Publications
Partners
Last week, an Uber controversy exploded in Cape Town. For the uninitiated, Uber is a smartphone application that enables consumers to request a trip, locates them and refers them to the nearest available Uber partner driver. It has proved to be a “cool”, safe, cheap and efficient service. Young people love it, and many parents (including me) sleep better at night knowing their kids will “Uber home” rather than take risks after a night out.
So it came as a shock to discover that more than 200 Uber taxis have been impounded by the traffic police since the beginning of the year.
Uber’s e-hailing service “does not fall into any of the categories of the National Land Transport Act”, as an official explained to me this week. It is also not provided for in the Integrated Transport Plan. And any process to regularise the e-hailing service must follow the requirements of the Promotion of Administrative Justice Act. Furthermore, just last week, a court case in the US concluded that Uber drivers were not self-employed, but employees of the Uber company, a decision with far-reaching legal implications.
This situation creates a crisis for government. Officials must act within the law, but the law doesn’t envisage or cater for e-hailing services. The result is government paralysis. Time drags by while officials try to squeeze the new reality into the prevailing legislative framework and the City of Cape Town prepares a bylaw to legalise and regulate e-hailing. The solution currently on the table is to license Uber taxis in terms of the clauses covering metered taxis while providing certain exemptions.
But why insist on licences at all, several people have asked. Surely, consumer choice should be regulated by the market? In any event, they say, Uber is self-regulating through a star-rating system.
When it comes to public transport operators, it is not so simple. Government cannot evade responsibility for safety, which includes roadworthiness, passenger insurance and third parties. If, for example, the vehicle does not have a valid operating licence, passengers cannot claim from the Road Accident Fund in the event of a crash.
Moreover, regulation of the taxi industry in South Africa has proved to be one of the examples of market failure. Competition is more often resolved by violence than consumer choice. There have been 15 murders (and many more injuries) in the past year relating to taxi conflicts in an overtraded industry. And the current situation of overtrading can only be resolved by market displacement, which usually results in escalating violence. Furthermore, the law prohibits the issuing of additional licences in an overtraded market.
This is not far-fetched. Just last month in France, President François Hollande called for a ban on the Uber app following violent resistance to the service in various parts of the country. Hollande is a socialist and believes in market manipulation. We do not. But this does not exempt us from the legal requirement to prevent overtrading and take into account the comments of current licence holders before we issue new ones.
Earlier this year, reports surfaced that Spain and Germany had prevented Uber from offering unlicensed services.
It’s a minefield. Once I had investigated, I could understand why officials were treading warily. They know they will be held responsible if something goes wrong.
I can also understand the public’s fury at the red tape and the inconvenience caused by our failure to regularise e-hailing, not to mention the impact this has on jobs.
This article first appeared in Inside Government, Western Cape Premier Helen Zille’s online newsletter. Cape Town licensed a number of Uber partners this week and it has begun the process of creating a system to make e-hailing legal
