Ride-hailing in Egypt: A global tug-of-war
Egypt has one of the fastest-growing populations in the Middle East, growing at a rate of approximately one million every six months. According to the Central Agency for Public Mobilisation and Statistics (CAPMAS)’s latest census, Egypt’s population has reached 102.5 million, of which close to 20 million live in Cairo and Giza. As the population grows, so too does the need for convenient and affordable transportation. For decades, Egyptians living in the main cities have relied on taxis, microbuses and trains or trams to get around. More recently, with the rise of the sharing and gig economies, on-demand tuk-tuks and motorbikes have also become a common sight on the streets.
As in most countries around the world, the on-demand ride-hailing model in Egypt was pioneered by Uber at a time when internet penetration rates and smartphone adoption was on the rise. Since its launch in Cairo in 2014, Uber has consolidated its dominance of the ride-hailing sector, especially following its $3.1 billion acquisition of its once-biggest Middle Eastern rival Careem, with no other local company managing to edge it out.
Recently, several other global companies have had their eyes set on Egypt, posing a direct threat to Uber’s long-standing dominance over the Egyptian market and placing it at a challenging inflection point.
Among them are the Chinese ride-hailing company DiDi and UK-based UVA, both unveiled plans to launch in Egypt, and both have started their trial phase. This is in addition to the Russian-founded ride-hailing firm inDriver, which kicked off its operations in Egypt last year.
“As the cash cow that it is, the Egyptian [market] is still lucrative for global companies to operate in,” says Mohamed Ragab, business development representative at inDriver.
He adds: The cost of setting up a ride-hailing business in Egypt is relatively low compared to other markets, given that a large chunk of the population that can afford ride-hailing is concentrated within a limited area. This ultimately brings about more efficiency and reduces costs and improves economies of scale.
Latest government figures show that there are more than 377,000 registered taxis in Egypt, Uber claims to have 90,000 active drivers across Egypt, although it has previously stated to have as much as 200,000 drivers in the country. While Ragab did not confirm how many taxis are listed on inDriver’s platform, one of its drivers claims there are about 15,000.
In September 2020, inDriver officially launched in Egypt, starting initially in Suez city before expanding to Cairo and according to Ragab, the company has grown 100 per cent since its launch.
“Egypt is currently one of our best-performing markets,” says Ragab.
Founded in 2013 by Arsen Tomsky, inDriver now operates across 35 countries, availing its services to over 100 million users worldwide. The company has also launched operations in Morocco and Tunisia, with plans to expand to Algeria.
inDriver is one of the few Russian-founded startups to make a mark in the Middle East. Back in 2019, Russia’s Ministry of Digital Development, Communication and Mass Media opened a centre for digital innovation in Dubai, with the aim of bringing Russian businesses to the Middle East. While the pandemic has halted much movement in this regard, we can expect to see more Russian startups expanding to the region over the coming years.
A commissions battleground
As part of its pilot phase, inDriver currently charges no commission, offering rides that cost less for both passengers as well as drivers.
"This won’t carry on. At some point, we will start monetising; but right now we are only focusing on growth,” says Ragab, who adds that the company plans to eventually charge 5-9.5 per cent commission per ride.
The current zero commission policy is one of the key factors driving the growing popularity of inDriver, especially after Uber’s recent move to change its fare structure, resulting in a significant surge in its fares. Uber charges a fixed rate of 22.5 per cent in commission, although some drivers claim that both Uber and Careem charge as much as 28-33 per cent during peak times. This rise in prices and high commission rate when compared to inDriver, has resulted in a drop in satisfaction levels among Uber’s drivers and customers.
“For one of my previous rides, I had to pay about EGP 30 extra because there was a high surge, which seems to be the norm with every ride these days, whether there's actual demand for Ubers or not,” Mostafa Amin, an engineer living in Cairo, told Wamda.
Complaints about high commissions have become more frequent among drivers, many of whom rely on ride-hailing apps as their sole source of income.
“Uber and Careem were awesome in the early days of their rollout, and then rates got really high and even promotions and offers aimed at customers disappeared; people had to switch to whichever app was cheaper. As drivers, reaching a star in the sky is easier than getting incentives!,” says Mohamed Abdeen, who worked as a driver on the Uber platform for three years before switching to inDriver.
In an attempt to dodge the high commission, some drivers tend to play a little trick. After onboarding a passenger, they cancel the ride request so that they can get the full amount without a commission cut. This trick typically works in Egypt, where the majority of customers pay in cash.
However, leaving aside the higher prices, both Uber and Careem's long-standing presence in Egypt has helped both brands earn customer trust. Conversely, one of the biggest threats facing inDriver is its lack of privacy and security features as the app enables drivers to access customers’ contact information.
For Yasmine Abdelmoniem, a translator in Cairo, Uber used to be her first choice, but lately, this is no longer the case.
“For so long, Uber was the obvious choice because of its relatively affordable rates. Lately, I had no choice but to migrate to inDriver, despite its unsafe system and old vehicles,” she says.
In response, Ragab argues that the company is “still in the early stages of developing the app. We will keep working on enhancing its security features and will get there”.