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Marcopolis presents Kenya Report focused on topics such as investments, doing business, economy and regional integration, featuring interviews with Kenya's leaders. The sectors under review in this issue are agriculture, banking, energy, industry, telecom, IT, tourism, logistics and many more.
InterviewsDecember 02, 2021
Safe and Reliable Mobility in Kenya: Huib Van De Grijspaarde Presents Kibo Motorcycles
Huib Van De Grijspaarde, CEO of Kibo Africa
- Written by Sandra Francisco
- Published: December 02, 2021
Interview with Huib Van De Grijspaarde, CEO of Kibo Africa
What makes Kibo Africa stand out from the crowd?
What makes us stand out is that our products are designed for Africa. We spent two years doing field research in East Africa to understand what motorcycle users need in terms of their bikes and what came out of that is that it is mostly a utility vehicle. A motorcycle is an investment to generate revenue and generate a living. We all know about the motorcycle taxi industry across sub-Saharan Africa, but we do not focus on that, we sell a higher quality and more expensive bike. The long-term strategy will take us to more affordable products that will be accessible in the market. What stands out is the design of the bike. A very strong, long-lasting frame, big wheels, very tough tires, good suspension, and a lot of ground clearance. It translates into a vehicle that can be used on the road, off road, carry heavy payloads, is efficient in its fuel consumption and does not have high maintenance costs. Yes, the initial cash down is a little bit higher than what we call in Kenya the ‘mass market’ motorcycles, which are mostly imported from India and China, but once you own it, the operating costs are relatively low and the longevity of the product will help you earn back that investment over time.
What segment of the market are you mainly focused on?
What makes us stand out is that our products are designed for Africa. We spent two years doing field research in East Africa to understand what motorcycle users need in terms of their bikes.
The largest customer segment we have is individuals. They represent about 40% of our demand. Typically, they consist mainly of 50/50 expatriates. They buy our most expensive bikes and use them for off road, leisure riding, and sometimes for the daily commute to avoid traffic in Nairobi, but it is mostly a leisure thing for them. The other half are Kenyans who buy our more affordable bikes. They use them for the daily commute a lot, but also use them for practical purposes on weekends or after work hours to ferry goods and check up on their businesses. It is a very all-round type of use. They represent about 35% to 40% of our clientele. Larger corporate organizations such as G4S, use our bikes for courier and security services in Kenya. The national government buys our bikes mostly for donor funded projects in agriculture. On the County level, we sell bikes to water companies and such like. Wildlife conservancies, ranches, farms, and NGOs also buy our bikes. There is a good variety of customers. What is smaller at this point in time is the SME sector. Our bikes are probably still a little too expensive for most people who are doing startups and have small to medium sized enterprises. And the boda boda motorcycle taxi business, which represents roughly 90% of the total motorcycle market in Kenya, is still out of reach for our current products’ priceline.
Why doesn’t the expatriate segment of your customers opt for international brands of motorcycles?
The fact that Kibo is a Netherlands-Kenyan brand speaks to their imagination and for the most part we find that they are enthusiasts. They probably feel that at home they can still get a BMW, a Honda or any mainstream brand of bike, but when in Kenya, they probably want to try the Kibo thing. That is really nice because it creates an environment around the brand that helps us a lot and people have fun with the brand. And they are also ambassadors for us. It is something that is unique.
What edge does Kibo Kenya have that helps you to penetrate the market?
It has been tough. The first couple of years especially were very difficult because we were battling the big brands that were well established. That said, of our customer base, the expatriates are the easiest to convince because they come to us knowing what they want. When selling to organizations that have procurement officers who have to justify buying a Kibo bike over an established brand, it is a tougher job. The product has definitely done a large part of the convincing. In the beginning, we used to offer demo bikes for extensive periods of time to potential large fleet customers. We would give them a bike to use and talk to them on a regular basis, have them give us feedback and then make that part of our strategy. Talking on all levels within an organization is also important because there are the guys who ride the bike, the procurement department who have their own targets that they have to hit and then there is senior management. All of them have their own dynamics, their own interests and making sure that we have alignment across the different levels in the bigger organizations is very important.
One key thing that hampered our early growth was the positioning of Kibo against the other brands and our pricing. When looking at 2017 and 2018, the growth curve was not there, and we realized that about 10% to 15% discount on a Kibo bike in comparison to any of the main brands was not enough to convince people to try it out. Consequently, we re-engineered our entire supply chain to see how we could cut costs both on direct materials and logistics and how we could localize production for some of the parts so that we could cut out logistics and duties altogether. That helped us to reduce our total cost price of the motorcycle by almost 35% which we passed on to the customer in its entirety. Ever since we did that the brand has taken off. As much as you can talk, you have the product and you are a nice guy, the price is still very key, especially in this price-sensitive market.
Does playing on the ‘Made in Kenya’ angle help the business?
