Uber Launches In Port Elizabeth, Ninth African City

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Written by Dana Sanchez

Uber, the smartphone app that connects passengers with taxis, has chosen to launch in Port Elizabeth, South Africa — population 1.1 million — and 10,000 people in the Eastern Cape city have already signed up to the platform, IndependentOnline reported.

Uber has gained a reputation not only for its popularity among investors, but also for its aggressive expansion strategy, according to AfricanBusinessMagazine. Wherever the service has been introduced, passenger demand has been heavy but hostility has been fierce from other taxi companies and even local governments.

Port Elizabeth is the ninth African city where Uber has launched, starting with Johannesburg (September 2013), Cape Town (October 2013), Durban (October 2013), Pretoria, (Lagos (July 2014), Cairo (February 2015), Nairobi (June 2015) and Casablanca (July 2015).

This is “a list that might be a proxy for Africa’s coolest, or at least best connected, cities,” Uber said in a statement.

Uber has said its mission is to be in every city globally with a population of more than 200,000 people, according to the Port Elizabeth community website MyPE.

“Not only will the service make the destination more attractive and accessible to visitors, but has the potential to increase employment opportunities adding to economic growth for our destination,” said Nelson Mandela Bay Tourism CEO Mandlakazi Skefile.

So how does a city warrant an Uber launch?

It has to have the infrastructure — smartphone penetration and network quality. It must have a supply of vehicles that will fit the Uber brand. The market must be big enough, and the population open to testing and adopting new technologies, according to a report in AfricanBusinessMagazine.

Since launching in South Africa in August 2013, Uber says it has created more that 4,000 jobs with another 15,000 possible in the next two years, Fin24 reported.

South African cities have been some of the fastest growing Uber markets in the world, Uber’s Cape Town General Manager Anthony le Roux told Fin24. “When we overlayed where we are now with where other cities were at this stage of their Uber history, we know that we’re only just really scratching the surface and the opportunity is massive going forward,” he said.

But despite consumer willingness to try out, adopt and drive for Uber, the company has run into obstacles in a number of markets in developed and developing countries.

Ever since Uber launched in 2010, cities and states across the U.S. have been trying to find ways to ban it. Hostility to the new kid on the block stems from Uber’s low rates undercutting traditional taxi services.

Taxi drivers have protested in cities across the U.S. and Europe, calling for Uber to be banned.

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, AfricanBusinessMagazine reported.

“History shows us that every truly revolutionary innovation was faced with stiff opposition from incumbents and rear-guard actions by regulators,” the company said. “Despite a few individual, country-specific setbacks, the future is bright for Uber and the sharing economy.”

Uber does not employ drivers, instead partnering with vehicle owners and drivers. Uber takes a 20 percent share of passenger fares. The rest goes to its partners.

That distinction between Uber partners vs. Uber employees is being challenged in a California court.

A lawsuit argues that drivers qualify as Uber employees as opposed to independent contractors and, as such, deserve benefits and protections called for by California labor law, France24 reported.

A judge this week expanded the number of drivers who can join a class-action suit against Uber contending they are treated like employees but get no employee benefits. The suit argues that Uber failed to reimburse drivers for expenses or losses related to doing their jobs.

The case is among several pending in U.S. courts about workers in “on-demand” or “sharing-economy” platforms who are considered independent contractors and get no social benefits, but want to be treated like employees, according to France24.

Uber says its platform offers far more flexibility than employees would get, and that in many cases the workers earn more.

“Nearly 90 percent of drivers say the main reason they use Uber is because they love being their own boss,” Uber said in a statement. “Drivers use Uber on their own terms; they control their use of the app along with where and when they drive. As employees, drivers would lose the personal flexibility they value most.”

Uber is a tech solution that connects passengers to drivers nearest them in real time via their smartphone. Uber feels it is disrupting the transport segment globally, but in Africa specifically, the company sees huge opportunity.

There are growing calls in Europe by competition authorities to deregulate the taxi industry and embrace technology services such as Uber, an Uber spokesperson said.

The company expects this trend to be replicated in other regions. High unemployment and a floundering economic recovery are not unique to Europe.

“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,” an Uber spokesperson said.

Uber plans on more African expansion.

“Uber has transformed the way people think about their transportation options in Africa,” Uber said. “The way people think about transportation and are moving around their cities is changing, and Uber is a big part of that change.”