Uber’s Interest In Kenya’s Minibus Public Transport – What You Should Know
Road transport is big business in Nairobi. According to the survey released by The Kenya National Bureau of statistics Economic survey of 2017, public road transport contributes USD 6.6 Billion to the GDP with marginal growth each year pushed by rural to urban migration. Public mini-buses locally referred to as ‘matatus’ are used by about a third of Kenyans in Nairobi as the dominant means of transport as they travel from home to work or school, government offices, to food markets and retail stores including trips to hospital, leisure and tourism as well as the necessary trip back home. To prevent individuals from running a single minibus as a business, all matatus in Kenya seek affiliation to a group that is called a Sacco that grants them the right to join routes allocated to them.
Over the years, 635 Saccos in the transport industry have sought registration from the Transport Licencing Board (TLB) allowing their members to operate minibuses along specific routes. With each Sacco owning an average fleet of 20 mini-buses that are either a 14-seater, 40-seater or a 60-seater and at least a two drivers and two customer service crew referred to as ‘conductors’ these mini-buses ferry passenger all day with some beginning as early as 4 a.m until 11 p.m with particular routes in busy urban centres running 24 hours a day. This brings the human resource count in the public road transport to a modest approximation of about 24,000 drivers and 24,000 conductors. Transport out of major towns to the provinces is also run by private operators with vans as well as bus companies that cover long distances routes.
Uber’s interest in the Kenyan public road transport reported recently is bound to cause further disruption when they begin testing then rolling out its version of what could be called “Uber Mat” When Uber launched in Kenya four years back, its business model disrupted the local taxi industry by linking customers directly to cab owners licensed to them via an app with Uber generating income from a percentage of the fare charged to the customer with the promise of lower cab fares attracting users to this platform. The App could also be used to identify the nearest driver as well as provide fare estimation ruffling the feathers of thousands of traditional local taxi operators who up to now have not been able to employ software technology in product improvement or development.
Already 6,000 drivers are signed on the Kenyan Uber platform. Uber computes economic opportunity based on the number of people who have downloaded its App with active users being the ones who have ordered a ride from the app at least twice. Kenya is already Uber’s second busiest market after South Africa with 363,000 active users in Kenya as reported in September 2017 competing for business with other ride-hailing apps operated by Taxify, Little Cabs with more and more players taking an interest in this market segment and a Russian operator mulling entry.
With Public transport known to be affected by three key factors revolving around cost, safety and time Uber’s new mini-bus offering could be a game changer with many commuters in urban centres known to travel to a central position before taking a second vehicle heading to their final destination. This could partly be the reason behind long traffic jams in Nairobi that clog major highways. Mombasa Road, Ngong Road, Jogoo Road, Waiyaki Way, Langata Road, Thika Road are perhaps the most widely used in Nairobi as the routes serve the major exit points into and out of the capital. Nairobi residents without personal cars often navigate complex routes as part of their daily commute wasting valuable time as they shuttle between destinations. If you stop to ask workers in Nairobi’s busy industrial, trade and office locations in Gikomba, Westlands, Karen, Upper Hill and Nairobi’s Industrial Area – a good number of them might come from as far as Umoja, Embakasi or Githurai yet there is no direct public transport from those locations straight to these busy office locations and trade areas.
Sharing a minibus taking a direct route with other people could offer a practical solution that many people would gladly consider. There is indeed a 14-seater that carries passengers leaving Westlands heading to Thika Road every evening although commuters that know this unofficial route are not able to tell if they are in time or might have missed it when they get to the pick-up point know in most towns in Kenya as the “stage.” Compared to other forms of road transport, cabs are known to be much safer although not entirely free from rogue operators that have been known to harass passengers including isolated incidents of hijackings which tend to occur in specific areas where security is a general concern.
