SA is not the only country to be caught off-guard by the emergence of Uber, the innovative e-hailing taxi service. We are not the only country to witness heated resistance from the existing metered taxi industry. And we’re not the only country grappling with ways to align our regulatory framework to provide for an entity such as Uber.

Because of its rapid rise and its unusual business model – it operates as a mobile app that allows consumers to request trips with the nearest available Uber drivers – we were caught napping and our regulatory framework now has some quick catching up to do.

Today Uber operates in more than 300 cities spread across 58 countries. And in many of these countries they are portrayed as the bad guys – the new unlicensed, unregistered upstarts muscling in on the lucrative territory of law-abiding cab drivers. Anti-Uber protests have spread across a host of European countries, including the UK, France, Spain and Germany. In fact, the Uber service has even been banned in certain cities, including Berlin.

It is an issue that polarises opinion like few others. Defenders of Uber point to the way it has shaken up the market and delivered a service that was never there. Opponents of Uber point to the lack of proper licensing and registration of drivers and how this affects passenger safety. It is worth mentioning here that, wherever there is resistance to Uber, it is not the consumers who are complaining.

Let me make my position clear right from the start: Our economy needs innovations like Uber. We also need to ensure that the service is safe and lawful. And we can’t allow the debate to conflate these two issues.

One is about the need for competition, innovation and precious job creation in the transport industry, and the other is about ensuring that anyone who drives members of the public around complies with laws designed to protect these passengers.

It is entirely possible to support both these views.

You don’t have to be a business guru to understand the value of competition in any sector of business. Competition is what drives an economy forward. The obvious benefit of increased competition is to the consumer, in that it drives down price and improves service.

But equally important, competition offers people choice. There are countless examples of products and services where price is not the sole determinant. People have a multitude of unique reasons why X is a fit and Y is not. Competition presents alternatives for consumers who simply are not satisfied with any of the existing options.

Competition is also crucial to the growth of any industry, and the growth of individual players within the industry. It forces businesses to become creative, it prevents them from becoming complacent and it offers fresh new solutions that all players in the industry can borrow from.

This is the essence of modernisation. Through innovation, we all move forward. As people modernise and their needs change, industries have to do the same to keep up. If we choose to remain where we are, we will cut ourselves off from global trends and influences. Our apartheid history can teach us some valuable lessons about the dangers of isolation.

Competition drives innovation, innovation drives growth and growth drives job creation.

But here it is worthwhile to distinguish between sustaining innovation and disruptive innovation. Sustaining innovation is when products or services are created to meet the future needs within an existing market – something entrenched market leaders are very good at through market research and product development. Disruptive innovation creates entirely new markets, and here market leaders are often slow and clumsy in their reaction.

Uber is a classic case of a disruptive innovator, and it is precisely the type of innovation we should encourage and enable.

In addition to the obvious service benefit to consumers, Uber is a job creator. At the start of this year they already had 2000 “partner drivers” across four cities in SA, and predicted that they could ultimately create around 15 000 jobs over the next two years.

Their business model offers a great platform for employment with limited barriers to entry. In a country where unemployment poses the biggest threat to our future stability, we are in no position to turn down these jobs.

So what should government’s role be in the Uber issue?

It’s not up to government to run or protect the metered taxi industry. The role of the state is simply to put a regulatory framework in place that does two things: allow for efficiency in our economy and ensure that there is no exploitation in the industry.

Importantly, these regulations will then have to apply to everyone, including the many metered taxis that currently operate outside of this framework.

Uber’s business model could very well represent the future of the metered taxi industry, or it could implode within a year or two. There is no guarantee that a new innovation will boom. The important thing is to give the consumers the choice and let the market decide.

If the existing metered taxi industry is afraid of being left behind, their response should be to explore innovations of their own and not to hide behind regulations or to try and bully Uber out of the market.

In recent years, technologies like BBM and WhatsApp revolutionised the way we communicate with short text messaging. The big cellular service providers couldn’t realistically expect their SMS services to be protected from these disruptive innovators. Music stores can’t be protected from iTunes. Magazines and newspapers can’t be protected from online content.

Those who innovate, move forward. Those who don’t, are left behind. The metered taxi industry is no different.

With Uber, government has the opportunity to provide leadership on how to effectively respond to a market disruptor. The right kind of response could become a blueprint for similar models in other industries.

If we are serious about growing our economy and creating jobs, we must do all we can to enable competition and innovation in every sector of the economy. DM