How ‘disruptive’ applications like Uber are taxi to the future

New technology like Uber, Netflix, Bitcoin and Airbnb that Kenya is grappling with could herald a post-capitalist era.

Sunday February 7 2016

Uber international launcher, Alastair Curtis (left), and  Uber operations and logistics manager Kaitlin Freedman during an interview with Business Daily, February 3, 2015  PHOTO | DIANA NGILA | NATION MEDIA GROUP.

Uber international launcher, Alastair Curtis (left), and Uber operations and logistics manager Kaitlin Freedman during an interview with Business Daily, February 3, 2015 PHOTO | DIANA NGILA | NATION MEDIA GROUP. 

By VINCENT ACHUKA
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It has always been a matter of when, not if, taxis in Kenya would rise up against Uber’s entrance in the market.

But the conflict ignited this week has brought to the fore the global dilemma posed by disruptive technology.

Fuelled by high Internet penetration and globalisation, firms are in a race to match consumers to services and products, while traditional capitalist models are being caught flat-footed, and protesting vigorously.

Left far behind are the regulatory authorities, which are furtively trying to catch up.

Whereas the new entrants are making life convenient, they are doing so at the expense of already existing businesses.

Yet more and more customers are happy with the ease of business offered by these disruptive technologies.

'WHO ARE UBER?'

Because they do not own any of the services or goods they provide, the new apps are not only reducing government revenue but also becoming a regulatory nightmare.

So awkward is the situation that Treasury CS Henry Rotich, when asked by Sunday Nation whether the government was collecting taxes from Uber — one of the reasons taxis cite for their protests — responded with a question of his own: “Who are Uber? How does it work? I don’t understand what the fuss is about?”

“Ask those taxis who are complaining whether they have been paying taxes themselves? When one pays a taxi driver, all that money goes into his pocket. It is good that the issue has come up so that we can narrow down to those who are paying taxes and those who are not.”

In the meantime, the government is in a dilemma on how to regulate over the top service providers, after the Kenya Film Classification Board said it would regulate US video streaming service Netflix, which recently announced its expansion to Kenya.

The film board insists content from the video streaming service is “a threat to our moral values and national security”, despite intervention by ICT Cabinet Secretary Joe Mucheru, who asked the board to wait for policy direction from his ministry.

Netflix merely requires one to have great Internet access to subscribe.

The Central Bank of Kenya is, meanwhile, locked in a stalemate with technology company Bitpesa, following the regulator’s decision in December to slam the brakes on use of Bitcoin in Kenya.

Bitcoin is a digital currency that uses encryption techniques to regulate the generation of units of currency and verify the transfer of funds, operating independently of any government or central bank.

INTERNET PENETRATION

Data from the Kenya Bureau of Statistics indicates that Kenya’s Internet penetration stands at 54.8 per cent of the population, or 22.3 million Internet users, which is 14 per cent higher than the global average of 40 per cent.

As the country grapples with the entry of Uber, Netflix and Bitcoin, more and more technology companies attracted by Kenya’s mobile penetration are making inroads or plotting entry points, setting the stage for future confrontations.

Airbnb, an online marketplace that allows people to list, search for and book accommodation across 35,000 cities is already in Nairobi.

It has 1,400 listings available currently through its app in Kenya. Like Uber, it does not own any of the rooms it is offers, enabling it to price them lower than the standard rates.

“Africa represents a huge opportunity for the company. In the wake of strong successes in key markets around the world, Airbnb plans to significantly grow its business in Africa,” he said.

Taking a cue from international companies, local startups like Kuhustle — an online platform where freelancers bid for jobs directly from clients across the globe — are also positioning themselves for a piece of the billions that disruptive technology has brought.

Kuhustle was coined from the Kenyan phrase “nina hustle” — basically, pursuit of opportunities to make an extra coin, says Kuhustle chief executive Billy Odero.

Designed in almost similar fashion to TaskRabbit, an American app that connects those in need of odd jobs to those providing them, the local platform, which recently clocked one year in operation, had by the end of last month attracted jobs worth at least Sh23.8 million and over 4,000 bids.

Analysts say the trend will continue and that, instead of fighting them, local businesses and the government should adopt to the new post-capitalist age that the world’s economy is moving into.

“It is not coincidental that the most valuable media company, Facebook, produces no content; the world’s biggest taxi company, Uber, owns no vehicles; and the world’s most valuable hospitality company, Airbnb, owns no hotels,” says Mr Dennis Makori, the chief executive of OnPhone Group.

“Technology is meant to make life easier. Whatever you are seeing on the global and local scenes was meant to happen with the invention of the Internet,” he says.

DISRUPTIVE APPS

He argues that with Kenya’s standing in Africa as the largest technology savvy population, more disruptive apps are on the way and advises businesses, especially those in the service industry, to craft how to incorporate technology or lose revenues.

In the US where most of these apps originate; a private parking lot can be rented out via Parking Panda, an unused tent rented out via Rentoid, a bicycle rented out via Liquid and an empty room in a house rented out to a dog through Dogvacay.

On the other hand, Breeze is connecting drivers who do not own cars to vehicles they can use as Uber taxis for a fee, while Zipcar is linking people to cars they can rent.

Uber — which was this week given a seven-day ultimatum to leave the country by the Kenya United Taxi Organisation — has maintained it is going nowhere, setting the stage for protests unless Interior CS Joseph Nkaissery intervenes as promised.

“Our technology is open and pro-choice. We are keen to offer it to a broad number of taxi drivers to boost their occupancy rates and chances for profit. We do not feel that it should be about Uber or Taxi but rather Uber and Taxi,” company spokesperson Samantha Allenberg told Sunday Nation. 

“Many taxi drivers are already using our technology to boost their incomes. We would welcome more to join their colleagues,” she said.

On the global scale, the entry of disruptive technologies has received mixed reactions.

Last week, French taxi unions staged nationwide protests against Uber and the French government, bringing capital Paris to a standstill. And last month, Ojai City in Carlifornia, US, banned rentals of less than 30 days, effectively outlawing Airbnb within its jurisdiction.

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