TAXI booking app Uber was fined $7.3 million this week by California regulators for not filing all the reports required by the state government; it’s just the latest controversy for the company, which is threatening the old taxi order, and has been involved in legal battles all around the world.
In Africa, the service has been launched in seven African cities: Cape Town, Johannesburg, Durban and Pretoria in South Africa; Lagos in Nigeria; Cairo in Egypt and Nairobi in Kenya - and is looking to grow.
The setback in the African context is that few people own credit cards, which it uses to charge for rides, but the company recently announced that it is exploring ways to incorporate mobile money into its payment model and in markets like Kenya there is an option for cash payment.
Globally, the reaction to Uber falls along two broad camps - it’s loved by drivers and passengers, but hated by taxi companies and regulators. Perhaps it’s unfair to describe the taxi booking app as controversial, but the innovation is certainly disruptive, and polarising - and hints to a changing world, that Africa is already at the centre of.
South African threats
But so far, South Africa, Canada, France, India, Hong Kong, the US and UK have all seen demonstrations against Uber; in France they turned violent, and in South Africa, the company has had to provide security for its drivers who have been threatened by rivals.
Broadly, taxi companies accuse Uber of unfair competition by undercutting prices, and allowing unlicensed drivers to escape regulation required by the professionals.
Uber works by connecting passengers with the nearest driver in the area by GPS, and payment is run automatically on arrival on the passenger’s credit card - the company gets a cut on each ride.
Drivers use their own cars, taking care of their fuel and service costs. Because Uber doesn’t directly employ drivers or own the vehicles, and taxis don’t have to travel far to pick up their next rider, costs are kept low, so fares are usually lower than conventional taxis. But drivers make more trips than they normally would, as many regular taxi stands require drivers to line up and wait their turn.
The service does background checks on drivers before allowing them to join, but crucially, it makes it mandatory for passengers to rate drivers. The higher a driver’s rating, the more rides and earnings they can make. If a drivers rating falls below a certain threshold, he or she risks being kicked out of the service.
Drivers can also red-flag rude or abusive passengers, who might then be blocked from using the app in the future.
The ladies get a look in
Uber’s whole business model might find its biggest competitive edge in African cities, where car ownership is relatively low, but poor urban management often means horrendous traffic jams such that even people who own cars choose to take taxis on brief errands, just to avoid encountering a snarl-up and missing an appointment when they then also cannot find parking.
The ratings system is crucial to giving Uber a competitive edge. In a city like Nairobi, because of the risk of crime, many people have one or two trusted taxi drivers they have on speed dial. Security is a big concern for drivers, too; with stories of carjackings, robberies and even murder by thugs posing as passengers, many drivers say they would never pick up a stranger off the street.
The ratings improve the professionalism of the industry - which can be quite shambolic in some cities - and reduces the information asymmetry on security, makes things safer for both passengers and drivers, and increases productivity - imagine all the wasted man-hours at the taxi rank because a driver doesn’t want to pick up a stranger.
It reduces barriers to entry, which in many African cities are firmly in the grip of cartels, who only allow one to join if you are of the right ethnic group or if you pay protection fees.
A number of women Uber drivers have even been spotted in Nairobi, with one telling her passenger that she had an office job but quit, because the computer hurt her eyes and she just likes driving. There’s probably hardly any other way a woman who “just likes driving” can make a living from it in Africa.
And because the whole thing is run off smartphones, one unintended result is that Uber drivers are probably the only demographic in Africa at that income level with 100% smartphone ownership.
New ways of doing things
But Uber demonstrates only something bigger and unique to Africa, and needs to be seen as only part of a trend. Because there are fewer established systems in the taxi business - hardly any African city has taxis charging by the meter, instead, the price always up for negotiation - the service demonstrates that there’s an opportunity to build a wholly new way of doing things.
Bus park in Dakar, Senegal. (Photo: flickr/Jeff Attaway)
It’s already happened with banking and insurance, when mobile phones unexpectedly led to broad financial inclusion. In Kenya, for example, there are less than seven million bank accounts, but at least 23 million mobile money accounts.
The formal banking system locked many out due to high fees and mandatory balances, but mobile money’s low barrier to entry brought financial services down to the people, and the uptake has been tremendous.
The same could be said about film. Cinema halls in Africa are shutting their doors by the day, as cheap TVs and pirated DVDs make them unsustainable. Khartoum now has only four cinema halls in operation for a population of 4.6 million; in Nairobi, outside the upmarket malls, some of the last remaining cinema halls are focusing exclusively on adult movies.
But the Nigeria film industry, whose distribution model is almost exclusively DVD, is now the second biggest formal employer after agriculture; an estimated one million people are employed in Nollywood. And unlike other places where industry players set up numerous barriers deter piracy, in Nigeria, the pirates are the distribution model.
Similarly, African cities are famously chaotic and unplanned. It’s a headache for anyone trying to do home deliveries - most postal services in Africa gave up long ago and only deliver to post office boxes, and it’s why companies like Amazon could never make a breakthrough here. Many Africans just use landmarks to describe where they live.
Jumia and Konga’s way
But the lack of an postal address and delivery system was not a deterrent for e-commerce firms such as Jumia and Konga, which uses motorcycle taxis for deliveries, riders getting directions on their mobile phones.
And when it comes to libraries, there are a few excellent libraries in Africa, mostly housed in universities. They include the most famous, the Library of Alexandria; St Catherine’s Monastery and October 6th Library in Egypt; the National Library of South Africa, Balme Library in Ghana and Kenyatta University Library in Kenya.
But a new project in Accra, attempts to reimagine the library as we know it. Librii is a network of libraries built along the expanding fibre-optic network on the continent; each Librii consists of an anchor building that acts as a physical study space and houses collections, an e-hub made from a modified shipping container that contains high-speed computers along with other digital tools and an agora that serves as a public plaza equipped with WiFi.
Africa’s reputation as a place where systems are broken, or were never built in the first place, might be viewed as a disadvantage. But clever people are seeing it as a unique chance to forge a whole new path.