‘Sharing economy’ rattles businesses

By: VINCENT ACHUKA

On paper, Ms Emily Johnson is among thousands of freelance journalists who get paid for a story filed.

She has no salary, benefits, job security or other benefits.

But the American is also a data point of a revolution that is turning millions of people into part-time entrepreneurs, disrupting known business practices and challenging regulatory authorities.

She rents out the extra rooms in her five-bedroom house in Lavington, Nairobi, for $35 (Sh3,675) a night.

Less than a year after Uber, the share-a-ride app that has become a global transportation phenomenon, was launched in Nairobi, another one that allows people to rent part of their houses is challenging the hospitality and real estate markets.

Airbnb is an online market place that allows people to list, search for and book accommodation across 35,000 cities in 192 countries.

Home owners with extra rooms are pricing them lower than hotels and lodges.

Ms Johnson, who uses the app, says the “sharing economy” continues to grow.

“This has worked in the US. It is only natural to see companies move into developing markets as quickly as they can before copycats like EasyTaxi (a firm similar to Uber) can get too much of a foothold,” she says.

The sharing economy is building a new wave of daily part-time entrepreneurs by providing a peer-to-peer (P2P) connection through Internet-based applications thus enabling people to share goods, services, time and skills.

PROFITABLE BUSINESS

While sharing goods has been a common practice among friends, family and neighbours, the concept of sharing has moved from a community practice into a profitable business model through on-demand websites.

Already Airbnb has 1,400 listings through its app in Kenya with the greatest concentration in Nairobi, which has 788, says the company’s head of communication Nick Wilkins.

“Africa presents a huge opportunity. In the wake of success in key markets around the world, Airbnb plans to grow its business on the continent significantly,” he says.

“The company has already seen some impressive growth. In just the last year, the number of people staying on Airbnb listings in the region grew by 145 per cent.”

And just as a pointer to how serious the firm, which in June was valued at $25 billion (Sh2.6 trillion), is in capturing the East African market, it recently hired Nicola D’Elia as the regional manager for growth.

In Westlands, taxi driver David Wanjohi says his earnings have increased threefold from June when he joined Uber.

“The earnings per trip are lower since I have to pay the company but because it is customers coming to me, I make three times more trips than previously,” he said.

Data from Kenya Bureau of Statistics indicates that the country’s Internet penetration stands at 54.8 per cent of the population or 22.3 million people.

This is fuelling the quick adoption of the sharing economy.

“From the success of these apps, you can tell it is not just a one-off situation. It is the new way of doing things and more of them (apps linked to the sharing economy) are hitting the Kenyan market,” ABC Capital Corporate Finance and Advisory Manager says.

THE CHALLENGES

He adds that investment in Internet connectivity comes with many benefits.

“As connectivity increases, one investment accelerates the next,” he says and urges entrepreneurs and regulators to move with the times.

In the US, where most of these apps originate, a private parking lot can be rented out via Parking Panda, an unused tent rented out via Rentoid and a bicycle via Liquid.

Breeze is connecting drivers who don’t own cars to vehicles they can use as Uber taxis while Zipcar connects people to cars they can rent.

However, even as their rise seems unstoppable, apps involved in the sharing economy face challenges from regulators.

There have been protests by traditional taxi operators against Uber in London, New York, Paris, Berlin, Johannesburg, Rio de Janeiro and other places.

Indeed, some cities have banned the app.

Kenya Taxi Cabs Association has raised concerns about Uber’s growing popularity.

“A taxi is required to have a permit and operate within certain regulations,” the association’s chairman Peter Mburu says.

Various countries have started working on regulations for the sharing economy and how to earn taxes from it but there have been no such efforts in Kenya.

Mr Mburu adds: “You cannot just change a vehicle from personal use to commercial use and vice-versa. This is illegal and also compromises safety.”

On its part Airbnb, on the other hand, is having problems with the State of New York because of a decline of taxes collected by the hospitality industry as its listings do not pay taxes.

SOURCE: DAILY NATION