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Uber & Bolt Face More Regulatory Travails In Kenya Than Tanzania

By  |  September 27, 2022

In Kenya’s ride-hailing landscape, partner drivers working with Uber and Bolt are far from satisfied. In a new bout of strike and protest actions, they are expressing their discontent with the fact that the new commission charges that have been introduced by law to both platforms are yet to be implemented by the actors.

Yesterday [26th September], these taxi drivers staged a go-slow to urge the firms to lower their fees, barely a few days after Uber and Bolt’s 18 percent commission review was supposed to start taking effect. 

The policy was recently introduced by Kenya’s National Transport and Safety Authority (NTSA) and affects not just Uber and Bolt, but also all ride-hailing services in the country. 

Uber took the case to court, citing that it will most likely restrict its revenue model’s flexibility while jeopardizing its ability to negotiate favorable commissions. The cab-hailing giant also complained the downwards amendment would have adverse effects on the demand and competitive abilities of its investment in the market. 

“The introduction of 18 percent as the ceiling for the allowable commission has the potential to stifle innovation and reduce the petitioner’s economic feasibility of investing in the market,” reads a document filed by Coulson Harney LLP, the legal firm representing Uber.

While Bolt is yet to legally challenge the reduction or simply waiting for the ice to thaw, it is clear that it is not so eager to cut down its commission, which is why its drivers and those of its biggest rival [Uber] are taking to the streets to demonstrate. 

Ordinarily, Uber charges a 25 percent commission per trip, while Bolt takes 20 percent. As the regulation becomes law, these two platforms, undeniably, will have lots of restructuring to do to be in the good books of the industry’s watchdog. However, Uber would be taking the bigger blow, as it stands to shed 7 percent off, while Bolt can perhaps manage a 2 percent cut. 

On the drivers’ side of the development, an increase in fuel prices is also a huge factor, especially in Nairobi, where petrol now retails at USD 1.49 (KES 179.86) per liter and diesel at USD 1.37 (KES 165.37). 

Since Uber and Bolt are yet to effect the directed changes, drivers are displeased enough to threaten a temporary cessation of services, with reports of some intending to go offline in the coming times. 

“We are asking Uber and Bolt to obey the law. Regulations were supposed to take effect on September 22. This is the backbone of our strike which started today [26th Sept] morning,” said Zachariah Mwangi, chairman of the Organization of Online Taxi Drivers and Digital Taxi Association of Kenya.

Nevertheless, one player is not particularly affected. Little, a local player, charges a set 15 percent commission, lower than NTSA’s 18 percent benchmark, hence the reason its partner drivers are, apparently, not partaking in the debacle. 

In fact, should the situation remain unamended, it could be an opportunity for Little to win over drivers and succeed where its biggest rivals are lagging. 

Kenya is not the only market where the Uber-Bolt duo is facing regulatory hurdles. In the past few months, it has been just about the same story in neighboring Tanzania, where the Land Transport Regulatory Authority (LATRA) demanded commissions to be set at 15 percent. 

However, after months of twists, turns, and halts—Uber pulled the plug and Bolt switched to corporate-only rides—the regulators now look to redress and welcome these players back into the market with more favorable policies. Here, drivers were hardly part of the narrative; both players responded as they deemed fit to survive or operate profitably.

Tanzania is a smaller market compared to Kenya, the uncontended tech node of East Africa. While the former has 15 million people, the latter has not only 22 million but also a more developed digital ecosystem [which] Uber and Bolt might not be keen to give up on. 

It is also important to recall that, in May, Egypt’s soon-to-be-SPAC’d bus-hailing service, Swvl, abandoned the Kenyan market in a downsizing effort forced by the global economic downturn.

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