Uber and Careem duel for Middle East, but local competitors are rising – Business Insider

A man uses a mobile phone while riding a camel through a traffic jam in downtown Cairo.
REUTERS/Mohamed Abd El Ghany
  • Thanks to a massive population of 23 million, snarled
    traffic, and poor public transportation, Cairo has become a test bed for
    transportation startups.
  • Uber and U.A.E.-based
    Careem each launched bus
    services aimed at serving Cairo’s low-income population in
    December. But they are competing with local bus startups Swvl
    and Buseet, as well as other transportation startups serving
    other niches.
  • An Uber exec told Business Insider the Middle East’s
    expanding young population makes it an ideal place to invest
    after Uber pulled back in several markets in 2017 and
  • The founders of Swvl and Egyptian autorickshaw-hailing
    app Halan said they think the transportation needs in emerging
    markets are so great that no single provider will be able to
    dominate the market.
  • But Uber is testing out multiple transportation modes in
    Egypt and elsewhere in the Middle East and Africa in its quest
    to get to one billion riders before its I.P.O. later this

Spend any length of time in Cairo, Egypt and what sticks out immediately is the
traffic. Every highway, road, and alleyway is
clogged with cars and motorbikes spewing fumes into the air.
Crossing a road is akin to beating the final level of Frogger:
six crammed lanes with zero traffic lights or crosswalks and
constant honking.

There are many options for navigating the city of 23
million people – considered the most populated in Africa – but few are attractive.

With a whopping 4 million daily
on its three lines, the Cairo Metro is
half the size of the Washington D.C. Metro and carries four
as many passengers per half-mile of track. The public
bus system is similarly outmatched. Among the world’s major
cities, Cairo has one of the
lowest numbers of buses per million residents

The most used, and most important, part of Cairo’s transit
system is the microbuses, a network of semiformal private vans
that are ubiquitous on the streets of Cairo (and most African
cities). While dirt cheap and with lines all over the city,
microbuses are known for driving at dangerous speeds, packing in
as many passengers as they can, and ignoring traffic laws. Road
injuries are a leading
of death in the country. A study by the World Bank

found that traffic costs the country $8 billion per year
, or
4% of its GDP.


Motorists stuck in a traffic jam on a street towards downtown of Cairo, Egypt.
REUTERS/Amr Abdallah Dalsh

It would not be uncommon for an Egyptian to spend hours
navigating several trains, multiple buses, and a taxi in a single
commute each day.

Though the Egyptian government
announced it would invest over $100 million
to improve and
expand the metro in the coming years, young Egyptians aren’t
waiting for the government to fix the problem.

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Transportation is a ‘mega opportunity’ in Egypt and other
emerging markets

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A scene at the Rise Up Summit in Cairo, a premier tech and innovation conference in the Middle East.
Annie Zheng/Business Insider

As I walked around the Rise-Up Summit, a premier tech conference held in
Cairo in December, transportation seemed to be on everyone’s
mind. Among the booths of hopeful entrepreneurs and established
regional tech stars was an assortment of Egyptian transportation
startups, each serving a different niche.

Read more: Travel guides will tell you to
skip Cairo, but the Egyptian capital is a fascinating city
bursting with amazing food and culture

Swvl and
each offer private buses traveling along fixed
routes reserved and paid for using their apps. Fyonka is a
ride-hailing service hoping to win on safety and harassment
issues by
connecting only female drivers with female passengers
Meanwhile, Halan is a low-cost, ride-hailing service that only
features motorcycles and tuk-tuks, or that autorickshaws that are
popular throughout Africa, the Middle East, and Asia.

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Fyonka co-founders Mostafa El Kholy (L) and Abdullah Hussein at the RiseUp Summit in December.
Annie Zheng/Business Insider

When I asked Fadi Antaki, a veteran Egyptian entrepreneur
and the CEO of A15, a leading
Egyptian tech investment fund
, why the scene is saturated
with transportation startups, he looked bewildered and motioned
to the traffic honking outside the Greek Campus where RiseUp was
being held.

“A lot of people have long commutes and the existing public
transportation isn’t working,” he said. “The public buses are
always jammed and packed. Cars are twice the price here that they
are in the US and parking is a nightmare. And the minibuses are
packed, dirty, and unsafe.”

As RiseUp’s founder Abdelhameed Sharara told
me the following day, there’s an added kicker. Egyptian
entrepreneurs understand that the government is not capable of
fixing the city’s transportation problems.

“There is a mega opportunity there and technology
can really enable [the solutions],” he said.

Tech giants Uber and Careem are in a dogfight for the Middle East

Uber_Careem_Middle_East_Egypt (2 of 3)

An Uber Bus activation at the RiseUp Summit in December.
Annie Zheng/Business Insider

Egyptians aren’t the only ones to have noticed the opportunity.
Tech giants Uber and U.A.E.-based Careem, which operates in
84 cities across twelve Middle Eastern countries, are locked in
their own battle for dominance over Egypt’s massive
transportation needs.

In December, Uber and Careem launched
bus services in
the city, firsts for both companies. Like Buseet and Swvl, both
are focused on using tech to remake the ubiquitous microbus
sector. Uber Manager of Matching Science Eoin O’Mahony wrote on LinkedIn that it
could “unlock a new global business for Uber, serving the $100B,
100 billion annual rides ultra-low-cost transit market for high
capacity vehicles.”

