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Uber comes to Africa

Uber comes to Africa

Uber, the mobile app-based taxi-calling service, has taken the world by storm, gaining praise and hostility in equal measure. Wherever the service has been introduced, demand by passengers has been heavy but hostility from other taxi systems and even local governments has been fierce. Is Uber set to reign supreme in the taxi business? Gabriella Mulligan has been finding out.

With its most recent valuation weighing it at $18bn, taxi-hailing mobile app, Uber, is gaining a reputation not only for its popularity among investors, but also for its aggressive expansion strategy.

Africa has not been left out, with uptake strong in South Africa and Nigeria, while other African countries eagerly await the arrival of the disruptive tech-based transport solution.

Uber launched in Africa in 2012, beginning with Johannesburg before quickly expanding to Cape Town and Durban; followed by a launch in Lagos, Nigeria, in 2014. The company is currently working on rolling out a service in Nairobi, Kenya. Not a conventional taxi company, Uber is a technology solution which connects passengers to the Uber-registered drivers nearest to their pick-up location, in real time, via their smartphone. Uber feels it is disrupting the transport segment globally, but in Africa specifically, the company believes there is a huge opportunity for the flexible, reliable service offering multiple price points – the higher-end UberBLACK service running alongside the cheaper uberX service.

“We are changing the way people think about getting around, we are changing the way people connect with the people in their cities,” an Uber spokesperson said.

“Since launching in Africa, the uptake has been incredible in all cities we are currently present. In a short space of time, we’re are doing thousands of trips per week, with hundreds of drivers on our system,” Uber said.

“Launching uberX has also added another price point to customers, making Uber more accessible to the people. UberX is changing the way that people move around their cities and is providing riders with a safe, reliable and convenient transport solution in their cities, replacing the need for car ownership.”

According to Uber, the company’s role in Africa is not only to improve the transportation ecosystem, but also supports economic growth – particularly that of small businesses – by empowering drivers.

“In Africa, we have partnered with a significant number of drivers and provided them with the tools to build their own small businesses. Our mission is to provide a safe and reliable transport option to passengers and greater economic opportunity to drivers. The growing number of partner drivers, driving on the platform, as well as passengers using the technology is testament to that,” Uber says.

A number of factors play into the decision of where the company introduces its services. Although it wants to launch “everywhere”, Uber acknowledges that a number of elements have to be present in a city to warrant a launch.On the infrastructure side, factors include smartphone penetration and network quality, the existence of a supply of vehicles that will fit the Uber brand. The market opportunity also needs to be present, in terms of size of market, and the populations’ openness to testing and adopting new technologies.

“Take Nigeria for example; it made sense to launch in Lagos because of its population (5,195m) and size (999.6km2). Lagosians are also progressive and tech savvy and in particular love products that are cool, exclusive and offer a new experience, and Uber is doing just that,” Uber’s spokesperson says.

Strong hostility to Uber
However, despite consumer willingness to try out and adopt Uber, the company has run into obstacles in a number of its markets – both in developed and developing countries.

As a result of hostility to the ‘new kid on the block’ in terms of providing lucrative taxi services, ever since Uber’s initial launch in 2010, cities and states across the US have been digging deep to find rules and regulations to try and ban Uber’s operations.

These include provision which prohibit drivers from using electronic devices while driving, and not permitting GPS devices no to be used as a fare metre. In June last year, the government of Virginia, US, banned Uber from operating on the basis that the service not complying with local transportation regulations. Similar attempts have been made in Europe. For example, multiple local governments in German cities have issued hefty fines to Uber, and have even banned the service, based on transportation regulations which pre-date the Uber business model – such as requiring the company to own all cars operating its service, and requiring drivers to return to their ‘garage’ between fares.

Taxi drivers themselves have also been up in arms, with protests breaking out in cities across the US and Europe, calling for the ban of Uber operations.

Uber brushes off this opposition as simply incumbents unsettled by changes in the market, and insists the global transportation industry is set to be reinvented by technology-based solutions such as Uber.

“History shows us that every truly revolutionary innovation was faced with stiff opposition from incumbents and rear-guard actions by regulators,” says the company.

“Despite a few individual, country-specific setbacks, the future is bright for Uber and the sharing economy.”

According to Uber, authorities in Europe are already starting to be more supportive, a trend which the company expects to be replicated in other regions.

“We see a growing trend in key legislatures across Europe, from the review of the sharing economy launched by the Catalan parliament to the Dutch government acknowledging the need to modernise sharing economy rules.

“Competition authorities in Europe have multiplied their calls for full and proper deregulation of the taxi industry, there is a growing, unstoppable momentum to embrace technology services such as Uber, at a time of high unemployment and a floundering economic recovery,” Uber’s spokesperson said.

Similar disgruntled opposition is palpable in Africa, Uber says, but again, the company expects this to subside as a new, reliable transportation model becomes prevalent over time.

“Uber is shaking up a market that hasn’t seen new entrants in a long, long time. Our technology truly brings the sharing economy to the people of Africa and we are changing the way people think about getting around, so this type of disruptive technology is bound to cause resistance where existing structures have not seen any real advancement for many years,” the company’s spokesperson insisted.

Added security features
However, it is not just incumbents’ opposition which has caused difficulties for Uber; in India, the much more serious question of security was raised following the alleged rape of an Uber passenger by her driver in December; Indian courts having since charged the man in question and the trial has begun in Delhi.

Following the incident, the Indian government encouraged states country-wide to ban Uber from operating, with the service quickly banned in Delhi – where the incident took place.

Uber recently withdrew its petition against the ban, commenting only that: “We continue to have faith in the judicial and executive system, trusting that the interests of Delhi’s riders (passengers) and livelihoods of our driver-partners would be central to any decision [by the courts].” The incident prompted Uber to pledge a safety review, as well as increased security measures for its services in India specifically and worldwide.

“The safety of our passengers and drivers is the highest priority for us; not only for the rides we enable in New Delhi and across India, but also for the millions of trips we are facilitating around the world every day. To that end, we’ve been working around the clock to make Uber in India even safer,” Uber said in December.

The new India-specific security measures include police verification of drivers’ records, a specialist verification team on the ground to detect fraudulent driver and vehicle documentation, and emergency response team, as well as a “share my ETA” function within the app – which shares the driver’s details with a rider’s chosen contact, as well as allowing GPS tracking of the trip.

While issuing multiple apologies and pledging increased security, Uber nonetheless made valid points distancing the company from end responsibility for the crime in India – such as the inability to predict a driver’s actions despite background checks, and the limited safety regulations in place in many markets; points which could raise on-going safety questions for Uber in under-regulated markets, or markets with underlying security concerns – including many African countries.

“Of course, no background check can predict future behavior and no technology can yet fully prevent bad actions,” said Phillip Cardenas, head of global safety at Uber.

With regard to the Indian regulatory ecosystem, CEO Travis Kalanick pointed to the need for: “clear background checks currently absent in their commercial transportation licensing programmes.”

Despite the challenges the company faces, Uber is going from strength to strength, addressing obstacles as they arise. The company is looking forward to further African expansion, as it continues its mission to transform transportation systems across the continent.

“Uber has transformed the way people think about their transportation options in Africa,” Uber said. “We think we’re part of a pretty exciting change at the moment, and our technology makes our riders lives easier and simpler. The way people think about transportation and are moving around their cities is changing, and Uber is a big part of that change.”

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Written by African Business Magazine

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