Fighting the Global Cost of Living Crisis
In the last four years, one word has come to dominate popular discourse in most developed economies: inflation. As prices surged following a perfect storm of the Covid-19 pandemic and a global energy price shock, governments across the G7 have made tackling the rising cost of living a top priority.
But inflation hasn’t been limited to major developed economies - in fact, it’s been even more pronounced in many emerging markets. These economies are often more dependent on imports for key products like energy, more prone to foreign exchange instability, and have weaker monetary policy institutions to manage these risks. The result: emerging markets consumers are more exposed to rising prices.
Whilst the rising cost of living in emerging markets is a macroeconomic phenomenon, shaped by global factors like energy prices and monetary policy, it also reflects market inefficiency. Fragmented supply chains, limited access to affordable financing options, and anti-competitive behaviour by large, monopoly players.
Take food delivery, for example. In Pakistan, a McDonald’s Big Mac Meal on Foodpanda is priced at 1,173 Pakistani rupees, or around US$4.2. Compare that against an in-store price of 995 rupees, or $3.55, and we can see that consumers face an 18% mark-up.
Take another example - logistics. A recent study by United Nations Trade and Development found that median transport costs for maritime trade in developing countries were twice that in developed economies. This doesn’t just mean that vital imports cost more - it also makes it harder for these economies to develop by exporting to global markets.
The human impact is accentuated by the fact that people in emerging markets generally spend a greater share of their income on essential goods like food and transport. For example, food represents up to 51% of household spending in Nigeria and 38% in Mexico, versus only 11% in the US.
However, inefficiency begets opportunity. That’s why at inDrive, we see the rising cost of living as a chance to disrupt the status quo by simplifying supply chains, cutting out the middle-men and taking on monopolists. The problem is both ethical and financial, but the solution is also an economic opportunity that can enhance the spending power of hundreds of millions of people across the world’s most dynamic emerging markets.
At inDrive, we serve a fast growing audience of more than 60 million monthly active users in 48 countries. Our core mission is simple: give these consumers a fair choice in ride-hailing by allowing them to negotiate directly with drivers, and by charging a market-beating low commission of only 10% for doing so.
But our mission is bigger than just ride-hailing. Our New Ventures division is focused on finding solutions to make key services across mobility, food, groceries, and e-commerce more accessible for middle-income families in our key markets, from Latin America to the Middle East, to South East Asia.
If you are building something that helps to make vital services cheaper and more accessible for the mass market, we’d love to hear from you. Please feel free to reach out through our website, or to me directly on LinkedIn.
Andrew Hayley
Investment Principal - inDrive New Ventures