Kenya’s ride-hailing drivers struggle as price war with apps escalates

In Nairobi, Kenya's bustling capital, taxi drivers are facing unprecedented challenges as a price war among ride-hailing companies intensifies. For Judith Chepkwony, a seasoned driver with eight years on the road, business has never been this tough. A fierce competition between international giants Uber and Bolt, and local contenders Little and Faras, has driven fares to unsustainable lows, leaving drivers grappling with how to make ends meet. The situation has become so dire that many drivers are now setting their own rates, risking penalties from the platforms they work for.

The Strain on Drivers: Rising Costs and Unpaid Loans

Chepkwony's experience mirrors that of many drivers in Nairobi, who are struggling to keep up with the rising cost of living and loan repayments on their vehicles. "Most of us have these cars on loan, and the cost of living has risen sharply," Chepkwony explains. To make her business viable, she often tries to negotiate higher fares with passengers. "If they can't pay, we cancel and let them find another driver," she adds, highlighting the tough choices drivers must make daily.

Ride-Hailing Platforms’ Response: A Clash of Interests

However, these informal fare negotiations have not gone unnoticed by the ride-hailing companies. Uber, in particular, has stated that such practices violate its guidelines and has urged drivers to comply with the standard rates set by its algorithm. This sets the stage for a growing conflict between the global ride-hailing industry's automated pricing systems and the economic realities faced by drivers in one of its largest emerging markets.

Economic Pressures: A Nation Struggling with High Costs

Kenya, a nation of 50 million people, has been under severe economic strain, marked by widespread protests against tax hikes, soaring prices for basic goods, and high-interest rates. These factors have significantly reduced disposable incomes, compounding the difficulties faced by ride-hailing drivers. With relatively low car ownership rates, countries like Kenya, Nigeria, and Tanzania are crucial markets for Uber in Africa. But these markets have proven challenging, with drivers going on strike multiple times over the past year due to low commissions.

Drivers’ Collective Response: A New Approach to Pricing

To counteract the unsustainable fares dictated by ride-hailing platforms, drivers in Nairobi have started to organise collectively. Many use walkie-talkie apps like Zello to agree on higher fares among themselves, ensuring customers face consistent pricing regardless of which app they use. Additionally, some drivers have created their own fare guides, which they post inside their vehicles to inform passengers of the rates they are willing to accept. "We first ask the client where they are going and how much is shown on the app," says Erick Nyamweya, a Nairobi-based driver. "Then we propose a rate based on our chart, which can also be done by quickly multiplying by 1.5. If they agree, we take the ride. If not, we either negotiate further or decline."

Local Start-ups: A Small Victory for Drivers

There has been some progress in addressing drivers' concerns. Local start-up Faras Cabs recently raised its fares by up to 20% in response to drivers' demands, according to Osman Abdi, the company's Chief Commercial Officer. This move, while a positive step, underscores the broader issue that the industry faces—balancing the needs of drivers with the expectations of customers.

The Customer's Perspective: Time and Money Wasted

For customers, this new reality has introduced a frustrating element to what should be a convenient service. "The negotiations end up taking so much time that it defeats the purpose of using a cab to save time," laments Lameck Owesi, a frequent ride-hailing user in Nairobi. This added inconvenience, combined with the higher fares, means that customers are now paying more in both money and time.

A Complex Future for Kenya's Ride-Hailing Industry

As Kenya's ride-hailing industry continues to evolve, the ongoing tension between drivers and platforms is likely to persist. With economic pressures showing no signs of easing, drivers are increasingly forced to find ways to make their work viable, even if it means bending the rules. Meanwhile, ride-hailing companies must navigate the delicate balance of keeping their services affordable for customers while ensuring that their drivers can earn a sustainable income. The outcome of this struggle will shape the future of ride-hailing in Kenya and potentially across other emerging markets in Africa.

(Inputs from Reuters)