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Thursday, 29 March 2018

A copy of the Ride-Hailing Apps Act just got leaked to the press

LEGISLATION WATCH- A copy of the Ride-Hailing Apps Act has leaked to the press: The current draft of the Ride-Hailing Apps Act, which is under review at the House Transport Committee, has been leaked, courtesy of Al Mal. The law, which would regulate companies such as Uber and Careem, has recently been pushed to the top of the government and parliament’s priorities after the Administrative Court issued a ruling ordering these apps’ shutdown. Among the highlights:

  • Companies will be required to pay up to EGP 10 mn to receive a five-year operating license. The exact cost of the license will be determined based on the size of the company’s fleet.
  • Ride-sharing drivers must pay up to EGP 1,000 for a license to work through the companies. Licenses will be renewed annually. Drivers will also be required to obtain a special symbol to show that their vehicle is being operated through an app-based service. It remains unclear whether the symbol will be a special license plate or something as simple as a sticker to be placed on the car’s windshield.
  • Taxes for ride-hailing apps will be 25% higher than those imposed on cabbies.
  • A separate ministerial decree will be issued to set specific quality standards for the cars being employed by the apps.
  • White taxis must be incorporated into ride-hailing apps’ fleets within three months of receiving their operating licenses. The text of the law does not impose a minimum quota, but previous reports had suggested that the apps would need to ensure white taxis comprise half of their fleets. White cabs operating under the apps will be subject to the same legislative framework, minus the extra taxes.
  • Companies and drivers will both face fines if something goes wrong. Companies that operate without receiving the necessary licenses would face penalties ranging between EGP 200k and 5 mn, while drivers would be fined EGP 5-20k for the same offense. Companies will also be slapped with a fine of no less than EGP 500k and no more than EGP 5 mn for failing cover their drivers under an insurance program, share their databases as required by the state, or incorporate white taxis in their fleets.
  • All parties involved will have a grace period of six months to comply with the law.

You can also read the full document here (pdf).

Meanwhile, Careem is said to be in early talks with potential investors to raise USD 500 mn in new funding, sources tell Reuters’ Arabic service. Uber’s largest rival in the region could some of the fresh capital to expand its business lines, one of the sources said, adding that the company is looking to expand into new markets, such as Tunisia and Algeria. Despite recent reports that Careem had held talks with investment banks about a potential IPO aimed for early 2019, CEO Mudassir Sheikha said in January that it was “nowhere on the horizon,” but that the company was “at a scale already where bankers think we should consider it.” In related news, Careem said yesterday it resumed services in Ramallah for the first time since November after striking a deal with Palestinian transport authorities. The company also announced it would begin operations in Pakistan’s Quetta starting today, according to Business Recorder.

Is Uber struggling in emerging markets? Uber is struggling in many regions, particularly in emerging markets, largely due to the company’s failure to understand and adapt to local nuances, Adam Minter writes for Bloomberg. For example, Uber failed to offer a cash payment option in countries with low banking rates and fell behind in offering options including tuk-tuks and motorcycles in others. Minter also suggests that last week’s Administrative Court ruling in Egypt against Careem and Uber would not have happened to “a local company with better government relations.”

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2018 Enterprise Ventures LLC.