Uber Eats pledges $10.7M investment in SA, after competition watchdog report

Food delivery company Uber Eats has promised to invest 200 million South African rand (US$10.7 million) to create economic opportunities for the youth in South Africa's townships (typically low-income areas) just days after it received a rap on the knuckles from the country's Competition Commission.

Uber Eats announced on Friday it had signed a three-year Memorandum of Understanding (MoU) with the Gauteng Department of Economic Development (GDED) to implement the Township Development Act by leveraging the power of technology to create earning opportunities for merchants and delivery people in township communities.

The $10.7 million investment will be over the next three years, targeting 2,000 delivery people and 700 restaurants to sign up to the Uber Eats platform.

"This investment is an ongoing effort which will go towards hardware, training, campaigns, and account support," the delivery app said.

The initiative will be rolled out in phases and aims to have onboarded 200 merchants and 150 delivery people in Gauteng by March 2024.

Uber Eats GM for sub-Saharan Africa, Nakampe Molewa, said the MoU aims to stimulate township economies through digitalization.

"Uber Eats is perfectly positioned to deliver on this goal, harnessing our technology to uplift township economies and transform the lives of township residents. Our commitment will also make township markets more viable for local technology platforms, with more delivery people and merchants online," added Molewa.

Competition watchdog demands changes

Earlier this week, South Africa's Competition Commission (CompCom) published the final report from its two-year Online Intermediation Platforms Market Inquiry (OIPMI) along with a raft of remedial actions for local and international players, including Uber Eats and other tech companies like search giant Google and online retailer Takealot.

The CompCom believes the changes will provide greater visibility for smaller South African platforms, enable more intense platform competition and level the playing field for small businesses selling through online platforms.

When it came to food delivery platforms, it flagged Uber Eats, which is part of American ride-hailing company Uber; and local company Mr D Food, which is a subsidiary of e-retailer Takealot and part of Africa's biggest listed company Naspers.

The actions included that restaurant chains are no longer allowed to restrict their franchisees from listing on local delivery platforms of their choice, rather than just with the bigger players.

Uber Eats and Mr D Food must also offer lower commission fees and improved value for independent restaurants.

"Independent restaurants lack negotiating power with Uber Eats and Mr D Food resulting in higher commission fees than the restaurant chains, forcing them to push up prices to consumers, and less choice in trading off service levels for fees," the Commission said.

SA's Competition Commission told Uber Eats to offer lower commission fees and improve value for independent restaurants. (Source: Jean-Baptiste Terrazzoni on Pexels)

The watchdog also told companies to improve competition for Black-owned South African businesses on online platforms and provide funding opportunities for Black entrepreneurs.

Reaction to ruling

An Uber Eats spokesperson told Connecting Africa it was assessing the findings of the OIPMI report before deciding what, if any, further steps it will take.

"Since entering the market in 2013, we have created over 3 million economic opportunities in over 50 [sub-Saharan African] cities that we are present in, helping create diversified forms of earning a living across many segments of the population," the spokesperson added.

Whether the MoU announced today has been in the works for a while or is a knee-jerk reaction to the CompCom report, it looks to make an impact when it comes to inclusion for small businesses but only focuses on one out of South Africa's nine provinces.

Gauteng Department of Economic Development MEC Tasneem Motara said the initiative is in line with the Township Economic Development Act of 2022, which aims to unlock economic development for small and medium sized enterprises (SMEs) in township communities.

"We are pleased to have partners such as Uber Eats team up with us in our vision of enabling over 10,000 township businesses to access growth opportunities. This is an outstanding example of the power of public-private partnerships, and we are proud to be working together on a project which is certain to change the lives of thousands of South Africans," added Motara.

Molewa added that the partnership provides a platform to invite emerging online e-commerce platforms to participate in township economies and, on the flip side, makes it possible for township enterprises to expand their reach beyond local markets.

"When we first started operating in South Africa 10 years ago, we committed to creating an impact as a partner for continued growth, driving innovation in our communities, and we plan to continue in this manner," concluded Molewa.

Last month, South African ride-hailing drivers from Uber, Bolt and inDrive suspended their services for a few days in protest of poor working conditions, safety concerns and low wages.

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*Top image source: cottonbro studio on Pexels.

— Paula Gilbert, Editor, Connecting Africa