REGULATION

Uber faults proposed 15 per cent commission cap on trips

The regulation presents a barrier for the growth in the lucrative ride hailing sector

In Summary
  • The taxi-hailing business has been booming in Kenya, with apps such as Uber, Bolt connecting drivers and riders in major towns.
  • According to a 2019 report by MeryCorps, the online Kenyan gig economy is expected to grow by 33 per cent over the next five years, to $345 million in 2023.
Suzuki Altos used as Uber Chap Chaps
Suzuki Altos used as Uber Chap Chaps
Image: COURTESY

Uber Kenya is opposed to the government draft regulation that proposes a 15 per cent commission cap on trips terming it restrictive.

“As ride hailing firms we are all about policies that support innovation and businesses growth, however such a law will not be progressive for the industry,” said country manager Richard Njao.

The taxi-hailing business has been booming in Kenya, with apps such as Uber, Bolt and Little Cab among the main ones in connecting drivers and riders in major towns.

 

Investment in online taxi services has been on the increase, with KNBS data showing a surge in the number of public service vehicle (PSV) licences issued last year.

“This was mainly due to increased licences issued to PSV taxis using mobile apps and registered PSV Saccos and companies in 2019,” said KNBS.

The regulation therefore to cap commissions might present a barrier for the business to attract more people due to the low earnings.

According to a 2019 report by MeryCorps, the online Kenyan gig economy is expected to grow by 33 percent over the next five years, to $345 million in 2023.

Key growth sectors will include ride-hailing platforms (37 per cent average annual growth) and blue-collar matchmaking platforms (63 percent average annual growth) which present the highest income growth opportunities for gig workers.

“As a country, we are still trying to better understand the tech industry,even from a tax standpoint, and it is important that we explore ways of growing the industry, with progressive regulations,” said Njao.

“By not over-regulating the industry, policy makers will be able to modernise existing regulations, emanating in tens of thousands of new jobs and business opportunities being created.” 

 

He however noted that even as they oppose some clauses there are other avenues that the government could consider to drive growth and driver earnings.

“The government could provide ride hailing drivers with flexible pension and health schemes through NSSF and NHIF and this could be a win win.”

 

The Covid-19 pandemic also hit hard the ride-hailing industry as they were major restrictions of movement imposed in the country to reduce spread of the virus.

Uber for example reported a 70 per cent drop in activity from April till around July when the measures were eased

Despite the hurdles brought about the pandemic, the firm was able to launch a new service 'Uber Connect' that allowed people to send parcels and also had increased activity on it's food delivery platform, UberEats.