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Like microbuses, Uber Bus and Careem Bus fit around a dozen
passengers each with prices aimed at a working-class population
that can’t afford daily private rides.

Uber has said prices will be 80% cheaper
than a standard Uber
, while Careem has said its service
will be
60-70% cheaper
than a standard Careem. Rather than sign
existing microbuses onto the service – most of which are old and
in disrepair – both services advertise safe, new, branded, and
air-conditioned buses.


A typical Uber Bus at the launch for Uber Bus in December.

The launch represented a retrenchment in the Middle East
for Uber after years of backing out of international markets like
China, Russia, and Southeast Asia, where Uber has partnered with
or sold its business to local rivals like Didi, Yandex, and Grab

Earlier this month, Anthony le Roux, Uber’s chief executive
for the Middle East and Africa, told the Wall Street Journal that
his region would “play
a massive role
” in helping Uber reach its goal of a billion
users before its initial public offering later this year.

That sentiment was echoed by Tino Waked, Uber’s general
manager for the Middle East and North Africa. In an interview
with Business Insider, Waked pointed to the Middle East’s rapidly
expanding young population, limited transportation
infrastructure, and large demand for low-cost transportation
solutions as reasons the company sees the region as an ideal
place to invest and test new services.

In the battle for dominance over Egypt and the Middle East,
Uber and Careem have made localizations to cater their product to
the market. Both companies allow cash payment and
offer low-cost rides

on scooters
, tuk-tuks, and motorcycles. In order to deepen
its smartphone penetration in Egypt, Uber will
soon launch a version of its app
requiring less data, after
launching a similar app in other Middle Eastern countries last

Uber has reportedly engaged in talks to purchase Careem,
according to the Wall Street Journal, which reported that some
bankers see the sale as inevitable given how much more cash Uber
has to burn in its duel with Careem.

Solving Egypt’s transportation problems could help solve issues
for other countries in emerging markets

Cairo_Egypt_City_Guide_Travel (14 of 37)

Traffic in Cairo is nightmarish.
Harrison Jacobs/Business Insider

The battle to win Egypt is likely about more than just
winning a lucrative market: It’s also about unlocking access to
other countries suffering similar transportation woes.

“There is tremendous opportunity in Egypt. This is a country of
100 million people and there’s a sense that solutions that work
here will work in other parts of the world with similar
obstacles,” Antaki told me.

While the two whales duke it out, the other Egyptian
transportation startups are hoping they can outmaneuver both with
a better understanding of the needs in a developing

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Last year, bus startup Swvl raised an approximate
$38 million
, putting its valuation close to $100 million, and
in January it
launched a pilot program in Nairobi, Kenya
, another city
notorious for its snarled traffic and anything-goes microbuses.
Swvl has plans to launch in several Southeast Asian cities in the
coming months.

Meanwhile, Halan, the startup focused on tuk-tuks and
motorcycles, raised
$4.3 million in Series A funding
in December, opened up a
second market in Sudan, and added Uber founder Oscar Salazar to
its board. In the announcement, Salazar cited Halan’s
to bring transportation to “the remaining
6 billion” people not being served by major ride-hailing

Uber_Careem_Middle_East_Egypt (1 of 1) 2

Annie Zheng/Business Insider

When I asked Swvl founder Mostafa Kandil
how the company could compete with Uber and Careem,
he suggested that the transportation needs are so dire in Cairo
and other similar markets that, unlike cities in the US, one or
two transportation companies cannot serve all the demand.

“You see the same problem across emerging markets, whether
it’s Manila, Nairobi or Jakarta. One single player is not enough
to build the network,” Kandil told Business Insider. “We like to
see ourselves as building a profitable mass transit system from
scratch in emerging markets and taking it off governments’

Rather than crowd out smaller players like Swvl, Uber Bus
has expanded demand in Cairo, according to Kandil, who said that
Swvl signups have quadrupled since the launch of Uber Bus.

For now, Halan founder Mounir Nakhla believes
concerns about competition from Uber or Careem is overblown,
saying it’s like comparing a plane to a taxi. Whereas Uber or
Careem is typically used by wealthier consumers for mid-length
rides and Swvl and other bus serves are for long commutes, Nakhla
said, Halan is focused on short rides of around a mile or less,
areas not typically served by Uber or Careem, and low-income

“When you live in a country like Egypt, where there are so
many needs and pain points, it means there are a lot of
opportunities,” Nakhla told Business Insider.

Nakhla has deep experience both with tuk-tuks and Egypt’s
low-income population, having
co-founded Egypt’s largest financing business for utility
vehicles like tuk-tuks
in 2009 and a micro-finance business
in 2015.

Both Kandil and Nakhla suggested their more clear-cut focus
on the low-cost market and their first-hand knowledge of emerging
markets will help give them a leg up when they do eventually come
head-to-head with the tech giants.

That day may be coming sooner than later. As Waked, Uber’s
general manager for the Middle East and North Africa, told
Business Insider, Uber’s goal, particularly in the Middle East is
to “become a one-stop shop for all your transportation and
delivery needs.” Every transportation modality – from bikes to
scooters to buses – is part of that.



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