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What’s Mine Is Yours, For A Fee

Published 5 years ago
By Forbes Africa

You don’t have to be there anymore. Last night, 500,000 people rented a roof over their heads in 57,000 cities through the web. Also, 640,000 homeowners and paying guests were matched up by Airbnb, a firm based in San Francisco.

It’s a money maker.

A typical South African Airbnb host, who shares space in his home, can make at least R28,000 ($2,000) a year, according to Airbnb data .

“South Africa is currently the largest market for Airbnb in Africa with 9,400 homes listed. South Africa is becoming an increasingly popular global destination, with the number of people staying in places booked through Airbnb in South Africa increasing by a staggering 257 percent. South Africans are embracing the service as well, with those using Airbnb to travel increasing by 163 percent,” said an Airbnb report last year.

“Airbnb is the worst idea that ever worked,” says Brian Chesky, Co-founder and CEO of Airbnb.

That’s not all.

On the internet, everything is for hire and anyone can make money. It is called the sharing economy. It allows people to make money from under-used things. You can rent out your house while on vacation, or rent out your lawnmower, piano or  car when not using it. It can be anything.

“I travel a lot and whenever I do, I make sure that my entire house in Stellenbosch is rented out for whatever days I would be gone for. I even let them use my helper if they need to and sometimes I even leave them my pets at an additional cost,” says Jean van der Merwe, a sharing economy devotee.

“I also rent someone’s house instead of a hotel when I’m away. This means I get to feel at home and experience the city like a local would at a cheaper fee.”

Van der Merwe says she rents musical instruments for her children, instead of buying.

“Children change their minds. So I just rent to see what they like and when we are done with it, I just return it to the owner.”

The impact is huge. Airbnb in the hospitality sector; Uber in transport; Spotify in media and Poshmark in fashion are leading the way. According to PricewaterhouseCoopers (PWC), global revenue generated by this growing phenomenon is expected to be worth $335 billion by 2025.

“We’ve definitely seen a shift in consumption habits, specifically as it pertains to music. People are feeling less of a need to own a track of music, which is where Spotify comes into play. They would rather rent or share things instead,” says Amanda Havey, Vice President of On-Air and Brand Creative for VH1.

For Uber, the sharing economy has brought remarkable growth. Since 2013, the online ride-sharing company has taken off in 12 cities in sub-Saharan Africa, with no advertising. Its disruptive nature and low prices has put it on everyone’s lips. It connects customers through a smartphone app that tracks the journey. Leaked financial results show that the company had gross bookings of $3.63-billion in the first half of 2014 alone.

These figures can’t be ignored. But there is a trick to it. It works on trust and reputation. If you hire out your car, you trust someone will bring it back, in good condition.

According to a PwC survey, 51% of people surveyed say they can see themselves being providers in the sharing economy in the next two years, while 72% say they can see themselves being consumers in the sharing economy in the next two years.

“A potential Uber or Lyft driver, weighing the costs of a new car, may choose to spend more for a higher quality, more luxurious vehicle, knowing that it can yield return on investment rather than simply being a depreciating asset. A prospective homebuyer may look into purchasing a three-bedroom home rather than a two-bedroom, mindful that rental income from a spare room can cover the additional mortgage payment,” reads the study.

It sounds almost socialist in nature, but some argue that it leaves a bigger gap between the haves and the have-nots.

In Uber’s case, little by little, the dream of dominating the taxi ranks of the world is crumbling in Africa. For a start, many drivers complain they are exploited. Angrily, they have joined the South African Transport and Allied Workers’ Union (Satawu) and plan to take the company to the Labour Court – the antithesis of Uber’s free market philosophy. That could be a stumbling block in the sharing economy utopia.

The dispute is over Uber taking a cut from every trip; 20% for UberX and 25% for Uber Black.

“I joined Uber because they promised [we could] be our own boss and get a chance to earn up to R10,000 ($700). We have to work long hours for little income. The cost of living is too much, we’re not benefitting from Uber. They just came to Africa to abuse Africans,” says Joseph Munzvenaga, an Uber driver in Cape Town, who has been driving for the company for more than two years.

Julian Wenn, another Uber driver in Cape Town, says exploitation is an understatement.

“When people are desperate they will do anything, when a firm like Uber has you tuned into the channel of desperation you are bound to be exploited. The sad part is most drivers still don’t realize just how much they are being exploited,” he says.

What may stand up in the court, for the defence, in the sharing economy spirit, is that Uber classifies its drivers as independent contractors and not employees, hence they can avoid paying insurance and other costs companies cover for employees.

Uber spokesperson, Samantha Allenberg, says all drivers are independent operators and are free to work when they want.

“Uber is not a taxi, nor is it a taxi or transportation company. Ridesharing apps like Uber make it affordable and more efficient for riders to get around – especially in places where there is little public transport,” says Allenberg.

This paragon of the sharing economy is also controversial.

The Kenya Taxi Cab Association called for a withdrawal of Uber in the East African country, citing the lack of regulation. The call came on the day violence flared, in the capital Nairobi, as taxi drivers attacked Uber drivers. The association’s organizing secretary, Job Nzioka, says Uber is cheaper because they are not subjected to hefty levies, such as inspection fees, parking fees and operating fees.

In the midst of blood and chaos, investors think that Uber will not just survive, but thrive. They have put their money to drive Uber’s valuation up to $68 billion; much higher than Facebook when it was six years old. Uber has also launched UberEATS, an on-demand meal delivery service powered by its app.

Despite its troubles in Africa, Uber’s ambition is to be ubiquitous, just like many sharing economy companies.

It seems the sharing economy is too big an opportunity to miss.

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Related Topics: #Airbnb, #Data, #Homeowner, #Internet, #November 2016, #Technology, #Travel.