Value-Innovation in West Africa

December 9, 2013

Yesterday, instead of taking a 30 minute flight between Accra, Ghana and Lome, Togo, for a client meeting, I decided to take a chartered cab between the 2 West African cities, a 3.5 hour (170 mile) drive. I asked the cab driver how much the trip will cost, he said 80 Ghana Cedis ($40, N6500) to my utter amazement as I was expecting a price of at least 200 Ghana Cedis. I didn’t argue or bargain with him as I thought he will not make a decent margin from taking only me in a nice air conditioned car from Accra to Lome in traffic for just 80 Ghana Cedis!!!!.

2 hours into our journey, I noticed that his gas (petrol) gauge had not moved an inch from the half way mark it was at when we started our journey (nothing unusual with West Africa cabs)… still puzzled on his margins, I said nothing…30 minutes later, the driver pulls into a gas station and signaled the gas station attendant to fill him up (there goes his margin I thought to myself)…till I took a closer look at where we were, it was a Liquefied Petroleum Gas (LPG) station (natural gas) and the attendant was filling the cab with LPG. I got out of the cab and realized that the entire station was an LPG station and each car/cab had modified their gasoline tanks to run on both LPG and Petrol, by simply flipping a switch on the dashboard of the vehicle.

The cab driver said he modified his car to run on both LPG and Gasoline, which is the only way he can keep his fuel costs (gasoline subsidies in Ghana are very low) low, charge a decent price for the journey and still offer passengers the comfort of a nice air-conditioned car for the journey for just 80 Ghana Cedis ($40) as opposed to 200 Ghana Cedis ($100). I was pleased with what I saw…a classic case of value innovation in West Africa.

Karl Omatsola, March 2013

Comments are closed.