Ride hailing has revolutionised transport across the globe. Once only found in the US and Europe, ride-hailing companies have quickly expanded into emerging markets such as Kenya, Nigeria, and Egypt. Because local transport in these places is often poor quality, unreliable and expensive, on-demand transport has provided a great service to consumers.
The need for convenient transportation has led to a surge of ride-sharing services on the continent with nearly 60 companies in operation across 21 countries. But despite the benefits of ride hailing, it is a limited solution to transport problems in emerging markets and only works for a small share of the population.
Ride hailing puts more cars on traffic-choked roads and exacerbates congestion in cities such as Cairo and Nairobi. The harm caused by ride hailing in emerging markets has exposed the need for alternative solutions, including on-demand mass transit.
The initial promise of ride-hailing services was compelling: companies wanted to reduce the number of people driving on their own commutes while providing other people with steady jobs as drivers. In the congested cities of developing countries, this promise was particulary attractive.
Except that the number of people driving did not decline when ride hailing was introduced. Ride hailing actually puts more, not fewer, cars on the roads. This is bad enough in advanced economies, but it is even more detrimental in emerging markets that cannot handle the added strain.
Consider what has happened in Manila; ride-hailing services have added an estimated 10,000 to 15,000 vehicles on the roads every day, in a city that already has some of the world’s worst traffic. Drivers often find themselves crawling along for an hour and a half just to reach their passengers. High levels of urbanisation and poor traffic infrastructure mean that cities like Manila — or Cairo, Nairobi, Karachi and Lagos — cannot handle the increased congestion.
The prospect of a major expansion in ride-hailing services in developing economies, and the additional congestion that comes with them, is alarming given what we know about the economic cost of traffic. Studies show that high-traffic economies suffer: they lose productivity when workers are sitting in traffic, they bear the increased cost of transporting goods through congested areas, and they are forced to spend money on wasted fuel.
In India, four major cities are estimated to be losing $22 billion annually to traffic congestion. High traffic is known to cause a direct increase in road deaths, which already plague emerging economies disproportionately. In fact, 90 per cent of such fatalities occur in developing countries. Ride-hailing apps will just exacerbate these existing problems by adding more cars to an already congested system, as demonstrated in Manila and elsewhere.
In the medium to long term, governments should be investing in mass transport solutions — such as metro lines, light rail and bus rapid transit systems — to address these issues sustainably.
Obviously, these options are difficult and costly and do not always happen as planned, even in the most developed economies. In certain contexts, private sector solutions, like mass transit bus hailing apps, can help in ways that low-scale ride-hailing apps cannot.
In Cairo, for example, where traffic is so bad that it causes an $8 billion hit to Egypt’s GDP every year, along with the deaths of over 1,000 people from avoidable traffic accidents, offering bus rides to commuters on fixed routes is a much-needed alternative to ride hailing.
Tech-enabled bus-hailing companies connect riders to a driver with a comfortable vehicle that fits up to 30 people at a time. Compare that figure to ride hailing, which puts one or two riders in touch with a car on any given route. The bus-hailing model shows real progress in getting cars off the road. Lower prices, up to 40 per cent less than ride hailing, also make it a more mass transit solution.
Emerging economies, whose major cities are lacking adequate road and mass transit systems, face the steepest challenges in getting people from A to B. Ride-hailing apps have tried to capitalise on this deficiency by pushing their services in these locations.
But the benefits of ride hailing do not outweigh the problems it causes, particularly in emerging markets. Despite making it easier, in theory, to commute, the reality is that ride-hailing services add more cars to the road, which causes more pollution, congestion and traffic accidents, and harm economic productivity. Bus hailing services point to a better-adapted model.
Kandil is CEO and co-founder, Swvl