Legalising Uber and Careem

Ahmed Morsy , Saturday 28 Sep 2019

The cabinet has issued new regulations to legalise the work of ride-hailing companies Uber and Careem, reports Ahmed Morsy

Legalising Uber and Careem
The executive regulations of ride-hailing companies are out


After they had worked without an appropriate licence for nearly five years, the cabinet last week approved the executive regulations of the law governing the operations of ride-hailing companies like Uber and Careem in Egypt.

According to the regulations, the ride-hailing companies are obliged to apply to the Ministry of Transportation to obtain a five-year renewable licence and pay a minimum fee of LE3 million if the company operates up to 5,000 vehicles. This sum doubles as the number of vehicles increases, with the licence fees reaching LE40 million if the company’s fleet includes more than 50,000 vehicles.

The companies are also obliged to submit a commercial record, a tax record, a certificate of registration for VAT, and provide social insurance for their employees in order to get the licence.

The decree stipulates that the Interior Ministry should conduct an annual technical examination of the companies’ vehicles and then issue an operating permit for LE600 for each vehicle. Each driver should also have an operating permit for a fee of LE400.

The decree compels the companies to select its drivers ethically and professionally and to provide them with needed training. “Each driver should be re-trained if three complaints are reported against him, and in case of repeated complaints the company must cancel his operating permit,” the decree says, adding that the complaint database should be linked electronically to the Ministry of Transport.

The decree compels drivers to put a mark or sign on their cars that refers to the service provider for LE100 and can be obtained from the Interior Ministry. The companies are ordered to conduct a monthly examination of a random sample of drivers of not less than 0.5 per cent of the company drivers in Egypt to detect any suspected substance abuse. The random tests are to be performed at any medical centre affiliated with the Interior Ministry.

If the results of the tests are positive, the companies will be obliged to cancel contracts with the drivers concerned.

The cabinet decree also necessitates the ride-hailing companies to provide daily trip data for each vehicle, including trip lengths, average speed and timing, and a map of the distribution of rides per week, stipulating that companies must keep records of trips and routes for at least six months and provide them to the Ministry of Transport upon request.

Uber and Careem among other smaller companies that provide ride-sharing services in the local market have been facing legal problems over the past few years because there was no legislation that governed their work.

Last year, parliament approved a law regulating the operations of the ride-hailing companies, and the recent decree of the cabinet puts the regulations into force.

According to an official at Uber Egypt, who preferred to speak anonymously, the company “is still studying the cabinet decisions, and it will adhere to decisions in the interest of customers.”

The newspaper Al-Masry Al-Youm quoted Wael Abul-Ela, president of Careem Egypt, as saying that the company had reservations on several items, the most important of which was one stating that drivers should have permits to work with only one ride-hailing company.

Abul-Ela said that his company wanted to see working permits apply to all companies operating in the market, especially because about 60 per cent of drivers worked for more than one company at the same time.

One of the agents providing services for Uber and Careem told Al-Ahram Weekly that the fees were overpriced. “I believe that drivers will stop working after these fees are imposed, as the decision compels them to pay before getting working permits.”

According to the regulations, drivers must pay LE2,000 (up from LE1,000) for an annual licence to work through the companies, and they will pay taxes that are 25 per cent higher than those imposed on taxi drivers.

Ahmed Zaki, a driver who works for Uber and Careem, expressed his frustration at the cabinet decision. “Obliging the driver to pay all the licence fees in advance before obtaining the licence is too much, given that there are other fees for the driving licence and the car licence,” Zaki said, adding that the fees should be reduced or the drivers given options.

Mohamed Ahmed, another driver who works for Uber and Careem, believes that a large number or drivers will quit because of the cabinet decisions. “The two companies used to accept cars produced in 2007-08, but now they stipulate that the cars should be no more than five years old. Why don’t they link the operating permit to the yearly technical inspection of the car, not the year of manufacture,” he asked.

Ahmed said the drug tests were unexceptional, however. “No one works for the two companies without having a drug test. As for the random test, it is something good to ensure safety measures,” he added.

The US-based Uber launched in 2014 in Cairo, and according to the company it has helped more than four million people get around Egyptian cities. In 2017, almost 160,000 drivers were working with the company in the country.

Uber’s rival in the Egyptian market, UAE-based Careem, also launched its services in Egypt in 2014, and it operates across 100 cities in 14 countries and provides services to 33 million customers with 1.2 million drivers. In Egypt, Careem has between 55,000 to 60,000 drivers in more than 19 cities.

In March, Uber and Careem reached an agreement for Uber to acquire Careem for $3.1 billion, consisting of $1.7 billion in convertible notes and $1.4 billion in cash. The acquisition of Careem is subject to regulatory approvals and is expected to close in 2020.

The cabinet decree stipulates that the two companies comply with the competition protection law and avoid monopolistic practices in Egypt.

In October last year, the Egyptian Competition Authority imposed measures on both companies to regulate competition between them and safeguard the competitive structure of the market in the light of the reported merger between them.

*A version of this article appears in print in the 26 September, 2019 edition of Al-Ahram Weekly


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