Sharing economy: Embraced by Kenyans but stifled by virus
THE STANDARD INSIDER
By Winnie Makena | July 7th 2020
The coronavirus is tightening its grip on every sector of the economy. Not even the digital market place can breath with ease.
Online platforms, which are at the very core of the sharing economy -- an economic model defined as a peer-to-peer based activity of acquiring, providing or sharing access to goods and services that is often facilitated by the internet -- are struggling.
And people like Caroline Njoki, an Airbnb host in Nairobi, knows this only too well.
Airbnb is an American technology company that offers an online marketplace for hospitality services through its websites and mobile applications.
“When I joined Airbnb in 2017, I had no idea what it was all about. Two years later, my three houses had a 80 per cent occupancy. But now because of Covid-19 impact. I am back to zero visitors. I am planning to sell all the furniture and remain with empty houses. I cannot afford the current arrangement,” Ms Njoki said.
Njoki is understandably worried about the future of her business. She joined Airbnb when she lost her job and had to find a way to keep up with her lifestyle.
She started with her three-bedroom house in Nyayo Estate. She slowly built momentum and acquired two more houses around Nairobi which she furnished and listed on the app.
“I have had to drastically lower my rates from $70 (Sh7,461) to $50 (Sh5,329) to attract whatever few visitors I can,” said Njoki, who has had to let her part-time employees go.
She is not alone. Mombasa-based Teizeen Kassam, who owns four properties which are all listed on Airbnb, is also facing tough times.
“In a month, I would have many guests staying for a day or two. I was guaranteed visitors for at least 15 days of the month,” Ms Kassam said.
Njoki and Kassam are part of a huge network of people behind the 65,000 rental listings on Airbnb, who are now bearing the brunt of the coronavirus.
Up until 2015, Airbnb was quietly taking root in Kenya. No one was paying it any real attention despite its takeoff globally.
That was until CEO Brian Chesky arrived as part of former US President Barack Obama’s delegation. He created enough chatter to have people interested in the concept. By the end of 2016, there were over 1,400 listings.
In 2017, Airbnb announced an investment of $1 million (Sh106.6 million) through 2020 to promote and support community-led tourism projects in Africa.
The number of listings increased to 6,500 by the end of 2018.
“I listed my properties on Airbnb at the beginning of 2019 although I have been in property management for over eight years. I realised there was a need for homeowners to have their apartments managed as Airbnbs instead of sitting idle. I have four properties all of which are listed as superhosts,” Kassam said.
According to an Airbnb report dubbed The Fastest-Growing African Countries for Airbnb Guests, Kenya has seen a year-on-year growth in guest arrivals that hit 68 per cent as at July 2018.
South Africa is at 65 per cent and Rwanda at 73 per cent.
Just as the sharing economy was gathering steam in Kenya and Africa as a whole, Covid-19 struck and many Airbnb hosts have had their bookings decimated.
The problems facing Airbnb and other online travel sites, such as Booking.com and Homestay.com have rapidly escalated.
Njoki said she already had a four-month booking from students in Sudan but it was cancelled at the last minute.
“I had already collected the money and now I have to refund it and discuss a way forward. If Kenya opens, it will be good for my business because many guests have already booked; they are just waiting for things to ease up,” she explained.
Airbnb said 60 per cent of its reservations had policies that allowed for half or full refunds. As a result, there has been a decline in revenue to the company and to its users.
Njoki said she is now forced to sell aquariums to make ends meet. Kassam, like Njoki and many other Airbnb hosts, has to wait for the easing of restrictions. She has also attempted to renegotiate terms with some of her employees and reassign them.
She reckons if the country opens, there will be major drops in her rates from Sh13, 000 to almost half.
To exercise caution, her properties will have to be fumigated. She said she will also provide sanitisers and masks for her guests.
She is already working on a plan to have remote check-ins to prevent contact with people. The online hospitality industry has been hit with losses amounting to $3 billion (Sh3.3 trillion).
Taxi drivers listed on ride-hailing apps such as Uber have had to devise ways to stay productive and earn a living during the pandemic.
“In March, when Kenya recorded its first case, I stopped working. For two months, I was just at home, eating away my savings,” said a Uber taxi driver in Nairobi only identified as Lazarus.
“When I had no more savings to dip into, I started driving again.”
Lazarus revealed that on weekends, and during night hours, he used to make a killing before the virus struck.
But after restrictions of movement kicked in, sometimes gets two rides in a day. “I will probably go back to hawking, which is what I did before I joined Uber,” he said.
Uber Country manager Brian Njao said the company is taking unprecedented measures to help everyone stay safe and healthy.
“Drivers will also be asked to confirm that they’ve taken additional safety measures such as regularly sanitising their car and making hand sanitisers available for their riders,” Njao said.
Riders will also be asked to wash their hands before getting into a car. Windows will remain open for ventilation. Njao further acknowledged the disruptions in the business by the virus.
“We know the virus is a concern for people who drive and deliver with Uber. In these difficult times, their well-being is at the top of our minds. Any driver or delivery person who is diagnosed with Covid-19 or is individually asked to self-isolate by a public health authority will receive financial assistance while their account is on hold,” he said.
It is no debate that Uber has revolutionised how we used taxis, just as Airbnb has changed the hospitality market. The sharing economy as a whole is full of disruptive technologies that change the way we do things. However, Njao noted that currently, questions linger about its future.
“As we think about where we want our cities to be in the future, we know that technology will continue to play a big role in solving the evolving needs of cities and urban challenges.
“We’re excited to move forward with cities,” said Njao, positive that there are still opportunities for further growth.
“Uber has adapted our technology in response to the current situation to help assist businesses meet the increased customer demand for delivery.”
In a May, the firm’s global head of travel and expense Anthea Crittle said the impact is significant.
She noted that there is no doubt the business-travel industry as a whole and travel companies in particular are feeling the pain.
As such, Uber shifted resources to Uber Eats to support the 10 million free rides and deliveries of food for frontline healthcare workers.
Just this week, Safeboda, a Kampala-based startup, rolled out its low-cost local food and grocery delivery services. The motorcycle ride-sharing app founded in 2014 has about 4,500 drivers in Nairobi and about 1,800-2,000 have been active during this season.
The question still remains: is the sharing economy doomed? Not necessarily, according to Crittle. Sharing ventures in hospitality, travel, tourism will see a greater short-term impact, till life returns to normal.
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