Drivers’ frustration with Uber is mostly centred around their earnings per trip resulting in protests and service disruptions when they keep their vehicles away. Lower fares promised to customers mean that they have to either run more trips or earn less with each ride billing ranging from as low as USD 1.5 to USD 3 affecting how much they could take home per day. Drivers are known to strike or hold protests to negotiate for better terms since the majority of them are saddled with loans they took to get the vehicles. Other drivers are known to use rogue apps that tamper with the GPS locations allowing them to bill the client a longer route than the one they took. In order to keep drivers on its platform, Uber is known to organise for vehicle purchase agreements under MOU’s signed with with vehicle manufacturers like they have done in Kenya where they facilitated drivers who qualify to acquire 800 cc Suzuki Alto’s at a subsidized cost of USD 8,350 and launching a lower-priced service band labelled “Uber chap chap” which has been in operation for about a year as reported. About 500 such vehicles are on the road in Kenya covering short distances in urban centres.
At the centre of Uber’s opportunity is the ability to attract users who would never have ordered a cab to try and experience the convenience of an Uber ride. For most people, the cost of a taxi on one trip could easily cover their four days’ transport expenses on sometimes loud Nairobi matatus. To attract new users to download its App, Uber has taken to billboard advertising along major highways in Kenya using imagery that plays into the users psychological reason for taking a cab including status, safety and comfort. Not all downloads of their App lead to riding requests and not everyone who uses an Uber order the second ride. To further stimulate its uber app usage, Uber launched Uber eats in partnership with selected fast food restaurants that mostly serve pizza – the staple food of middle-class Kenyans. Uber’s interest in public minibuses could also be an attempt to break into the masses at the base of the pyramid the majority of whom rely on public transport.
Traditional taxis, on the other hand, have had no basis for determining standard fare charged for any route. Airport transfers attracted the highest charge as it was assumed that the customer belongs to a social class that already affords air tickets only used by wealthy people. Cab drivers, therefore, relied on fewer customers who are not price conscious and would easily even pay three to five times what the typical fare might be to sustain their business. There are least hundreds of cab drivers who were not affected by Uber since they have established relationships with clients built over many years with customers who use their services. A regular cab driver can help you move household items or vegetables from the market without much fuss. Maintaining a good relationship with a local cab driver makes it easy for some customers to request to pay later after a week or even a month of regular use a benefit that Uber is not presently able to offer. To remember which customers owe them, most cab drivers would either note down the bill in a voucher or remember all trips by the head – in sharp contrast to Uber’s software that collects and archives accurate data on customer and driver journeys.
The Kenyan transport system which is known to be infiltrated by groups that take charge of pick-up and drop off points often charging minibuses a fee for the right to use their bases could pose an initial challenge to Uber’s minibuses before they develop neutral pickup points not presently handled by these groups. Matatu crews are also notorious for sometimes flouting traffic laws including hiking fare prices especially during peak times or when it rains heavily. Uber’s new service of shared minibuses could prove to be a welcome relief and also open up new opportunities in the tourism and leisure industry making it easier to organise inexpensive leisure trips to places of interests either over the weekend or during public holidays – and sports fixtures that draw legions of loyal fans blasting vuvuzelas en-route to sports stadia. The recent building of roads on the outskirts of the capital serving the north, south, east and west in by-passes that make it possible to go round the capital without getting into the city have also opened-up new routes not presently served by public minibuses.
Some of the routes that will undoubtedly not get affected by Uber or could one day be disrupted in an entirely different way include Kibera-Industrial area, Eastleigh-Majengo-Town and Kawangware-Yaya where most people prefer to cover distances of between 7 to 10 kilometres on foot due to tough economic realities or the love of fitness developed by walking. Most of these residents probably own decent mobile phones or mid-range feature phones that cost a lot more to buy and maintain, though the thought of buying bicycles has never crossed their mind.
Uber’s entry into Kenya’s public transport could, therefore, prove to be a game changer in the same way it has disrupted the local taxi business in Kenya. Perhaps local mini-buses could learn from it and also use technology to diversify their product offering and continue to serve customers in this highly competitive road transport industry.
Feature image: Matatu in Nairobi (source: WeeTracker Media)