Uber now struggling after making a dramatic entry

Uber drivers protest outside Parliament Buildings on February 23, 2017 over the 25 per cent cut by the online taxi. The company finally bowed to protests and raised its fares, but the drivers are still complaining they are low. PHOTO | DIANA NGILA | NATION MEDIA GROUP

What you need to know:

  • I’m an enthusiastic Uber rider and have used the app in more than 10 countries.
  • I was involved in the UberCHOPPER pop-up service last year, and I have friends who drive for the service.
  • Most of them struggle to feed their families and still make their obligatory payments and that’s at the heart of the matter.

When Uber launched in Kenya in January 2015, it promised a “low-cost alternative to move you around Nairobi in a safe, cheap and reliable way”. The base fare for the American taxi-hailing company was Sh100, while it cost Sh4 per minute and Sh60 per kilometre. It was disruptive for the traditional taxi business, but it didn’t anticipate Safaricom and Craft Silicon partnering to launch a competitor deceptively called Little, or others like Taxify, Mondo Ride and Pewin Cabs. In July 2016, it was forced to drop prices by 35 per cent in Nairobi to remain on the road. An uberX ride now cost Sh35 per kilometre instead of Sh60, and Sh3 per minute instead of Sh4.

“With cheaper fares, we believe Uber can now be a true alternative to people driving their own cars into the city centre, with all the hassle and cost that parking brings,” a blog post announcing the rate cut said. It cited a 2014 case study of how a 20 per cent drop in prices for riders in New York City rates gave drivers higher earnings. It claimed that drivers spent less time idle because they got more requests, so they spent more of their time with paying customers. “As a result, drivers are able to log less hours while making the same amount of money as they did before,” a statement said.

Last October, Uber also slashed prices in Mombasa using the same argument. “More rider demand and more drivers on the road mean that drivers spend less time waiting around and more time moving people and earning fares,” Uber’s East Africa Marketing Manager, Dip Patel, wrote in the announcement. But the expected increase in earnings for the drivers failed to materialise, and protests quickly followed. More than 800 drivers, through the Digital Taxi Association of Kenya, even went to court accusing Uber of restrictive trade practices. “Despite the arbitral reduction of fares to the detriment of the plaintiffs, Uber’s commission of 25 per cent per transaction remained in force, leaving the drivers to absorb all appertaining costs,” the lobby said in its filings. “Uber’s actions were actuated by malice and in furtherance of a conspiracy to exploit the plaintiffs and dominate the taxi business.” 

Car owners in Kenya typically asked for Sh3,000 per day from their drivers, regardless of how much they had made. The drivers are required to pay for fuel and the 25 per cent commission from their daily income. Most of them ended up working longer hours for much less than they were used to making. BRCK Moja President Peter Ngunyi got into two accidents involving two separate Uber drivers at the exact same spot in Nairobi on two consecutive days. “The driver admitted to blacking out due to fatigue and was so disoriented that he did not even know what had happened,” he wrote in a now-deleted post. The crash, which threw his heavy Mercedes SUV into a ditch, happened at 11am. The following day, he says, another sleepy Uber driver rear-ended a car in front of him.

LONG WORKING HOURS

Both “driver partners” (that’s what Uber calls them) had probably worked through the day and night just to survive. Ngunyi pointed out that an Uber driver in California wouldn’t be allowed to be logged in for 30 hours straight because they would be considered a danger to themselves and others. “However, for multiple reasons like having enough drivers in circulation, drivers being forced to meet targets and ultimately to fatten this pig for investor value, we the African people are not afforded the same safety standards as places where the legality of such a prospect is questionable, if not flat out immoral,” he lamented.

I’m an enthusiastic Uber rider and have used the app in more than 10 countries. I was involved in the UberCHOPPER pop-up service last year, and I have friends who drive for the service. Most of them struggle to feed their families and still make their obligatory payments and that’s at the heart of the matter.

Last week, Uber jacked up its rates in Nairobi and Mombasa after a revolt by its drivers. It now costs Sh42 per kilometre in both cities and the base fare in both is also Sh200.

“We believe driver-partners will earn more as a result of these changes,” an e-mail to consumers said. The firm is a marquée property in the sharing economy but its latest challenges are also a master class in the challenges of this new world order. Uber became the world’s biggest taxi company in a few short years, yet it does not own a single vehicle. When a revolutionary idea becomes borderline exploitative and the providers feel enslaved, it is counterproductive. The effect of Uber on the previously hopeless Kenyan taxi business and their inexplicably prohibitive prices cannot be ignored, but this empire is built on sinking sand.

 

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Why on earth do we need doctors from Tanzania?

The ink had not even dried on the return-to-work formula that ended the 100-day doctors’ strike when the government announced one of its most baffling decisions. Tanzania would be sending  us 500 doctors to cover a shortfall and deal with the after-effects of the strike. The government doubled down on Sunday, declaring that it would process work permits for the medics to allow them to work in public health facilities.

Kenya is bending over backwards to accept possibly second-rate, unemployed Tanzanian doctors when that country doesn’t even like us. An abridged history of Tanzania’s contempt for Kenya would be too long to be abridged. It is easier for a Kenyan to win the lottery than to get a work permit in Tanzania. They say they are in the East African Community but they aren’t really keen on being here.

The Kenya Medical Practitioners and Dentists Union says there are qualified Kenyans who can fill those slots so why are we sucking up to Tanzania? President John Magufuli even lectured us on Kenyan vices while on an official visit here and we didn’t even catch feelings? This is a sick deal that needs treatment on its own.

 

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The ban on plastic bags long overdue

One of the reasons  Kigali is among my favourite cities is because of how clean it is. This isn’t always true the further away you are from the city centre of the Rwandan capital but the effort is appreciated. There is not a single plastic bag in sight and now Kenya might be heading that same way from September 1.

Environment Cabinet Secretary Judi Wakhungu has banned “the use, manufacture, and importation of all plastic bags used for commercial and household packaging” through Gazette Notice Number 2356. There are  industries  that might  be forced to shut down and possibly thousands who might lose their jobs as a result.

The economic argument is compelling, but every rational person should focus more on the environmental benefits this promises. If we could twin this with a legal requirement to sort our waste and a proper disposal or management mechanism, the impact would be huge.