See Why Uber Has No Plans To Compete With Minibus Taxis

Key to Uber’s strategy is the idea that drivers are independent contractors and cannot be forced to work.

Uber app displayed on a smart mobile phone - Surge Zirc SA
Uber app displayed on a smart mobile phone/Photo file: Fortune

Uber has no plans to compete with the minibus taxi industry in South Africa, and will only introduce shared transport options in partnership with existing operators.

“We are categorically not competing with the minibus industry and we have no plans to compete with the minibus industry…we don’t want to be seen competing with the industry,” Alon Lits, general manager of Uber sub-Saharan Africa, told Fin24 in an interview on Tuesday.

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On the same day, the ride hailing company launched Uber Bus in Cairo, which allows passengers to request minibuses through the app, and they are matched with other riders on the most suitable route.

Lits has reason to be nervous. The company in SA has come under attack from the established meter taxi industry and several Uber drivers were killed in the turf war last year.

The ride hailing giant gained a controversial reputation globally, amid accusations of flouting local regulations under previous CEO and co-founder Travis Kalanick, who resigned in June 2017.

“We’ve matured as a company. I think Dara (Khosrowshahi), as our new CEO, has made that really clear – that we’re changing our approach and it’s not us vs. the regulator, it’s us partnering with cities,” Lits said.

He shares Khosrowshahi’s vision for Uber to be a mobility platform, rather than a cab service and foresees people using the app to purchase Gautrain or public transport tickets and the possibility of electronic bikes being added for multiple staged trips.

While some areas were almost no-go zones for Uber drivers, such as the Gautrain stations, Lits says the situation has improved as the company has engaged directly with law enforcement and the meter taxi industry.

An emergency number has been established for drivers and pick up zones with private security supplied by Uber has been provided in some cases, while drivers complained at the height of attacks last year that the company was not doing enough to protect them.

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Amendments to the National Land Transport Act – which for the first time makes provision for e-hailing as a mode of transport – is making its way through the National Council of Provinces, to ensure vehicles and drivers are fully regulated.

Uber is attempting to smash traditional models of transport. However, some users remain frustrated they are only able to instant message or email a help centre. From Monday, riders and divers will be able to access a call centre 24/7 from within the app.

Setting up a call centre is just one of the ways the global ride hailing company has to adapt its offering to the unique setting SA provides.

Lits spoke to Fin24 at Uber’s Johannesburg Greenlight Hub near Sandton, which offers support and training to drivers. Queues of men, in the majority, wait to speak to staff and resolve issues.

For many, this is the only form of employment they have, unlike other major Uber markets such as the US, where it will often be a person’s second or third income stream.

Uber is incredibly popular in South Africa, with 679 000 active riders (people who use the app at least once a month) and 12 000 drivers, while offering multiple products such as UberEATS and UberVan.

Nigeria, with nearly four times the population, has 134 000 riders and 9 000 drivers, with only Uber X (the basic version) on offer.

In some other sub-Saharan African countries, the Uber vehicles are older, but due to the specifications of the middle income SA market, many drivers cannot afford to buy the newer models and work for the owner of the vehicle.

Lits acknowledges this system is not ideal, and the company wants to move towards a situation where the driver and the owner are the same people.

He adds, however, that drivers on the Uber app build up a profile and track record which allows them to access credit to buy their own vehicles.

Surge pricing

Key to Uber’s strategy is the idea that drivers are independent contractors and cannot be forced to work. This is the reason, according to Lits, why the company implements surge pricing during peak demand periods such as New Year’s Eve, as drivers need to be compensated for working at a time they might prefer to be doing something else.

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Uber refunded fares to Global Citizen concert-goers last week who were affected by surge pricing after the company had initially agreed not to implement it, but chose to price the service to try to entice drivers into the traffic chaos transport hundreds of people who were awaiting rides.

Beyond Uber’s plans to offer a full “mobility platform”, the company is in talks with property developers in SA to set up pick up zones in office and residential developments. Lits also foresees the need and regulation for parking spaces to be reduced as SA adapts to a changing world.

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