/ 19 July 2022

Uber drives a hard bargain in Africa at the cost of its drivers

On May 15
On May 15

The interview with Frans Hiemstra, Uber’s general manager for sub-Saharan Africa, and his communications manager, Mpho Sebelebele, begins with a half-truth.

“The one thing that is a bit of a pain is how journalists classify or label the drivers when they are writing,” says Sebelebele. 

“They’ll say drivers that work for Uber, or Uber drivers, but it’s actually inaccurate. The drivers are very specific that they want to be recognised as independent contractors.”

Uber says this claim is based on driver surveys. But publicly — and certainly anecdotally, among all Uber drivers interviewed — the drivers would much prefer to be treated as employees, with all the protections and benefits that come as a result.

But the global e-hailing company has a major financial incentive to not treat their drivers as employees. If it had to guarantee salaries, give sick leave and take responsibility for drivers’ safety and security, its business model would not be nearly so lucrative.

In some places, drivers have successfully challenged the “independent contractor” label. After a legal battle, some 70 000 Uber drivers in the United Kingdom won the right to be recognised as workers, forcing Uber to roll out holiday pay, a pension plan and a limited minimum wage.

Uber’s drivers in Africa enjoy none of these protections, despite their best efforts.

In South Africa, a group of Uber drivers successfully took the company to arbitration to demand recognition as employees, but the judgment was later overturned on a technicality — the drivers had sued the wrong holding company. 

In March, Uber drivers went on strike in three South African cities, in part to demand workers’ rights.

These are rights that Uber has no intention of recognising, as Hiemstra makes clear. 

“I think we should put the strike in context. So South Africa is the country in the world with the most number of protests,” he said, adding quickly that this shouldn’t take away from its importance. 

He said that Uber intensified its contact with drivers as a result of the strike, although “it wasn’t necessary to significantly change the game”.

In other words: Uber makes the rules and drivers just have to live with the consequences. 

Untapped market

The interview with Hiemstra, conducted on Zoom, is arranged to coincide with Africa Day. It is intended to showcase the company’s positive contributions to economic growth and development on the continent. 

Uber now operates in eight African countries — Côte d’Ivoire, Egypt, Ghana, Kenya, Nigeria, South Africa, Tanzania and Uganda — and has completed a billion trips in less than a decade. It claims to have offered three million “economic opportunities” in Africa, although it will not comment on the quality or duration of those opportunities.

Its plans for expansion on the continent are aggressive. In May, it added another three Nigerian cities — Kano, Enugu and Warri — to its network, with more still to come. 

“The growth potential is out of Africa. Essentially the biggest population growth will come out of Africa,” says Hiemstra. 

Hiemstra, who comes from a finance and consulting background, is keen to talk about Uber’s social and economic effect in Africa. “We are not just a company that brings you your car, we can bring things to you, we can move you places, and we’ve been able to leverage that to do good,” he says, referencing Uber’s vaccine drive which helped 95 000 South Africans access a Covid-19 vaccine.

He also talks up that figure of three million economic opportunities. “That’s three million people that would have been unemployed recently. That’s something I would love for you to lean in on because it’s a great story.” 

This, also, is not quite true. Although some Uber drivers may have been unemployed, many left existing jobs for the promise of good pay and incentives.

‘It’s not something we negotiate’

But when Uber unilaterally changes its pricing and bonus structure, that promise disappears — as revealed this week in a global leak of the company’s documents. Some 124 000 internal records were leaked by Mark MacGann, one of the company’s most senior lobbyists.

The Washington Post, which reported on Uber’s growth in Cape Town — in part overseen by Hiemstra — said the leak shows “that Uber created working conditions it knew would result in many drivers barely scraping by. Uber incentivised more drivers to sign up than were necessary, shrank driver earnings and built a system that rewarded workers for undertaking routes and schedules that put them at risk of harm in locations plagued by violence.” 

This is how it worked in practice, according to The Washington Post. When Uber first arrived in Cape Town in 2013, it offered drivers a $400 joining bonus and a subsidy of $4 a trip. Once they were committed — often taking steep loans to purchase their own vehicles — Uber unilaterally slashed the subsidy and increased their own commission from 20% to 25%. 

By 2016, some drivers were earning as little as a third of what they earned in their first year but had no choice but to keep working to pay off their vehicle loan.

In response to follow-up questions, an Uber spokesperson said: “Earnings do fluctuate as a normal part of the business. They are affected by factors such as seasonality and the macroeconomic environment [cost of living, fuel etc] …. Recently, we have seen driver earnings begin to recover in South Africa.

“In terms of subsidies, when we started in South Africa, we offered incentives and referrals for drivers to join the platform, as is common for any business investing in growth. As the market has matured, we have adjusted these incentives accordingly.”

In the interview, Hiemstra refuses to get into specifics about how the company sets its pricing — but once again makes clear that drivers don’t have a say. 

“It’s not something that we negotiate with drivers,” he said. “We have these economic models, and we have data points that we get from drivers, and that’s how we determine the prices.”

He said that the company would “in principle” be unable to give drivers a guarantee of how much they could earn.

This is convenient for Uber. It leaves its drivers carrying almost all the financial risk, while the company gets to take home the majority of the profit.

Whatever the rights and wrongs of the model, there is no doubt over its efficacy. It has fuelled the company’s rapid growth over the past decade — and, according to Hiemstra, Uber is only just getting started in Africa. “We need to make sure we get our fingers in every single use case. Then we need to be in all the cities.”