The global ‘sharing economy’ is very new, but big business. The likes of Uber, Lyft and Airbnb are among the best-funded and fastest-growing companies in the world, and they are making their presence felt in Africa too.
Airbnb, which rents out rooms or whole properties online, has enjoyed sizeable growth on the continent, more than doubling listings and seeing user numbers increase by 145% over the last year.
The site has more than 9 400 listings in South Africa, and its number of guests has increased by 257%. In Kenya, where Airbnb has more than 1 400 listings, the number of visitors using the service has tripled in the last year. To take advantage of the arrival of an African sharing economy, Airbnb has announced plans to rapidly accelerate its growth on the continent.
International transportation network company Uber is busy in Africa too, and present in eight cities – Cape Town, Durban, Johannesburg, Pretoria, Nairobi, Cairo, Casablanca and Lagos. Since introducing cash as an option for payment in Nairobi in August, business has doubled, and the company claims to have created almost 3 000 work opportunities in South Africa and Nigeria so far.
Though the figures on Africa’s sharing economy are light at this early stage, those involved in the sector believe it has the potential to have a similar – if not greater – impact than that seen in the US. The 1099 Economy Workforce Report, a survey conducted by numerous partners this year, found the sharing economy is dominated by workers between the ages of 18 and 34, the age group most affected by the serious issue of unemployment in Africa. Earnings via the shared economy are higher than the national average.
Apart from sharing economy providing employment, its ability to increase convenience, cut down costs and improve quality of service for African consumers is also welcome, with sharing-economy companies fulfilling the role it was previously assumed tight regulation would, in terms of tackling safety concerns and financial scams.
According to Samantha Allenberg, head of communications in Africa for Uber, a large part of the company’s success on the continent stems from offering an ‘unprecedented level of safety and convenience’ when it comes to transportation.
‘By offering unprecedented accountability and transparency built into our system, and having vehicle options at various price points, Uber has transformed the way people think about their transportation options in Africa,’ she says.
‘We think we’re part of a pretty exciting change at the moment, and our technology makes our riders’ lives easier and simpler. The way people think about transportation and are moving around their cities is changing, and Uber is a big part of that change.’
The ‘Uber model’, as it has become known, has been applied to various sectors across Africa, including couriering and driving lessons. Aisha Pandor is the co-founder and CEO of SweepSouth, an on-demand platform that connects users with cost-effective and reliable cleaners. She says the sharing economy has great potential in Africa, as there are so many industries with an imbalance between supply and demand.
‘Where a supply-demand imbalance exists, the opportunity is rife for industry disruption. The transparent ratings systems often used by sharing-economy companies can actually help with regulation by spreading performance information – like seeing what the rating is of your driver or accommodation – and helping to introduce industry standards where none may have previously existed,’ says Pandor, adding her belief that Africans ‘get’ the sharing economy, as suggested by concepts such as ubuntu.
‘In the industries we operate in, we aren’t inherently changing behaviours or asking customers to buy into a new concept. We’re just making it far easier for them to access services they were already using. Africa also has a rising middle class with serious spending power and this – along with ever-cheaper technology – makes the continent a great place to start a tech business right now.’
‘With e-commerce penetration rates at just 2%, we’re only scratching the surface of what is possible for Africa’s sharing economy’
The idea that Africa and its citizens are already innately prepared for a sharing economy by long-standing ‘offline’ ways of living and doing business is shared by Damilola Teidi, founder of Nigerian ride-sharing mobile application GoMyWay.
‘We are rekindling the spirit of sharing – the community spirit that is part of our culture. Some of the ideas that make up the sharing economy … have been happening for a long time, for example, ridesharing. We are simply using technology to expand the reach, connect more people and make it better,’ he says.
As ever with rolling out a business in Africa, it’s not all plain sailing. Allenberg says the continent comes with its own unique challenges, which Uber has adjusted to by rolling out cash-payment options.
‘Some of our driver-partners are using smartphones for the very first time; we have had to help teach them about smartphone usage as well as the Uber technology. In other markets, using smartphones is often taken for granted,’ she says. ‘The use of credit or cheque cards is low in some countries.’
Uncertainty over online payments, limited customer connectivity, and the high relative costs of accessing markets are also issues, says Pandor. ‘It can also be incredibly slow to do business on the continent because of administrative inefficiency and bureaucracy. Simple things like registering a business and opening up bank accounts should take hours or days, not weeks or months,’ she says.
Barrett Nash, co-founder of the Rwandan ‘Uber for motorcycle taxis’, SafeMotos, says a sharing economy will be limited in Africa until there are more established structures of reference and security.
‘As anyone who has been robbed in a country like Uganda, Ghana or Zambia will know, the levers of accountability are far weaker than in the West,’ he says.
‘Everyone has heard a story of a motorcycle driver who has been beaten or killed for their moto; of a house where thieves robbed it so thoroughly that it was like movers had come to take everything; of a phone being snatched in broad daylight out of a friend’s hands.
‘Until there is a more regular rule of law, in my opinion, the sharing economy will be a very nice channel for thieves to connect with their next targets.’
Others are more optimistic, however, with Johann Jenson, CEO of African accommodation marketplace SleepOut, saying there are ways of adapting the sharing economy to meet local requirements. SleepOut, as a result of a low number of credit cards on the continent, introduced pay-on-arrival bookings.
‘Last year, when we launched the service, we actually saw our bookings the next month quadruple. As Africans become more comfortable with online payments, and as APIs [application programming interfaces] for mobile and bank transfers become more sophisticated, I think we will see enormous growth in payments for both tangible and intangible products online,’ says Jenson. He adds that increasing trust in online payments was one of the biggest challenges faced by sharing economy marketplaces in Africa.
According to Jensen: ‘In addition, the level of comfort Africans have with sharing and paying for intangible products online is still quite low and it could take up to five years before the trend really starts to develop in a meaningful way.’
There have been concerns that local sharing-economy firms risk being blown out of the water by the massive resources available to the likes of Uber and Airbnb.
Nash admits local startups will always be underdogs, saying: ‘The marketing budget for a month of Uber in Nairobi is likely more than the current valuation of its local competitors.
‘However, if local competition can survive, they have a real advantage in terms of being able to modify their product in a way that their Western competitors can’t.’
Pandor agrees, and says local firms have the advantage of having intimate knowledge of Africa, which is a very different market and culture to the US and Europe.
‘There are African idiosyncrasies that we can and should take advantage of when developing solutions to problems, and we should use these as competitive strengths,’ she says.
Regardless of whether the firms addressing the market are global giants or local startups, however, Jenson says the space is big enough for all. ‘With e-commerce penetration rates at just 2%, we’re only scratching the surface of what is possible for Africa’s sharing economy. The middle class in our target countries is growing quickly, with what are considered to now be over 120 million stable middle-class Africans,’ he says.
‘Once the word gets out and price-conscious Africans are able to save on and earn money from these sharing-economy products and services, believe me, the growth will be exponential.’