It is most definitely a plus although it is not unambiguous. There are also downsides to it. When people hear that something is made in Kenya, the average Kenyan person will think it is affordable. So, one of the things we deal with is people asking if the bike is made in Kenya, why is it so expensive? And when they think of made in Kenya, they think of how things are made. There is a Swahili word which literally means under the sun. Things are made under the sun and that is the perception. When talking about government and multi-national corporations, who increasingly also have social targets to hit whether it is environmental or on the human levels, it is appealing to them that we add a lot of value to the product here locally. The current administration in Kenya has on its political agenda the ‘Big Four’ and one of the pillars is local manufacturing. As a result of that, there is a policy that demands government institutions buy locally-assembled motor vehicles which includes motorcycles. That is great on paper, but as in a lot of African countries, implementation of laws is little more complicated. It does not always work but it does help. Overall, the Dutch-Kenyan combination gives us everything we had hoped for. The Dutch side gives us the credibility in terms of engineering, quality and a unique design.
Are you planning to expand internationally?
Part of our plan in 2022 is to expand into Tanzania and Uganda. It was important that first we were well established in Kenya and now when you ask someone in Kenya if they know anything about motorcycles, they know about Kibo. They put us in the same league as international brands from quality and pricing perspectives. We have a proof of concept and a viability of the business that we have established in Kenya before we start rolling it out in other countries. That is not just on the product level, but on the service level as well. When you want your customers to be happy with the product, you have to have good after sales services. Parts have to be available, and people need to know where to take their bike if it needs attention. That was part of the learning curve for us in the first few years in Kenya. Now that we have all of that in place, and there is always room for improvement, we are ready to grow in two other countries.
If you think in terms of a pyramid, the small peak at the top is the very height of the market for the big and heavy bikes that cost $10,000 and more. That is not us. Upwards from the $2,500 point we do not have anything. Knowing that 95% of the market sits between $700 and $1,600, from a growth strategy perspective it makes a lot of sense to come with a product that is priced at around $1,500 or $1,600. That would let us tap into 10% of the market which would be about tenfold of the market that we can do now. Geographic expansion, as well as expansion of the product offering, is next.
Are you looking for partnerships or joint venture capital investors?
For our geographic expansion into Tanzania and Uganda, yes, we are looking for distribution partners. Ideally, we are looking for partners who distribute products that have a synergy with ours or are complimentary to ours, so we do not compete. Motorcycle distributors can be a little bit tricky. When an organization already distributes motorcycles and they are the more affordable bikes for the motorcycle taxi industry, their clientele will not be part of our target market. And if they have products that fit our market segments then we are not complimentary anymore, we are competing. Products that do not compete with ours can be cars, motorcycle gear, equipment that security companies use or things that are used by courier companies. If there is an alignment with our own customer segments it works. We are open to having conversations with established brands that are in those countries and preferably in key towns.
What is your vision for electric bikes?
The next big introduction will be the more affordable Kibo motorcycle, and we are looking to develop it in a way that it can be made with both a combustion engine and an electric engine. The 4-stroke internal combustion engine model will be first and we plan to launch it in 2024. We plan an electric one for 2025. We are going in that order because when you look at the cost breakdown for an electric motorcycle right now, if you want a good quality battery that gives the power and the range that you are looking for, in the high-end bikes the battery makes up almost half of the cost. When that is translated into a motorbike that cannot cost more than $3,000 immediately you understand the problem. That means compromise must be made on either the capacity of the battery or the quality, which means the battery’s longevity. Neither is desirable for a brand like Kibo because we are a quality brand.
The developments in battery technology are happening rapidly. We saw with solar roughly 10 to 15 years ago that the early technology was not as reliable, very expensive and not efficient. The productivity of solar panels increased 50-fold in a few years, the cost came down tenfold and the reliability improved immensely. We expect something similar to happen in the battery technology field. We have an electric driving prototype in the Netherlands, which is a lot of fun to drive, but it has a range of 60 kilometers and was very expensive to make. We have learned a lot from it, and we are investing continuously and understanding more about the technologies that are available in the market. We are working on the new, more affordable product that we want to introduce in 2024 in a way that the setup can be modular so that even the chassis breaks down in different components and we can use the same main components, just change some of the smaller parts, to facilitate the batteries in the electric drive stream for the product that we want to launch in 2025.
ABOUT KIBO: In 2011, while traveling in Africa, Huib Van De Grijspaarde created Kibo bikes with the ambitious objective of providing safe and reliable mobility for everyone. The idea was to build a commercially viable bike designed with the East African terrain in mind. In 2017, Kibo launched the first bike designed in the Netherlands, assembled in Kenya: the Kibo K150. This became the first purpose-built workhorse built to help East African riders to pursue their dreams. This was later followed by the K160 and the K250 which introduced more power, more performance and a more robust experience for the discerning rider. Since then, Kibo has opened a number of retail centres and service centres across the country, giving Kibo riders one of the most reliable aftersales support in the industry.
For more information, please visit: https://kibo.bike.
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