Swvl debacle: The case of outdated regulations in tech revolution age

Some 155 years ago, Lord Palmerston’s Liberal government passed a law that, according to one writer, “effectively stopped innovation in powered road transport in Britain for over a quarter of a century”. The Locomotive Act 1865 became known as the Red Flag Act, thanks to its extraordinary stipulation that any self-propelled vehicle had to be preceded by a person walking at least 60 yards ahead, carrying a red flag to warn the public of imminent danger.

The Act followed intense lobbying by horse-drawn carriage operators and the public railway industry. And in a rather severe response to dangers posed by road vehicles, the Red Flag Act also brought into force the world’s first speed limit: 4mph in the country and 2mph in towns, and a £10 fine for speeding.

As motoring innovation gathered pace, the Act- originally passed with heavy traction engines in mind — looked increasingly absurd, and many campaigned against it. It was finally repealed on November 14, 1896 when the Locomotives on Highways Act scrapped the flag and raised the speed limit to 14mph.

This week my attention was drawn to the ongoing kerfuffle between the Egyptian mass transit ride hailing service Swvl and the regulator National Transport and Safety Authority (NTSA). Swvl operates via an internet application and plies several routes in Nairobi where customers pre-book heavily discounted commutes. They have also introduced long distance routes presenting a serous challenge to existing public service vehicle (PSV) operators.

NTSA insists that Swvl is operating illegally because the law currently does not allow PSV vehicles to ply multiple routes. This is a classic case of the law failing to keep up with changes in technology. Like 155 years ago, there are also powerful lobbies representing existing players in the transport industry who feel threatened by the new technology, which offers cheaper and more customer-friendly services.

Internet-based taxi-hailing services like Uber, Little Cab and Bolt (formerly Taxify) were introduced in Kenya just over four years ago and initially met a lot of resistance from traditional taxi operators because the new pricing model was so much cheaper and convenient to the customer. The drivers of the internet-based taxis also took time to understand the pricing model and their commission income and we also witnessed strikes over income sharing. With time, however, the commissions have been renegotiated and the new technology is enjoying phenomenal success in Kenya. Some of the new operators have diversified into the motorcycle public service industry offering passenger, food delivery and courier services.

After 2000 a popular idea emerged that the sequence of technological revolutions is not over and in future, we will witness the dawn of a new universal technological revolution. In 2015, Professor Klaus Schwab, the executive chairman of the World Economic Forum, introduced the phrase Fourth Industrial Revolution (4IR) which included fourth era technologies that combine hardware, software and cyber-physical systems that emphasise advances in communication and connectivity.

The 4IR is profoundly changing how we live, work, and communicate. It is reshaping government, education, healthcare, and commerce- almost every aspect of life. The rapid pace of change and the disruptive nature of these technologies are creating challenges as well as opportunities to improve lives of people, particularly in Africa.

In all previous revolutions, new cheap inputs, products and processes have been key drivers for growth, be they steam, electricity or Information Communication Technology (ICT). Africa has often been unable to adequately respond and harness their development and inclusive growth. It is clear that these previous revolutions were resource intensive, requiring sustained investments in specialised industries, knowledge, infrastructure and mass production capabilities. While the 4IR builds on the previous three, it offers a unique opportunity for countries in Africa to leapfrog heavy capital investments, rapidly acquire knowledge and deploy smart solutions to old age problems.

Notwithstanding the unprecedent advances in societal transformation that 4IR offers, it must also be recognised that it gives rise to new challenges that are a threat to the very fabric of democracy and sustainable development. For example, artificial intelligence is being used by geopolitical actors to gain power in the military, intelligence, economic, and public sphere arenas.

Kenya is particularly well placed to take advantage of the opportunities given our proven prowess in the digital arena. The old adage “Opportunity benefits the prepared mind” can be suitably applied in our case.

Many of these internet-based applications collect data which is used to predict customer behaviour, traffic movement, weather patterns and other data which can be used in education, healthcare and agriculture.

The ratio of youth (aged 15-24) to the total population stands at 20.3 percent in Kenya, making it among the highest in the world (global average 15.8 and 19.2 for Africa). Our youthful workforce presents a labour dividend in terms of productivity, innovation, and consumer market growth. The youth are the ones with ICT skills that will drive innovation. Employment in the ICT industry in Kenya grew by 3.2 percent in the past year representing one of the fastest expanding segments of the economy.

According to Prof Klaus Schwab, “The changes accelerated by the 4IR are so profound that, from the perspective of human history, there has never been a time of greater promise or potential peril. Decision-makers are too often caught in traditional, linear (and non-disruptive) thinking or too absorbed by immediate concerns to think strategically about the forces of disruption and innovation shaping our future.”

Ultimately, as with many other possibilities in Kenya, without good governance all these opportunities will go to waste. Regulators must also be ready to understand and embrace new technologies with a view to developing new laws that will enable technology to grow in a sustainable environment.