In May 2014, the World Bank stated in its Cairo Traffic Congestion Study that about “EGP 47bn are wasted every year in the Greater Cairo Metropolitan Area due to [traffic] congestion”. This number is expected to rise to EGP 105bn by 2030, amounting to 3.6% of Egypt’s gross domestic product, according to the World Bank.
With traffic worsening, especially in Cairo, companies and startups worldwide have started offering solutions to transportation problems, especially in emerging markets and developing countries. In Egypt, international companies like Uber and regional services like Careem have started to gain a strong foothold in the market, offering their customers cars and drivers to drive them across town.
However, the local startup ecosystem is also coming up with its fair share of solutions and services, making Cairo’s traffic a bit more bearable. Services like the traffic-update app Bey2ollak and the carpooling app Raye7 have started to emerge and gain traction from frustrated, smartphone-savvy Egyptians.
Egypt has its very own competitor to Uber and Careem, and it is called Ousta. Although the service only launched in February, the Ousta Transportation Network Company managed to spread its services across 10 cities. It is available in Cairo, Giza, Alexandria, and some governorates in Upper Egypt and the Delta, as well as the Red Sea area.
Founder and chairperson of Ousta, Nader Batrawi, spoke to Daily News Egypt about the development of his company, announcing that he plans to finance the future expansions of the company with EGP 50m.
The company currently operates 4,000 cars, aiming to reach 10,000 cars by the end of this year. Ousta started negotiations with local investors to fund the company’s future expansion in exchange for a non-controlling interest, meaning equity below 50%, and a new agreement is expected to be finalised within the coming months, according to Batrawi.
How do you see the future of passenger transport applications and service applications in general?
The use of mobile phones has increased significantly, especially after the spread of smartphones. They have become a part of people’s daily lives, and the emergence of mobile service applications came to meet the needs of individuals who depend on their mobile phones.
Mobile phone applications are becoming more popular, especially those providing non-traditional services, such as passenger transport applications. These applications made it easier for mobile phone users to book a ride through their phones. The users can now identify the model and the specifications of the car as well as the driver, seeing how former passengers rated him. This is an alternative to the traditional means of transportation, which people complain about.
What do you think of the investment of the Saudi Arabian government in Uber?
The Saudi Arabian government recently invested about $3.5bn in Uber. In my opinion, this move was not the best decision. The new investment could have created at least three local competitor companies in the Middle East.
I think that Arab startups have a lot of creative ideas, and if they received such investments, they would be able to enhance their businesses and finance their expansions. It would have been better if the Saudi Arabian government financed an Arab company to compete with Uber. For example, Uber is suffering massive losses in China due to the presence of a local competitor, supported by the government. If the aforementioned sum would have been invested in a better way, it would have achieved a much better return.
In how many cities are the services of Ousta available?
We are providing our services in 10 cities: Cairo, Alexandria, Hurghada, Suez, Ismailia, Zagazig, Tanta, Mahalla, Mansoura, and Aswan. We are using 4,000 cars, and we are working on increasing them to 10,000 by the end of 2016. We also plan to expand our services at the regional level by the beginning of 2017.
What differentiates Ousta from its competitors?
Ousta makes the process of transporting individuals easier and safer through connecting them with a modern, sophisticated, air-conditioned, safe network of cars. The cars are driven by professional drivers that undergo periodic background checks and drug tests. We also develop their skills through periodic and specialised training courses.
What are the standards upon which drivers and cars are chosen?
Ousta has very precise standards for all its cars and drivers. For the driver, the most important aspect is that he passes the driving test, drug test, and has no past criminal records. The driver is then trained on the rules of basic driving safety and dealing with customers appropriately, in addition to abiding to the traffic rules and laws.
The car must be new and air-conditioned, and it must pass a very thorough technical test. It is then provided with regular maintenance in order to ensure its security and safety. The cars must be air-conditioned sedans. The model of the car must be 2012 or later; however, Chinese cars, Lanos and Verna, must be 2014 or later.
What are your plans to attract investment to finance your expansion during the coming period?
We target attracting investments in the coming months at the regional and local levels. According to our plans, we are going to inject roughly EGP 50m in the Egyptian market by expanding our company by 2017.
Are you negotiating with companies to get investments?
Yes indeed, there are negotiations underway that started a few months ago with a number of companies and investors to finance our expansion. We are expecting to sign a final agreement during the coming months. We are going to agree on giving up non-controlling interest against the expected investment. We are expecting to attract EGP 50m worth of investments.
Are the economic conditions in Egypt affecting your negotiations to attract investors?
Egypt is going through difficult times economically, but it is temporary. I believe that this does not affect attracting investments, because investors don’t waste good opportunities. Despite these conditions, our company was able to compete with two major companies in the field of passenger transport in the world, which supports our chances to grow in the future.
What if you cannot get local investment?
We are currently running serious negotiations with a number of investors, and we expect to sign an agreement with one of them. If we do not reach an agreement with these companies, we will resort to investors in the Gulf region─especially since the company already has plans to expand regionally, starting with the United Arab Emirates.
Is the Egyptian government falling short of investment in the field of entrepreneurship and startups?
The entrepreneurial sector and startups do not only require financing─this is just one of the challenges they face. The government needs to ease many other challenges, such as the flexibility of the law governing the establishment and exit of new companies, in addition to providing startups with some advantages, such as exempting them from taxes for a specific period.
That does not mean that the government should not invest in the sector. Most of the governments in the region, led by Jordan, have specialised investment funds to finance startups and entrepreneurs. Consequently, the private sector becomes motivated to invest in the entrepreneurial sector, and that will increase the growth rate of companies.
Why was the name ‘Ousta’ chosen?
Ousta is a word of Turkish origin that means ‘professional’. It was used to describe individuals who are professional and clever at what they do. For us, Ousta means a driver who is professional and clever─not only in driving, but also in dealing with customers and various situations. We aim to provide our customers with professional drivers in modern air-conditioned, safe cars, at a reasonable cost through a mobile application. We consider this one of our main advantages.
You have seen Uber and Careem’s problems with the white taxis─how do you evaluate the situation?
Egypt has more than 90 million citizens who are constantly commuting day and night. Generally, the winner is the one who offers high-quality services with reasonable prices, which eventually benefit everybody.
Our main goal is not to compete against the white taxi, but to serve society and enhance quality and safety standards in general.
What is the legal framework through which you deal with issues like licensing and such?
Ousta is a shareholding company that is subject to the supervision of the Egyptian Financial Supervisory Authority. It has a commercial record, a tax card, and licensed activities on the commercial record, including renting cars and road transportation for individuals.
We also deal with car-renting companies and offices that are all licensed and registered. All drivers and cars are also licensed; hence, we have all the required legal papers.
How can customers pay Ousta?
Customers can pay with credit cards or cash payment.