Egypt Pulse

Egyptian taxi drivers protest 'unfair competition' from Uber

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Article Summary
Taxi drivers in Egypt say ride-sharing services Uber and Careem do not have to meet the same regulations taxis do and do not pay their fair share of taxes.

In the middle of Mostafa Mahmoud Square, one of Giza’s busiest, Afifi, a 27-year-old taxi driver, was shouting his lungs out: “Stop! Come join us, we are defending your rights.”

On Feb. 4, Afifi, who asked that his last name not be used, was one of the few taxi drivers who responded to an anonymous call circulated on Facebook to protest the existence of “unfair competitors.”

As he tried to stop taxis passing through the square and persuade drivers to join him in protest, he talked to Al-Monitor about his complaint. He said, “Taxis are losing business to companies such as Uber and Careem that operate illegally in Egypt.”

Both Uber and Careem do not own any cars, nor hire any drivers. They are considered “transportation network companies” (TNCs), a term coined by the California Public Utilities Commission to define the business model in which companies use mobile applications to connect customers who need a ride with drivers willing to offer the service.

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TNC's profit comes from getting a percentage from every ride’s fees.

“These companies allow owners of private vehicles to operate as taxis, and this is simply not fair,” said Afifi.

It cost Afifi 50,000 Egyptian pounds ($6,400) to acquire a taxi plate. He then got a 60,000 pound loan to buy the car.

He has to renew his car license every three months until he finishes paying his debts. Like all taxi drivers in Cairo and Giza, he pays up to 3,500 pounds annually in taxes, mandatory insurance and mandatory fees for a national syndicate that he said “offers him nothing in return.”

Afifi said he is angry that companies such as Careem and Uber open a backdoor for owners of private cars to circumvent the legal boundaries of the business and operate as taxis without paying taxes or going through all the hassles and inspections taxis do.

In late 2014, the $60 billion American multinational Uber launched its operation in Egypt. Soon after, the Dubai-based startup Careem expanded to Cairo and recently received $60 million in funding.

According to Uber’s general manager in Egypt, Anthony El-Khoury, Uber delivered 1 million rides in its first year in the country, using more than 6,000 drivers.

“Uber’s expansion rate in Cairo surpassed any other city in Europe, Africa and the Middle East,” Khoury told Al-Monitor.

Khoury enumerated the reasons behind the instant success.

“We are adding an amazing layer of safety and security to both the driver and the customer,” he said. In order for a driver to join Uber, he or she must have a clean criminal record. Drivers are subjected to random drug tests and are trained in customer service and the company’s policy on sexual harassment.

Such training is a very good selling point in Cairo, where United Nations statistics say 99.3% of women and girls reported experiencing a form of sexual harassment and 82.6% didn’t feel safe or secure in public transportation.

Both Careem and Uber offer riders and drivers a chance to rate each other once the ride is over; this allows the reporting of any form of harassment or mischief by either party.

Khoury said that while taxi drivers in Egypt are traditionally men, a little less than 100 female drivers joined Uber in a sign that the platform is enabling women to access a new job market.

According to Khoury, 40% of Uber drivers were unemployed before joining the company.

Hadeer Shalaby, Egypt’s general manager of Careem, said her company is helping the country’s economy during a time of recession and turbulence.

“With many people losing jobs due to the decline of the tourism industry, we offer an opportunity. … You have a car, you get a job,” she said.

Uber uses a dynamic pricing system in which the price of rides may increase or decrease based on supply and demand of drivers and customers throughout the day. Careem is reported to be 5% cheaper than regular taxis.

“In the past, you either had bad quality service for a low price or good quality service for a very high price. Careem aims to offer good service for an affordable price,” Shalaby said.

On the same day of the taxi drivers’ demonstration, Careem sent its customers a text message: “All your next rides are now up to 15% cheaper … your Careem is now more affordable than ever.”

“The government decides the [taxi] fare; we can't control it,” said Mohammed Wahdan, one of the demonstrating taxi drivers. “How can the government force on us a specific price while allowing others to undercut us and decide their own fare?”

However, Wahdan is aware that paying a cheaper fare is not the only reason many customers prefer Uber and Careem to regular taxis.

“Some taxi drivers are not civil, they may refuse to drive customers to remote places; others do not turn on their meters,” he said. “But this calls for more regulations and punishments for bad drivers, not an obliteration of our only source of income.”

Uber and Careem are licensed in Egypt as technology companies, not as transportation businesses.

"We never had a formal discussion with the government,” Uber's Khoury said.

To provide legal cover for their drivers, Uber and Careem cooperate with limousine renting companies. For a small fee, the limousine companies give drivers stamped and signed work permits stating: “This car is on a work assignment around Cairo on behalf of the company.”

Originally, these work permits were for limousine drivers working in the tourism industry and not legally sufficient to turn a private car into a taxi.

Egyptian motor law prohibits using a car for a fundamentally different purpose than what is stated in its license and punishes the violation with the revocation of the driver’s permit for 30 days for first-time offenders.

“We are ready to cooperate with the government in discussing any legal framework. I believe that the [transportation] ecosystem has a place for more people to join in,” said Khoury.

It is not the first time TNCs have provoked a backlash from taxi drivers. There have been anti-Uber demonstrations in England, China, India, Spain and France, to name a few.

Nagla Rizk, professor of economics at the business school at the American University in Cairo, told Al-Monitor that while she is aware that Uber might be demonized in other countries, one should not jump to conclusions when it comes to their operation in Egypt.

“Context matters,” she added.

Rizk, whose research areas include business models in digital economies, argued that these services are providing valuable additions to the Egyptian private transportation market such as privacy, security and transportation for remote areas that regular services may not cover.

“It would make more sense to revise the law to allow for this successful business model to exist,” she said.

The taxi drivers’ demonstration attracted less than 30 protesters. Most left quickly when a few police cars started to surround the perimeter.

“This is not the end of it,” Afifi said as he was getting ready to leave. “If people are too afraid to protest in the streets, we are going to court very soon.”

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Found in: transportation, transport sector, taxi, protests in egypt, dubai, competition, cairo, business in egypt

Ahmed Ateyya is a Cairo-based, award-winning journalist and documentary filmmaker. He is the co-founder of Wojood Media, a documentary production company. On Twitter: @ateyya

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