes. Where else can you do this in 7 months? Rwanda’s enabling institutions are really what allow this.
In terms of the service they offer, the RDB is far better than other countries’ equivalent services that I know.
#importExport
At the moment, we’re 14 engineers and two-and-a-half business people. Soon we’ll be raising a Series A to hire more people, and this will allow us to look into the different options.
We’ve had a team of students from Warwick University (the university where I did my MBA) looking into options for us and recommending where we could go next. They looked into the various markets and the different value chains, the local availability of transport, etc and they suggested countries like Uganda, Kenya, and Tanzania. I’ve been looking into Zambia as well.
For instance, one of the things we do at OX is flat packing the vehicles, shipping them flat-packed into containers and then having them assembled on the continent. So, I think the location of the assembly – the “micro-factory” – will remain here in Rwanda and then we’ll just be exporting the assembled trucks to the different East African countries.But the idea is to always have Rwanda as the hub for East Africa.
#importExport #collectingMarketData
Our objective for the moment is to put 150 trucks in Rwanda by next year. From there we want to double production to 320 in 2020, and then double each year from there. We’re aware that demand in Rwanda may not absorb these trucks. If that’s the case, we’ll turn to other countries.
From our market research, we’re quite certain that there is a demand in those countries. But we’d still need to figure out what this demand will look like, including what will be the typical drive-cycles and things like that.
We’ve already had some inbound queries, including a company in Kenya which is looking to buy 50 trucks to do their last-mile delivery. If we can figure out a business model, where they buy the trucks and then they give us an operating contract this could be one way to enter that foreign market. Alternatively, we’ll probably follow a similar strategy by first deploying some pilots to other countries.
#institutions
The challenge, of course, is that Rwanda’s enabling environment – the institutions that have been helping us – do not necessarily exist in other countries.
#collectingMarketData
A lot of it has been done by these students at Warwick University, some of it has been from conversations I’ve had, and there’s also been a lot of organisations based around e-mobility in East Africa, from which to source info.
People might for instance flag up funding opportunities or various government incentives such as the one that came out recently in Rwanda for electrical vehicles. In fact, this new incentive was the result of a concerted effort by all of the e-mobility companies in Rwanda working together, and OX will no doubt be benefiting from it. Hopefully, as we expand into the market, we will in turn be able to have an active role in supporting this whole ecosystem.
We’ll be bringing our first truck at the end of June. This one will be diesel still, but it’ll be loaded up with sensors and trackers, and it will share the same platform as the electric truck, so the chassis is similar, if not exactly the same. This will allow us to collect a lot of ground data.EBCR has been invaluable to OX in terms of contacts, and webinars where I’ve learned a lot about e.g. how to pay taxes in Rwanda. But also I’ve had people reaching out to me by virtue of being on the members’ WhatsApp group chat. So EBCR has been fantastic.
#importExport #insights
One of the issues that we faced was that with our 4 diesel prototypes the steering wheels are in the centre. In Rwanda, the law says that when you import a vehicle it has to be left-hand-drive. (Unless it’s over 20 tons, or foreign-registered and simply crossing the country). So, I’m working with institutions such as the Ministry of Infrastructure (Under the Department of Transport) as well as, working with the minister of ICT and innovation to get this truck registered as a proof-of-concept under a “regulatory sandbox”.
Since the government has made it clear that e-mobility is a priority, and since having our truck here to inform how to best engineer our electric trucks, this is the kind of project that finds support within the government.
So at the moment, we have 4 weeks to get this exemption through before the truck arrives in Rwanda.
#importExport
I think it costs US$ 3,000 for a full container coming from Mombasa (1,468 km). Later on, when we have six (since we pack six trucks into a 40-ft container). It’ll be a shared-road transport cost, boiling down to about US$ 500 per truck, which is okay. But it’s kind of funny how it works at the moment. It seems like you get charged for the two-way trip: Mombasa – Kigali and return.
Hopefully, as Rwanda starts exporting more and more, this will drive the prices down. At the moment we’ve teamed up with a new company on the scene called Seafast Africa Logistics. **We started talking to them because they’re getting involved in the cold chain in Rwanda. This is also something that we’re looking to start because it’s something that’s been identified as a strategic priority to reduce agricultural food waste.
So, while talking to them, we mentioned, that we have trucks that are going to be coming into the country and they said to count on them for the logistics.
#institutions
The RDB has been very helpful.
In the beginning, we also benefited from a UK FCDO programme (Foreign Commonwealth Development Office – the UK foreign office essentially) calledManufacturing Africa. This programme offers support to British companies looking to export to and manufacture in the African continent. They were the ones that gave us a great introduction to the manufacturing team at the RDB. They also were one of the first people that I met when I arrived here in October last year.
All throughout the journey of developing the business plan, running the pilot, as well as engineering the OX, the manufacturing team has been great at keeping up to date with what we’re doing. Occasionally even proactively ask how they can help.
