BY Wesley Diphoko 3 MINUTE READ


The ride-hailing community is going through turmoil right now. From bad drivers (in the system) who are attacking women to petrol hikes that are affecting driver revenues, it must be the worst time to be in this business.

As these challenges unfold there’s a blame game underway and the most responsible parties, the owners of e-hailing apps, are not bothered.

Users of these apps don’t know where to take their concerns and drivers are taking their concerns to the government.

The reality however is that challenges experienced with these apps are part of their DNA and design.

When Travis Kalanick was designing Uber, which is one of the first successful e-hailing apps, he created a unique business. The Uber design is one of the reasons why this business has succeeded for now. He created a business that was asset, human resource and office light to enable scale. Uber was designed not to have cars, employees to drive the cars and physical departments for people to raise their concerns. In addition, the business was designed in such a way that it does not require government approval to operate. This was deliberate and it’s working for now, not just for Uber but for all other ride-hailing companies.

To address challenges experienced with e-hailing companies it’s important for all involved to understand the architecture and design of these businesses.

A protest by drivers to government offices will not change the ride-hailing business model. Law enforcement can do little to change attacks of women in e-hailing cars.

Courts in the UK have tried to address some of these challenges through the legal system. Towards the end of last year, there was a landmark court decision against Uber. The High Court ruled that its business model is unlawful.

The decision — which reboots the application of London’s regulations around private hire vehicle contracts — has huge ramifications for how ride-hailing platforms like Uber can operate in the U.K. capital and how much U.K. tax they will pay.

In the Netherlands, a court ruled that Uber drivers are employees, not contractors, and so entitled to greater workers’ rights under local labour laws. It was another court victory for unions fighting for better pay and benefits for those employed in the gig economy and followed a similar decision last year about Uber in Britain.

The Amsterdam District Court sided with the Federation of Dutch Trade Unions (FNV), which had argued that Uber’s roughly 4,000 drivers in the capital are employees of a taxi company and should be granted benefits in line with the taxi sector.

The legal system in South Africa is better placed to address the challenges experienced with ride-hailing apps. As indicated, there are parts of the world that are setting a precedent to address the legal loopholes.

Part of the challenge with entities like Uber and Bolt is that they have gamed the legal system and used legal loopholes to their advantage. South African laws were designed for a different transportation world. Ride-hailing is a new innovation with no laws affecting its implications.

There’s now a need to make sure current laws are on par with the current state of innovation. This is required not just for ride-hailing apps but for other industries that are impacted by innovation. Of course, part of this may limit innovation.

To balance the speed of innovation and the law there may be a need for special economic zones where normal rules of society do not apply. This should be done to host innovations in their early stages before they are accepted by mainstream society. In the absence of such an arrangement society will always face challenges such as the one experienced in the ride-hailing sector.

Today it’s ride-hailing services, tomorrow it will be cryptocurrencies.

Is South Africa ready for innovations that will come from other sectors such as fintech, health tech, and the rest?

If not, it’s about time a special area be created for these innovations to be tested before they bring their imperfections to everyone.

As South Africa dreams of a Smart city, it may be a perfect place to locate all new solutions. Such a place can’t be an existing town or city but a completely new one.

For now, the ride-hailing community may need to use available legal instruments instead of a protest that will not yield positive results.