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New Urban Mobility Technologies: An Emerging Market in South Asia

By Vincy Abraham and Natalia Saeed

YUBN - New Urban Mobility Technologies: An Emerging Market in South Asia

Emerging economies like Pakistan and India (two countries of interest to this article), face overwhelming challenges in transportation and find it difficult to translate international recommendations into effective policies, with informal transport operators often filling the gap. The environmental and social impacts of unplanned growth directly affect the quality of life and urban productivity, including – congestion, energy consumption, air pollution, and traffic accidents. Urban transportation issues must address urban mobility requirements and need new approaches.

The emergence of the new urban mobility technology industry

A trend that has captivated the urban sector is the emergence of the new urban mobility technology industry. These primarily include service marketplaces like Uber, Careem, Ola and countless others indigenous start-up apps which are being launched by young entrepreneurs throughout India, Pakistan and other parts of the world (e.g. Travly, Jugnoo, Rixi, Bykea, Limofied and Paxi). These new technologies are locally known as ride-hailing services in Pakistan, and online taxi aggregators in India which when powered by internet access and through their app-based mediums, create networks and act as facilitators for meaningful exchanges between service providers and consumers. It is no doubt that they have dynamically altered the way today’s urban residents travel.

Economists claim that the new urban mobility industry is potentially worth $40 billion. What makes the area lucrative is that it’s relatively cheap to start, employees do not require specialized skills, and customers can download and use various apps for free. The profitability potential is immense given the expensive rates of established taxi services in South Asia. This, coupled with a burgeoning middle class with a sizeable disposal income looking for both prompt and quality services at affordable rates presents a money-spinning business opportunity for those who recognize its potential.

“Formalising” the informal through tech

The International Labour Organization (ILO)  defines informal economy as a combination of ‘all economic activities by workers and economic units that are – in law or practice – not covered or insufficiently covered by formal arrangements.’ In Pakistan and India indicates, with the lack of formal employment opportunities, young people are over represented. Here’s where the transformative role of these new technologies emerges. These technologies are largely engaging the semi-skilled informal labor force and many young people with it.

By promoting exclusive partnerships with those who “sign up” to drive under their brand, a contract is drawn up between the driver and these new providers, thus elevating the driver to that of a “partner”. The language of “partnership” is not top-down here but rather signals an equality with rights, duties and liabilities. They are no longer workers or bystanders but are increasingly being recognized as a reformed new age self-employed partner. They enjoy a noticeable increase in income and a host of benefits that come along with it including higher standards of living, greater purchasing power, more disposal income, greater dignity of labor as well as more offers and subsidies in terms of commission rates collected.

A renewed Government scrutiny

In Pakistan – due to an increasing number of private car owners migrating to these new technologies without permits, the provincial governments of Sindh and Punjab both seem to have the same issue with Uber and Careem – they say that it is illegal to offer transport services without registering the private cars with a regulatory body, going as far as to say that such activity is a violation of city’s local laws. In fact, Government of Sindh has gone as far as requesting Pakistan Telecommunication Authority (PTA) to block both services’ mobile apps – due to lack of no-objection certificates (NOC) and fitness certificates. PTA however stated that it is not within their authority to do so.  In spite of this, both companies have stated their willingness to work with the authorities in this new economy to see what kind of laws can be developed to regulate the sharing economy. The companies see this as an opportunity for the Government and the people of Pakistan to have access to innovative services, higher and sustainable income potential and, move towards a global digital marketplace.

Meanwhile in India, Uber particularly has had a rough ride starting in 2014 with the rape case by an Uber driver grabbing national headlines. Since this incident, both Uber and Ola faced backlash from state governments across India springing from a number of other issues like the continued use of diesel and petrol vehicles in Delhi, practice of surge pricing, drivers’ protests due insufficient bookings and the lack of incentives as well as the suicide of an Uber driver due to poor earnings. With state governments intervening heavy-handedly, the Union government’s statutory recognition of these new technologies in the Motor Vehicle (Amendment) Bill, 2016 coupled with the largely liberal market-based approach in terms of national guidelines for taxi reforms have come as a welcomed surprise.

Job Opportunities and Skilling

For their survival and growth in Pakistan and India, these technologies have come out with attractive schemes, partnerships with private lending agencies and have reached out to governmental and inter-governmental agencies with a welfarist inclusive approach to employment under their branding.