They, for instance, introduced us to the Director-General for Transport at the Ministry of Infrastructure, which was fantastic, as well as a whole lot of other government entities, including the Agricultural Export Board.
Then, Kigali is a small town as well. So, after some months of being here, for example with the Ministry of ICT & Innovation, you make some personal contacts who want to help too. So, a lot of people have been stepping up to help us.
#registration #importExport
OX Rwanda is 100% owned by the UK holding company. We will continue this model for the other countries too i.e. OX Uganda, OX Kenya etc. (Unless we enter into joint ventures in those countries of course.)
#investing
So our investors actually invest in the UK holding company and the holding company has given a couple of shareholder loans to OX Rwanda. This seem to be the most efficient way to get your money back as a foreign investor.
#immigration
When coming to Rwanda with my wife who’s Egyptian, it was great to see that everyone is equal on arrival. Everybody gets a 30-day entry visa, whether you’re British, Egyptian or from wherever. I think this is a very forward-thinking open policy which is great to see.
When I first arrived I applied for a 3-month prospective investor visa. I applied through Irembo (the department of immigration‘s digital portal) which is a really good and straightforward service. The application process was very easy. Everything is very well laid out.
Then later, the delays we had in setting up the company meant that I had to apply for an extension on my prospective investor visa. But there were no problems with that at all.
At the same time, we applied for my wife’s 3-month tourist visa, through Irembo. Again, no problems at all. And then as soon as OX Rwanda was incorporated as a 100% subsidiary of the UK company, I was made Managing Director of OX Rwanda, and so I applied for a work permit – again, through the Irembo portal. Within maybe three hours of pressing “submit”, I had a call from the department of immigration asking for some clarifications, following which I was granted an 18-month multiple-entry residence permit.
I’ve applied for working visas in countries like Egypt, India and Ghana, and this was by far the easiest it’s ever been.
#immigration
My wife will probably be here about 6 months a year so we’ll apply for a dependent visa. A lot of people I’ve talked to said that dependent visas are not a problem. I don’t see why it wouldn’t work as long as you’ve got the paperwork. I know a lot of people here that have done the same.
#immigration #insights #hr
OX Rwanda has big plans: 150 trucks next year across 50 depots situated across the countryside. This means we have a lot of hiring to do, a lot of negotiations to be done with people like Rwanda Energy Group (REG), for energy access, renewable energy companies (to hopefully partially or fully charge depots with solar, perhaps even hydro-power).
One thing that we’ve done is to identify somebody who could build up those depos and build up their capacity. This American gentleman (Sam) who’s been here for 18 years. His talents lie in forming these teams and then promoting from within.
There’s been a couple of times where he started local companies here and then exited out as managing director to a Rwandese. This was the kind of person that I needed: somebody who could be a force multiplier to our recruitment efforts. Likely he’s agreed to come on board. In an ideal world, he would continue this work.
My own focus will be looking into the corporate finances: figuring out OX Rwanda’s pay-back strategy, leasing costs, amortisation schedule etc.
So, likely, with OX – so long as I have a person here to do the grown work (i.e. Sam) – I’m in a position where I can work from Rwanda, Egypt, or even from the UK.I’ve applied for working visas in countries like Egypt, India and Ghana, and this was by far the easiest it’s ever been.
#hr
This was mainly done by Sam. I think he posted the adverts for “Driver Plus” jobs on RwandaJob.com.
Within a month we had about 855 applicants. At that point, we didn’t yet know where the depo would be so it was mentioned in the ad that accommodation, meals, and transport back and forth would be covered – and that is the kind of working environment we’ll be looking to offer in general.
From the 855 applicants, I think we interviewed about 30 – 40.
Unfortunately, we only had 4 female applicants. We interviewed all of them, but it didn’t work out. (Though I think one of the ladies that we interviewed will become an admin as soon as we start building up our admin team).
We have plans for the next depo – which is likely to be in Nyamagabe – to be fully staffed by women, including female Driver’s Plus.
Overall, we’re aiming to get a 50/50 gender ratio across drivers, mechanics, assembly engineers and admin staff. To help us achieve that, within the 2 to 3 months before opening the next depo we will ask the women that we’ve hired to work with our current Drivers Plus in Nyamasheke so that they get to know the systems, the processes and so that they get comfortable with the trucks.
So, for the hiring, we haven’t gone through a recruitment agency. Our main person of support has been Sam. Sam had used RwandaJobs.com before and he’d hired for numerous companies in Rwanda like that.
#tax
Sam has also helped us in terms of figuring out taxes, etc. It was important for me, having arrived in Rwanda 7 months ago, to have someone who I could quickly get on board, and Sam was the perfect person for that.
