Struggle on the streets of Nairobi
It is noisy, dirty and crowded in Nairobi’s streets. At rush hour an uncountable number of cars, busses and motorbike jam the streets. Nearly the entire transport in the Kenyan capital relies on the ailing and confusing roads. In the recent years, there have been a lot of investments in the transport infrastructure; nevertheless, the situation on Nairobi’s streets remains chaotic.
Due to the rapid population growth there will be increased pressure at this already congested transport system. A study by the World Bank Group states that so far only 13% of all routes between people’s residence and workplace in Nairobi are covered by car. The majority walks to work (41%) or rides a Matatu bike-taxi (28%). Accordingly, expectations were high when 'Uber' was launched as the first online driver and taxi service in Nairobi in January 2015.
Sharing and caring
The Californian Company 'Uber' connects private drivers and passengers through an app. With just a few clicks, drivers are ordered to passenger’s location without the need of a phone call. The company sees itself merely as an intermediary platform. In contrast to a classic taxi company, 'Uber' does not hire drivers, does not own cars and can therefore offer its services at significantly lower prices.
The fare of a ride is set by 'Uber' and includes a commission for the platform service of up to 20 percent of the fare. It is often criticised that many of the drivers do not have the necessary prerequisites like licenses, concessions or insurances. Furthermore, the drivers act as independent subcontractors and therefore do not benefit from any workers’ rights, like protection against dismissal, minimum wages or work time regulations.
In Nairobi, many expected that digital taxis would be a cheap, safe and reliable way of getting around. The taxi drivers themselves saw 'Uber's market entry as a new income opportunity. To become an 'Uber'-driver, all you need is a valid driver’s license, a passenger transport certificate and a smartphone. Many drivers rent a cab to offer their services.
Due to the fact that both drivers and passengers have to validate their identity and the routes are recorded by the app, the taxi business is much safer than before. The apps also offer new opportunities especially for female drivers and passengers according to Faridah Khamis. She is one of 200 female drivers in the male-dominated taxi business in Nairobi. The number of digital taxi drivers as well as the number of passengers increased rapidly. So far, the number of digital taxi driver has risen to around 12,000 in Nairobi.
The hype of online taxi business
It was not long until other companies such as 'Little Cab', 'Taxify', 'Mondo' or 'Fone Taxi' adapted the business model and attracted 'Uber's monopoly position in the Kenyan market. This resulted in a full on price war amongst the apps. Victims of this price competition are the taxi drivers, whose existence is increasingly threatened by falling pay. Today, they often pay a registration fee, a basic fee and pay up to 25 percentage of the fare to the app owners. In addition, the drivers are struggling with rising gasoline prices and the high fees to hire a rental car. Many taxi drivers have to purchase multiple smartphones and operate with multiple taxi hailing apps simultaneously to increase their income and earn enough money for their families.
“The current situation is very hard. Every day more and more drivers register and new apps are coming up. They [the apps] set up lower prices, so we have to work hard […] for up to 12 hours a day”, says taxi driver Faridah Khamis.
The need for action
In the last two years, many drivers protested against their precarious working conditions. The protests culminated in July 2018 in a nine-day strike. The drivers blocked entire streets with their cars and impeded parts of the Nairobian traffic system.
The strike resulted in the signing of a Memorandum of Understanding (MoU) between the Kenyan Ministry of Transport, drivers advocacy groups and the taxi apps. The MoU includes a redesigning of communication, the improvement of pricing models, the prohibition of unannounced price changes and the enhancement of safety and security issues.
Many of the drivers remain sceptical: “The MoU was a big step in the right direction. Because if implemented, it will give drivers an opportunity in matter of job protection and general welfare. But what needs to be change mostly is up to the app companies, like working conditions or service agreements”, says Kim W. Eastlands, who is also a taxi driver in Nairobi.
After the initial enthusiasm in Kenyan transport, disillusion quickly returned. Only three years after the first digital app entered the Kenyan Taxi market, the entire transport industry faces a multitude of unsolved issues. It is clear that facilitated market access was initially interpreted as a real opportunity to enter the labour market, but that strong and unregulated growth ultimately led to far-reaching negative consequences. It was not only the strategic power of the app owners, but also the dependence of private providers on the operational decisions of 'Uber', 'Little Cab'and co.
- Further Information on Nairobi’s transport https://openknowledge.worldbank.org/handle/10986/25896
- Further information on MoU: https://www.standardmedia.co.ke/business/article/2001287680/uber-taxify-call-off-strike