Egypt’s Cabinet has approved a bill to regulate the fast-growing ride service market, which has been operating without regulatory measures allowing companies to hire drivers as independent contractors rather than employees.
If passed, the bill would require application-based ride service companies to pay taxes and insurance subscriptions for drivers and users operating with their markets and would oblige drivers to be the owners of their vehicles rather than leaseholders.
These measures come in addition to establishing a seven-hour daily cap on drivers’ operation hours and an expansion of services to include car pooling options and local taxis.
Social Solidarity Minister Ghada Waly said in a press conference on Monday that there are six app-based companies currently operating in the Egyptian market, including the US-based Uber, Dubai-based Careem and the Egyptian companies Ousta, Pink Taxi and PQ Egypt.
According to the minister, all stakeholders were involved in drafting the bill.
Since they entered the Egyptian market two years ago, companies like Uber have contracted regulated limousine companies, such as iCan, among others, which in turn hire drivers, after a screening process that includes drug tests and a review of their criminal record.
However, this process meant that ride service companies were not legally obliged to pay taxes or other expenses incurred by registered taxi drivers. On several occasions, this practice has prompted local taxi drivers to protest against what they considered allowances that grant unfair competition, which that they believed damaged their livelihoods.
Pressure from local taxi drivers has hit companies such as Uber around the world. In France, a court fined the company 800,000 euros in June 2016 after finding it guilty of running an illegal taxi service with non-professional drivers. In the US, Uber faces a class action lawsuit from drivers in California and Massachusetts, after a judge rejected a $US 100 million settlement, declaring it inadequate for drivers who argue they should be treated as employees rather than independent contractors and hence receive reimbursements for expenses, such as fuel costs.
Uber Egypt is one of the first and largest ride service companies in the market. Reuters reported in October that it has over 35,000 drivers, with approximately 2,500 new drivers joining the company each week, citing Anthony Khoury, who was Uber Egypt’s general manager at the time. The company also announced plans to invest $50 million in the Egyptian market over the next two years.