#hr
We’ve been lucky in that we’ve hired incredibly good Drivers Plus, who has helped a lot with communication. So, when we’re out in the countryside the languages spoken are generally English, French, Kinyarwanda or Kiswahili. So we work with the Drivers Plus when we’re talking to customers on the ground. They also generally help resolve problems themselves and they find new business themselves too.
Looking ahead there is a clear path for our Drivers Plus to become depo managers and district managers. So, looking into the future, there will be a considerable amount of effort put into uplifting our employees to get them to run the company.
#hr
No, we’re mainly looking to hire Rwandese. We may bring one or two engineers from the UK from those who’ve been working on the trucks to do some training. We might also bring some people with expertise in high voltage equipment for the assembly line – but these will all be temporary roles.
For the digital ecosystem around the trucks (tracking, placing orders, remotely cooling the batteries etc), I’m currently hiring for a Digital Product Owner role in Rwanda to govern this. So far, I’ve had some people reaching out to some potential candidates in Rwanda, but I’m also going through a recruitment agency in Nairobi that was recommended to us by contact because this is a really key role for us. I’m spreading my bets a little to find the right person because this is quite a specialist role. They need to have experience with managing dispersed teams, using agile and begin comfortable collaborating with our team in the UK, collaborating with our contracted Rwandese developers, but also our Drivers Plus here in Rwanda.
With this kind of job description, it would be hard to find the right person anywhere in the world, not just in Rwanda.
In fact, it may be more useful to have somebody who has experience internationalizing digital products from the get-go, so that we can design the architecture of the product with that in mind.It would feel nice to find a Rwandese person at the moment, but of course we’re expanding into East Africa in the next couple of years so we’re kind of agnostic as to the nationality.
We have a really good CTO in the UK, and we have the Rwandan developers here, so I took their advice on how best to approach this. It’s an iterative process. We’re going to hopefully hire the Digital Product Owner by August, maybe September.
#hr
They are excellent.
We actually started off with a discovery phase to figure out what the digital solution would look like. This discovery phase involved interviewing various stakeholders and users along the value chain. Then they helped us define a scope for the trial and then they’ve helped us iteratively develop an MVP.
#IP & trademark
We have a bunch of patents, yes, but we don’t yet have patents in Rwanda. I reached out to the Registrar General saying that we’ll be registering some IPs in Rwanda quite soon. I’ve had a look online, it seems like it’s pretty straightforward. I think you can get an IP registration for EAC through the RDB. It didn’t seem too complicated and the pricing seemed fair. I have faith in the RDB to help me through this.
#insights
Lucky, in the near future, because of the new investment incentives, all the truck’s supporting infrastructure, like the spare parts, charging infrastructure, as well as batteries, etc will all be duty-free and VAT free. So, there is a very clear legal framework through which OX Rwanda will be able to import the vast majority of these.
#accounting
We’ve found our current accountants through a recommendation from people who have worked with them in the past.
One of our first hires, post-series A, will be a CFO for the UK holding company. We want to be sure to have somebody with experience in international finance and cross-border transactions as well as tax efficiency and IP agreements.Banking and accountancy have been two important errors that we’ve learn to pay attention to.
Until recently we’d hired an external accounting consultancy on a monthly retainer. But one of the employees who were really good there has moved, so we decided to move with her to the other accounting firm she joined.
#collectingMarketData
A lot of it comes through informal communication and the e-mobility network. EBCR is helpful – especially the Members’ WhatsApp group.
#institutions
The RDB Manufacturing team has reached out a couple of times as well, saying to be ‘aware of “X”‘, or ‘this is coming up. The Director of Transport at RURA (the utilities regulatory authority), has been helpful, particularly for things like the regulatory sandbox that OX will use to run the pilot.
As a general rule, you can find a lot of the laws online.The New Times and various publications also often publicise them.
Our accountants have also flagged up a couple of things along the way.
In the short term, it would probably be about getting the digital platform right.
For example, we’re looking into using a USSD solution whereby, people can dial a code on their phone and order a ride. But when they do, we also need to be sure that we have the capacity to deliver. So, the digital solution has to scale with us.
Monitoring everything as well as keeping our Drivers Plus safe, and working out how best we can serve customers, is probably going to be the most interesting challenge.
In terms of expanding out into Rwanda and building more depos, I think we’ll follow the same formula with the anchor customers, for the first 3 months (for example with coffee harvests) and then progressively expand into different value chains.
In terms of the truck, we have a really good engineering team in the UK, and sooner or later we’re going to look to localise more manufacturing in Rwanda. There’s no point in sending a steal from the UK to Rwanda. So the interesting challenge here will be to source the materials as well as the required expertise.
#importExport
Then in the medium-to-longer term, I guess it’ll be about maintaining a really good corporate culture as we expand into new markets. The reason why I think that this has been so successful so far is the culture that we’ve been building up since October which is based on trust as well as self-reliance.