In Nairobi, Kenya, Uber drivers are struggling with unsustainable fare levels due to high price competition among ride-hailing companies.
Per Reuters, business has been more difficult in recent times for these drivers. The tough competition among international and local ride-hailing platforms has left many drivers labouring to make ends meet, prompting them to set higher fares than those displayed on the apps.
While dealing with car loan issues, there is also a rising cost of living. To cope, drivers often negotiate directly with passengers, persuading them to pay more than the app-generated fare. Approximately half of the passengers agree to the higher rates, enabling the drivers to continue working.
However, Uber and other ride-hailing companies have warned drivers against such practices, pointing to violations of company guidelines. This clash brings out the tension between the automated pricing systems of global ride-hailing platforms and the on-the-ground realities faced by drivers in one of Africa’s largest markets.
Kenya, with its population of 50 million, has recently been shaken by protests against tax increases and the soaring costs of basic goods and services, which have deteriorated disposable incomes.
Kenya, along with Nigeria and Tanzania, remains a key market for Uber and other ride-hailing companies in Africa due to its growing economy and relatively low rate of car ownership.
Despite this prospect, the ride-hailing sector in Kenya has encountered huge obstacles. Drivers have staged strikes multiple times in recent years, protesting against low commissions and unsustainable fares.
Uber’s Executives acknowledged receiving reports of customers being overcharged, urging riders to report such incidents. Another company representative stated that they are discouraging fare hikes while the industry seeks a balance between driver and customer needs.
In response to the challenging conditions, Uber drivers have found creative ways to circumvent standard pricing. Some use communication apps to coordinate fare increases, ensuring that customers encounter consistent pricing across different platforms. Others have produced and displayed fare guides in their vehicles, with rates that often exceed the official minimum fares set by the companies.
For instance, one fare guide reviewed by Reuters listed a minimum charge higher than that offered by the major ride-hailing platforms, which occasionally provide additional discounts.
Drivers explained that they propose a rate based on this guide, sometimes multiplying the app fare by 1.5. If passengers agree, the ride proceeds; otherwise, further negotiations ensue, or the ride is declined.
In the midst of these developments, at least one local startup has responded to drivers’ demands by increasing fares by up to 20% this month, recognising the financial pressures they face.
For passengers, this situation results additional costs and time spent negotiating fares. As one frustrated customer pointed out, the lengthy negotiations often undermine the convenience of using a cab service in the first place.
The economic issues for both drivers and passengers are complex and the dynamics of the ride-hailing industry in Kenya is challenged with maintaining affordability, while ensuring sustainability for its drivers.
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