Murkomen vows to address challenges in ride-hailing business

The government has pledged to work closely with stakeholders in the ride-hailing business to address challenges in the sector.

Roads and Transport Cabinet Secretary Kipchumba Murkomen noted that there is immense headroom for the ride-hailing industry in the country to grow and develop further.

“The role of government in this growth is to create an enabling environment that includes policy, institutional, regulatory and infrastructure review,” he said.

Murkomen said service charges need to be high enough to give vehicle owners, drivers and operators good returns but affordable enough for consumers.

Uber, Bolt, Little, Uber, Yego and Farasi are among the ride-hailing firms which have been licensed by the National Transport and Safety Authority and currently operating in the country.

The CS noted that intense competition has fostered further innovation in ride-hailing.

He said the competition has seen the introduction of digital hailing in mass public transport.

He added that completion has also seen the introduction of ride-hailing services that focus only on women and children and the extension of the services to small towns where large firms do not operate. 

He spoke at a Nairobi hotel during the official launch of ride-hailing taxi services by Yego Mobility Limited.

Murkomen assured that the government will improve the business environment for the public transport sector through the development of relevant policies and regulations.

“In such a fast-evolving industry, we realise that updates to regulations may be required more frequently than in other sectors and we pledge timely action to support the growth of this industry,” he said.

Murkomen told the meeting Transport Network Companies (Owners, Drivers and Passengers) Regulations, 2022 are in force.

The regulations are meant to guide the operations in the digital taxi-hailing sector. They were Gazetted on June 22, 2022, and came into force in February this year upon approval by Parliament.

“The Regulations make it mandatory for every company before being licenced to be a registered company, be tax compliant, be registered by the Data Commissioner as a data controller and have a physical office in Kenya,” the CS said.

The regulations have set the maximum amount of commission paid by the driver or owner of the taxi at 18 per cent of total earnings per trip.

Yego CEO Karanvir Singh said the company had complied with all the Regulations and was ready to take over the Kenyan market.

“This is a locally-owned company with a keen interest in ensuring the interests and welfare of the drivers are well taken care of. Unlike, other companies that upped their rates to the 18 percent mark to maximise profits, we have capped the commission we receive from drivers to 12 percent all-inclusive, meaning the driver walks away with 88 percent of his earnings. These payments are made 60 seconds after the trip has ended,” he noted.

“In addition, we cater for our drivers’ NHIF costs and have insured them against personal accidents. In addition, 10% of the annual dividend from the drivers goes to YEGO Sacco as an effort to secure their future, with their savings enabling them to get access to car financing,” added

Singh further stated that the company had a 24-hour live agent help desk to deal with any emerging issues including the safety and concerns of the drivers and passengers.

The CS noted that a study by a research firm in 2019 revealed that only two per cent of respondents reported using digital taxis as primary transport while one per cent reported using digital taxis as a secondary mode.

“The above statistics point towards a potentially huge unmet need for ride-hailing services,” he stated.

The CS noted that ride-hailing usage is skewed towards younger people, with two-thirds (66 per cent) of the users being below 35 years of age.

He said the study concluded that ride-hailing taxis are not direct competitors to matatus.

He however said there was room for matatus and buses to adopt digital technologies to enhance their services in light of evolving customer demands.