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Uber in Africa: What the Unicorn Has to Learn Quickly

 5 min read / 

Hated, debated, berated, and slated. These are some of the costs of being a disruptive force in the world of business, the tank of sharks. Uber understands this and takes on these challenges with a smile only its CEO, Travis Kalanick, can pull off while facing lawsuits more than any other unicorn, major cyber security threats, and growing competition from all sides.

Spreading Its Tentacles

As a rising force, Uber has had its fair share of failures and successes. It continues to fight for profitability and leadership in its markets with every drop of blood and sweat. It has set roots in major cities across the globe but how about Africa’s major cities? In Africa, Uber operates in 14 cities in Tanzania, Morocco, Nigeria, South Africa, Ghana, Egypt, Kenya, and Uganda.

Cairo became Uber’s busiest and largest city, with over 30,000 driver partners, half of its total driver-partners in Africa. Approximately 2,000 drivers join the Uber platform every month in Cairo. Uber’s plans to increase its investment in Egypt by 500 million Egyptian pounds, is part of its $2.2bn planned investment in the Middle East and North Africa. The tech firm’s Egypt General Manager stated that a large percentage of Uber Egypt drivers were completely unemployed beforehand.

Far-Reaching Strategies

Uber’s growth and strategy in Africa has had a significant effect on the lives of unemployed graduates and non-graduates in other regions of the continent. Unemployed graduates and non-graduates have been able to gain employment as drivers through Uber’s partnership programme.

Individuals already employed are able to benefit from the partnership programme as car owners who can gain additional income from their cars being used by Uber-certified drivers or by simply giving Uber riders lifts after work.

5% is the deposit needed for a driver partner to buy a car in Lagos City

Lagos City has recognised the importance of Uber in increasing activities in the entrepreneurial sphere. The Lagos State Employment Trust Fund partnered with Uber to provide loans for cars valued at 3 million nairas. Lagos driver partners may be able to purchase a vehicle for up to that value, with a 5% deposit.

With plans to ban the use of the city’s frequently used mini buses, more and more use may be made of Uber to reduce congestion in the city as ride sharing with Uber gains popularity as an alternative means of transportation. Costs for riders may need to be reduced by facilitating the use of Uber cars by more than one rider, which the application presently does not allow in Lagos.

Upping the Game

As time progresses and competition increases, it may be necessary for Uber to consider new methods of driving price competitiveness and customer experience.

Nairobi-based competitor Maramoja offers to recommend drivers for users based on their use of social media, while Nigerian-based Afro allows for customers to haggle with the driver (via the app) for lower prices.

The question for Uber is not how it may copy these innovative approaches but rather how it may solve problems its customers face with its app in these markets. In finding solutions to such problems, it may find that it kills two birds with one stone.

As an example, drivers that arrive late or cancel a trip without due cause may have the percentage of the fair price they gain from their previous trip reduced. An inconvenienced rider may receive a partial refund for the trip.

Why Customer Service Is Key

Price competitiveness, however, is easily overshadowed by new developments in technology and public relations. What may prove to be more important for Uber in the long-run is how its drivers interact with customers in different regions.

Many day-to-day business interactions in Africa are based on community values. How riders feel after each ride may make a significant difference in how they perceive the application and alternatives, irrespective of costs.

If You Can’t Beat Them, Join Them

In some regions, taxi drivers enraged by the new competition took matters into their own hands, attacking drivers and damaging vehicles. Uber worked towards overcoming these challenges by signing up traditional taxi drivers.

Legal and regulatory standards will increase pressures on the tech firm. Background checks on drivers are a growing concern but also an opportunity for Uber to gather more information and data which may be useful for the development of new frontiers.

Conclusion

While Uber is not new to the challenges of operating in different markets, operating in Africa comes with a large pool of potential labour force and demand for the service. Many of the markets are malleable but not to be subjugated and they are simply formless on account of their infancy.

Uber has come at the right time but so have domestic competitors rooted across the continent. Uber has scale, billions, and technology but its local competitors in Africa can feel the heartbeat of their customers. That one difference may play a huge role in determining who will grow and who will go.

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Companies

Whatsapp Launches New Venture Aimed at Businesses

 1 min read / 

whatsapp business

Whatsapp has launched a new app targeted at businesses, called the Whatsapp Business App, which they claim will enable companies to “communicate more efficiently” with present and potential customers.

This forms part of Whatsapp’s wider strategy to branch out into the corporate world. It plans to use the app to generate new revenue by charging businesses for using the extra communication tools that will enable them to better connect with their customers.

Although the app is set for worldwide release, at present it will only be available in Indonesia, Italy, Mexico, the UK and US. It includes a feature which indicates a business is authentic with a green tick badge next to their name.

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Companies

Amex: Troubled Credit Card Company Reports $1.2bn Net Loss

 2 min read / 

Amex annual report

On Thursday, American Express, or Amex, reported a net loss of $1,197m in the fourth quarter, the first net loss the company has experienced for 26 years.

Although the company stated that revenue from interest expenses was up 10% to $8.8bn, Amex said recent reforms to the US tax code meant the company incurred extra costs, including a repatriation cost on its foreign assets as well as a devaluation of its deferred tax assets. It estimates total costs amounted to $2.6m.

For the full year, net income was $2.7bn compared with $5.4bn the company earned in 2017. However, even with the estimated $2.6m the company claims it incurred from the recent tax charge, net earnings were still $5.3bn, $100m lower compared to last year.

In New York, American Express shares (AXP) took a near 1% tumble at the beginning of trade with shares finishing the day on $99.90.  JPMorgan Chase and Goldman Sachs anticipate greater earnings for 2018.

“Overall, we believe the Tax Act will be a positive development for both the U.S. economy and American Express” said CEO and chairman Kenneth Chenault. Chenault also said he will be leaving Amex in “very strong hands” when his successor, Steve Squeri takes over next month.

American Express has suffered from an ever-reducing share in the credit card market and ended its 14-year relationship with American warehouse chain Costco who in 2016 made an agreement with the market leader, Visa.

Keep reading |  2 min read

Companies

Tencent Extends Facebook Lead

Tencent Facebook

Tencent has shot past Facebook to become the world’s most valuable social network.

Editor’s Remarks: Although Tencent briefly overtook Facebook in terms of market cap in November, the recent selloff of Facebook shares prompted the Chinese tech titan to regain the lead. Facebook investors responded negatively to news that Mark Zuckerberg’s plans to highlight family and friend-based content on the newsfeed would reduce the amount of time people spent on the site. Shares in Facebook have fallen 5% since that announcement, enabling Tencent to gain a $19bn lead over the US company. Tencent’s growth has been spurred on by its diversification away from its flagship messaging app, WeChat, and into video games.

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