The Sharing Economy in Africa

Posted on April 24, 2015 12:15 am

Sharing Economy also knows as ‘collaborative consumption’ comprises businesses built on the sharing of resources, the most popular of which have so far been accommodation and transport. The real key is a decoupling of ownership and benefit through the use of technology in turn creating new efficiencies.Already African countries like Kenya, South Africa are seeing the sharing economy transform legacy industries which previously seemed untouchable like the cab service business. The sharing economy is effectively a revolution allowing anyone with a computer to become an online business,simultaneously disrupting the market for everything from garage sales to small business operations.Got a spare driveway?,Extra space in your shed?,A small job that needs doing?,Old clothes? and the list is endless….Also termed the access economy, or the peer to peer economy, this new economic model is based on ‘access to’ rather than ‘ownership of’ physical and human assets like time, space and skills.The ‘sharing economy’ has mushroomed in Africa, and South Africa, Egypt and Kenya in particular has seen a range of initiatives start up.Cape Town was among the first to embrace the sharing economy concept with the launch of Uber.These days, African cities boasts bike-sharing schemes, community-owned energy projects, solar leasing projects, and carpooling schemes for city commuters.Cairo city rooftops now grow vegetables and host beehives, and other cities are developing other initiatives to encourage a shared use of resources.

Operating in the sharing economy brings multiple benefits ranging from profit, community building, strengthened local economies and reduced waste. But it’s becoming clear that these sharing initiatives also pose major challenges to existing legal system.That’s because African laws are based around ownership of goods, rather than access to them.The legal frameworks in countries like South Africa and Nigeria have evolved to regulate established relationships such as employer,employee, landlord,tenant, developer,homebuyer, business,investor and producer,consumer.The sharing economy often doesn’t fit within these categories. Is a person who spends time tending to a community share garage in return for free car service in Cape Town an employee? What is the extent of their contractual rights and obligations? The challenge here is that service providers are under threat, as the likes of Uber and AirBnB go head to head with traditional taxi services and hoteliers. Uber, the ride-sharing app founded in 2009 lets car owners act as taxi drivers, connecting drivers with passengers through their app, slashing the prices of a usual taxi service and drawing a whole new demographic of clientele to the service.The app is now available in more than 50 countries and well over 200 cities around the world, making waves with slick marketing and raising the tempers of taxi drivers to boiling point.Uber is now one of the 150 biggest companies in the world, it’s value eclipsing US$40 billion.

AirBnB established in 2008 with the initial concept literally an air bed and breakfast, an air mattress in the lounge and breakfast in the morning somewhere in between couch surfing and a youth hostel.AirBnB is valued at $13 billion which is about half as much as Hilton Groups of hotels Worldwide.However, both still operate in a relative grey area of the law in Africa and the ongoing opinion divide seen with Uber in Egypt, Kenya and South Africa could be a sign of things to come.Opponents in Kenya argued the services are not sufficiently regulated and are fertile ground for criminals looking to make a quick buck, with the stringent requirements expected of licensed operators and the costs to meet those creating an unfair playing field.Nairobi, backed by one of the strongest taxi cartels in Africa has led a fight back against ride-sharing apps but the techno savvy Nairobians are hearing none of those shenanigans and are fully embracing Uber with open arms according to a friend who regularly uses Uber in Nairobi.Throughout Europe taxi drivers have blockaded national highways and staged enormous protests against Uber in cities like Paris, London and German cities.Even recently in India, taxi drivers were reported to have staged protests and temporarily succeeded in halting Uber operations but trust me, they will eventually fail in their bid.That hasn’t happened in African cities.It’s a matter of the law playing catch-up and figuring out how to stay ahead of a rapidly evolving phenomenon tech solutions like Uber and in case of African countries,it is hardly a quality that African lawmakers have been associated with. The sharing economy is here to stay and I predict that it will be popular like mobile money uptake as long as it can provide certainty to workers and ensure that safety and best practices are followed regardless of the operator, and more importantly make sure government coffers are taking their fair share.

Contador Harrison