The government is hoping to ease congestion in Egypt’s major cities and transform local economies; however, these public-led urban transport initiatives are also being met with exclusive endeavours from the private sector. Indeed, tech start-ups are eyeing the transport sector as an area of opportunity in the market. Companies such as the US-based and UAE-headquartered ride hailing apps Uber and Careem, and Misr for Technology and Projects ( MisrTech), a technology-driven mass transit firm, have recently deployed capital in the Egyptian market. In an economy that is known for its informal and entrepreneurial solutions to systematic deficiencies, such start-up firms are likely to thrive.
Cairo’s traffic has provided fertile ground for Egypt’s nascent tech scene. For example, Bey2ollak, a mobile application dedicated to user-generated traffic information that helps drivers navigate the many frustrations of Cairo traffic, is one of the most popular apps in the country by user numbers. It should come as little surprise that such ventures are succeeding. Egypt has long been driven by a large informal economy and small enterprises plugging gaps in public provision. In 2014 this represented as much as 70% of economic activity, with a value as high as LE1.5trn ($98.8bn), according to Abdel Moneim El Sayed, head of the Egyptian Centre for Economic Studies.
A new wave of regional and international start-ups is now looking to penetrate the local urban transport market. In July 2017 MisrTech launched a new minibus operation in Cairo. The company, in which Emirates National Group holds a majority share, opened 18 lines connecting parking spaces with underground stations. The firm has a fleet of 180 vehicles and is seeking to distinguish itself through a smart ticketing system, which allows passengers to use refillable smart payment cards for travel. The company hopes to roll out 52 routes in total in Greater Cairo, employ 3600 people and serve 8m passengers by the end of 2019.
There is also significant interest in public transport operations from the ride-hailing segment of the urban transport market. In July 2017 Careem bought a minority stake in Swvl, a new bus transport start-up. The company has developed a mobile application that allows customers to reserve and pay for private bus tickets, and shows them the shortest travel time to their destination by bus using their location and information on fixed bus routes. As of July 2017 Swvl had approximately 50,000 passengers and some 200 buses using the application.
However, the company could face significant competition from Uber, which is planning to launch a national bus service in 2018, targeting the 5.2m daily public transport commuters in the country. Uber has already enjoyed some success in Egypt in its core ride-hailing business. There were 30,000 Uber drivers in Cairo in 2016, marking the Egyptian capital as one of Uber’s fastest-growing markets globally.
While price sensitivity could present a challenge to growth for these companies, this issue is becoming less critical with the government’s commitment to fiscal prudence and subsidy removal. As such, many modes of public and mass transport are becoming more expensive. In July 2017 Hesham Arafat, the minister of transport, told local press that Cairo metro tickets could double in price to LE4 ($0.26) by the last quarter of 2018.
Although Uber’s new national bus service has yet to release pricing details, it could be competitive with existing options as long as the company can persuade the government of the efficacy of such start-ups. Indeed, these companies present a challenge to the status quo and existing transport services, such as Cairo’s white taxis. As such, the penetration of these new tech-led services are unlikely to succeed without some resistance.
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