Vincent Lilane, Business Development Representative at inDrive, highlights that approximately 21% of South Africans now rely on e-hailing services, marking a substantial shift in urban transportation dynamics.
Despite this growth, the sector faces several critical challenges that could impede further development if left unaddressed.
Issues such as equitable pricing structures for drivers and passengers, concerns over passenger and driver safety, and the need for greater empowerment of drivers are among the key hurdles identified.
“Remember, drivers are the lifeblood of this industry, and their well-being directly impacts its success,” with many earning well below minimum wage,” said Lilane.
South Africa’s ride-hailing market, with an estimated R6.01 billion in revenue in 2023, is highly competitive. Strong local players such as Uber, Bolt, and inDrive to name a few are battling it out and itching for market dominance.
The industry itself is gearing up for further growth. By 2029, it is projected to reach R8.11 billion in annual revenue and serve a user base of around 14.5 million people, according to Statista.
Lilane said that this is “fueled by influences such as evolving customer preferences, unique local conditions, and underlying macroeconomic factors.”
“However, to unlock its full potential, the industry must address present challenges while simultaneously capitalising on growth opportunities,” he added.
Lilane said that doing so is likely to greatly maximise the ride-sharing industry’s job creation and GDP contributions, benefiting both the economy and people.
“By empowering drivers, prioritising safety, and embracing new possibilities, the e-hailing industry could serve as the driving force in shaping a transportation ecosystem that benefits all South Africans �` passengers, drivers, and businesses alike,” he said.
Pricing woes
Shedding light on a critical challenge for the ride-sharing industry, Lilane said that achieving fair pricing for both drivers and passengers is essential.
“The sad reality is that South African drivers tend to earn less than minimum wage (of R27.58 per hour),” said Lilane.
This is because their earnings are eroded by:
Rising fuel prices;
Vehicle rental fees;
The elimination of incentives and bonuses; and
Increased commissions for each transaction.
“Longer hours are often the only way to compensate, impacting driver well-being and potentially compromising safety,” said the inDriver representative.
While it is hoped that the recently enacted Economic Regulation of Transport Act (which looks to consolidate the economic regulation of transport within a single framework and policy) will positively impact their earnings, “drivers must be given more control over pricing,” said Lilane.
He said that this, in turn, will empower them “to achieve sustainable incomes and economic stability.”
Lilane argues that driver control over pricing could also benefit passengers. “This would allow them to access more competitive fares, a critical factor during the current cost-of-living crisis where affordable transportation is a major concern,” he said.
Lilane also urges the ride-hailing industry to reintroduce and expand incentive programmes and bonuses as a way to reward drivers, especially with 85% reporting that these are essential for their earnings, that are already often well below minimum wage.
Safety issues
“The rapid growth of ride-hailing in South Africa has coincided with a concerning rise in threats to the safety of both drivers and riders across all operators in this space, tarnishing the reputation of the entire industry as a result,” said Lilane.
This has been taking effect in the headlines, with numerous reports of passengers being attacked, robbed and more by some drivers, while many drivers themselves have faced the same ill fate.
“Unfortunately, this isn’t unique to South Africa, as similar incidents are reported globally,” said Lilane.
There are various safety challenges in the industry, including that of insufficient driver background checks, lax enforcement of vehicle maintenance, and passenger harassment of drivers among others.
Lilane emphasises that there needs to be shared responsibility approach, such as offering in-app support for both parties to address any violations promptly.
New frontiers for e-hailing
Liliane noted that e-hailing can extend beyond passenger services in South Africa to significantly impact the freight and cargo sector, especially in underserved remote areas.
He said that by leveraging technology and networks, these platforms could offer dependable cargo transport, opening new revenue opportunities for drivers and enhancing the country’s logistics infrastructure.