Notably, in Pakistan Careem has entered into a resource sharing agreement with the Technical Education and Vocational Training Authority (TEVTA), Government of Pakistan to create job opportunities for 100,000 unemployed Pakistani youth. Youth are to be trained in driving and road safety as well as trained in basic Arabic language skills (for those deployed to the Middle East and North Africa region) with a stipend during their training period. In addition, JS Bank will provide subsidized loans at 6% mark-up rate to potential cab drivers for buying cars to run their cab service business – provided that these cabs are covered by insurance and tracker facilities as part of the partnership between Careem and the Prime Minister’s Youth Programme for the Youth Business Loan Scheme. As for Uber, they have signed an agreement with the Bank of Punjab to pave a way for over 50,000 green and yellow cab customers to move over to the Uber platform. In an effort to further integrate the more established transport modes, both companies are now partnering with existing rickshaw owners and have launched trial Uber Rickshaw – a cheaper alternative to private cars. In addition Careem has also introduced women drivers.

Women in New Technologies

Similarly, in India Uber collaborated with UN Women to create driver jobs for women in 2015 in a pilot project in Delhi. This project was to be rolled out in other cities of the world in a bid to bring more women into the labor force and under the formal organized sector. With a vision to create safe job opportunities for women, Uber committed 10,00,000 new jobs for women globally. Leaving no stone unturned, Uber entered into a partnership with Maruti Suzuki India Ltd and National Skill Development Corporation (NSDC) for its new initiative called UberShaan, to impart driving skills to 30,000 drivers and train them to procure commercial licences, provide them with vehicle financing and leasing solutions. Ola has its own programs to empower drivers with initiatives such as OlaPragati which offers financial solutions to its drivers including personal loans (where it partnered with Indifi), motor insurance solutions (partnered with Bajaj Allianz), car loans as well as providing education to drivers’ children (through its partnership with financial institutions like Neev Finance and NBFCs like PNB, IDBI, Chola etc). Like Uber, Ola has also entered into partnerships with car manufacturers like Maruti, Ford, Mahindra and Nissa to enable its drivers to buy cars at discounts made available at scale. PinkCabs, a service of Ola, deserves mention here as an exclusive service “by women, for women” particularly keeping women safety in mind.

Recommendations for the New Urban Mobility Technology Industry in India and Pakistan

The system overhaul we are witnessing due New Urban Mobility Technologies still has room for improvement. These businesses must not stop at transforming just the taxi industry but it they must integrate and innovate with other modes of transport, both traditional and non-traditional. They must prioritize the informal sector and further tap into a huge labor market potential of the South Asia region. A few thoughts for further action are elaborated briefly here.

Short Term Initiatives for expanding the impact of these technologies include asking that Careem, Ola, Uber and others to partner with offices, schools and universities for van services for employees and students, encouraging ride-sharing.

Rights based approaches to development/business models need to be developed through which capacity building of the informal labourers, who are not already working as drivers, is undertaken. This gives drivers a sense of ownership and knowledge on all aspects of their job – social to technical skills.

Another option would be sexual harassment courses, skilling courses and other vocational courses for drivers in collaboration with NGO/UN. In addition these new urban mobility technologies must continue to encourage the integration of all sections of the labor force. The potential for partnerships with other indigenous start ups (e.g. Bykea or Paxi) should be explored further. Pakistanis frequently get food and other items delivered to their houses – so partnering between existing mobility technologies in the city and restaurants, online shopping brands (e.g. Daraz.pk) and other businesses may create a whole new market economy.

Long Term initiatives include the creation of research centres in coordination with the governments to provide fact based sustainable solutions to urgent urban mobility issues. It should serve as a credible platform for companies and businesses involved in providing urban transport solutions to advise the government through policy initiatives and white papers. These centers can be based in Universities as well as in coordination with think tanks specializing in transportation.

The creation of a government led fund for youth innovation in urban mobility can take the lead in encouraging youth innovation in this sector. It can also serve as an investment platform for sustainable innovative solutions that emerge in the process. Established transport related businesses must be allowed and encouraged to contribute to these funds as part of their corporate social responsibility.

Governments need to adopt a market led view so that international competition can spur local transport to improve the quality and quantity of their services without killing their business and market share. It should encourage local and international players to innovate efficient technology that is labor intensive.

Overall, sustainable national transportation policies of governments particularly in South Asia need to be drafted with care and taking into account all the stakeholders involved. Policy makers need to balance regulation with market induced competition in the sector.

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