Tuesday, May 16, 2017

NO CAR, NO PROBLEM

This last week I have been without my car, so Uber, described as transportation network company, became my friend.

Uber, the largest taxi company in the world but does not own any cabs, runs a network of private car owners who allow their cars to be hired out as taxis. By use of an app on their smart phone, users can summon a car to wherever they are to ferry them to wherever they wish. Fares are often time as little as a third of what the old special hire drivers (where are they these days?) were charging for comparable routes.

Uber earns 25 percent of the driver’s fare, leaving fuelling and servicing to the drivers. The drivers complain the Uber fees are too steep but for those who were previously special hire drivers acknowledge that they have so much more work to do than they used to previously.

For the car owners the trick is obviously to use the most fuel efficient car possible – the Platz, Bitz, Spacio and Raum are the best they say. For the drivers too it’s a game of strategy – what time to operate and where to be, to maximise work and benefit from company incentives. I learnt that after doing 40 rides a week they are entitled to incentive fees over and above what they earn from their passengers.

"How is the company able to keep fares so low? Obviously it helps that it does not have to manage a huge fleet – easily dozens of uber cars are criss crossing the city at any time of the day or night, drivers are paid according to how much they work so there are no wasted labour costs and their office an unassuming space in industrial area means those fixed costs are minimised. I imagine the major expense would be the software that bring sit all together...

Interestingly drivers are rated by their passengers and this could mean the difference between staying on as an Uber driver or not. On a scale of one-to-five if the driver falls below 4.4 average he can find himself locked out of the system, his service terminated.

The drivers too rate their passengers. The better your rating the more likely you will have little trouble drivers responding to your requests for a ride.

"On the one hand Uber allows drivers to link into a huge network of clients they would never have been able to build as independent operators. Foreign visitors to Uganda can use their Uber app to hail cabs here, so to speak...

The service has been in Kampala for about a year and it maybe early days to tell whether it is a viable model for this market. But it has worked in about 400 cities all over the world there should not be a reason why it cannot work here.

It is a harbinger of things to come not only for the transport industry but for business generally in Uganda, linked to the proliferation of ICT and more crucially the growing significance of data.

The Economist last week made the point that, “Data are to this century what oil was to the last one: a driver of growth and change. Flows of data have created new infrastructure, new businesses, new monopolies, new politics and—crucially—new economics. Digital information is unlike any previous resource; it is extracted, refined, valued, bought and sold in different ways.”

The World Economic Forum (WEF) in projecting into the future of shopping, reported that  your regular supermarket will know your common purchases and have them delivered to your door step on a regular basis, its shelves will be stacked automatically, you will need not pay at the counter but an automatic debit to your account will be effected as you leave the store and for some items £D printers will generate them as soon as you order.

This is without factoring in that in the next decade or so more than half our shopping will be done online.

"If you are a businessman looking to the future these and many other trends surrounding data mean that one, your major expense will no longer be payroll but ICT; secondly that the sooner you adopt these new technologies either through your own resources but most likely by partnering with the generators of the technology is the longer you will remain relevant rather than be shunted to the side as the competition passes you by...

To compete maybe futile. It’s already happening. We are bypassing older supply chains and ordering our books, clothes, electronics, cars and even food online.

This will invariably increase economic activity because making purchases will be so much more convenient. The missing link in Uganda so far is to bring the credit market to interact with these new possibilities in commerce.

Last year it was reported that all mobile money platforms had a turnover of sh44trillion shillings or about half the GDP of Uganda and more than the national budget. A lot of this money was store away under our mattresses, in our socks or in our bras, now finds its way into the formal financial sector, and will have far reaching effects for the economy.

But if the local businessman is having to face existential questions spare a thought for the worker of future.

"The rule of the thumb seems to be on a scale where manual labour is on one side and knowledge work on the other, the more your work is manual than knowledge based is the extent to which that role will soon be extinct....

A few weeks ago Jack Ma, Founder of Ali Baba, one of the world’s largest online stores, said Artificial Intelligence (AI) – where computers use data to make human like decisions, will be disruptive and cause a lot of pain but the general economy, hopefully our general standard of living will be better for it.


Who knows I may not even need to own my own car in the future and be better off anyway!

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