Drivers vs taxi-hailing companies: Here is where the problem lies

Whenever you speak to online ride-hailing companies, they are usually shy to share their absolute figures on the partners they have.

Each guards their figures with absolute secrecy, cards played close to their chests, which makes it a challenge to know the vastness of the industry.

But the rate at which new companies keep joining the sector, and the persistent complaints from drivers which were not as frequent before the 2022 regulations, point to a possible saturated industry.

A typical driver has about four applications: Bolt, Uber, Little Cab and Faras. However, there are Hava, Yego, InDrive and others that drivers dither around depending on the kind of car they drive, traffic and the commission offered.

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“For me, it depends on where I am and where the client is going. While I drive a hybrid, there are requests from some applications that I won’t accept even though my car is as efficient as those 650cc taxis because of the commissions,” explains Eugene Wachira, a driver.

The multiplicity of these applications, and the surge in the number of cars getting into the business point to a possible saturation. But is this the case? If it is, is this the reason why drivers keep on protesting over commissions?

“We believe that the ride-hailing industry in Kenya is still in its nascent stages, with opportunities for innovation and expansion for all players,” Imran Manji, Uber’s Head of East Africa told Enterprise.

He pegs this on the country’s youthful population and the digital transformation that is underway with more than 22.7 million internet users in Kenya at the start of 2024.

He argues that this massive insurgency and adoption of the online world, has made Kenya one of Africa’s most agile countries, and a top choice for international investment.

The Kenya National Bureau of Statistics (KNBS) 2024 Economic Survey reports that until 2022, the number of saloon cars, where most of these taxis fall, was slowing down.

In 2022, the figure stood at 6,350 from 8,170 in 2021, 7,754 in 2020, 9,971 in 2019 and 10,504 in 2018.

Market saturation

Between November 2023 and August 2024, the highest number of saloon cars registered was 720 in January 2024, while the lowest was 276 in April 2024.

Justin Nyaga, chairperson Organisation of Online Drivers, opines that saturation of the market cannot affect the commissions drivers earn.

“Not unless the number of drivers increases. But even as the app companies increase, a driver can only take one trip for one app at a time,” he says.

Mr Nyaga says the more taxi-hailing companies get into the Kenyan market, the more they compete against each other on the amount of commission.

The regulations state that a driver should take home 82 per cent while the company gets the remaining.

Before these regulations in 2022, online taxi companies were charging 20 per cent and above as their commission. It was a free market then.

As much as there are regulations, there are still complaints among drivers that online hailing companies are charging other fees outside of the specified commission.

According to Mr Nyaga, the amount drivers are getting cannot even meet the maintenance of the taxis.

He argues that a report in their possession shows it costs Sh36 per kilometre to maintain a 650cc to a 1,000cc car, the usual engine size for online taxi vehicles.

However, the digital hailing companies opine that it costs Sh29. “It does not even meet the cost of maintaining the car,” he says.

Sometime last year, online drivers ganged up and developed their own pricing that some had posted in their cars.

This price was more than what was being charged by the digital app companies as they protested against victimisation.

But Linda Ndungu, Bolt’s General Manager in charge of rides, says the challenge with the sector is that there has not been a baseline study that can show how much it costs to operate different vehicles which forces every company to come up with their own.

The 18 per cent and 82 per cent share between drivers and the companies therefore may not have been the best approach.

“The question is, was that the right way to do it? Depending on whom you ask, it’s too much or too little depending on the either side. The reality is how it should have been done in principle; should have been informed by some macros,” she says.

 “The regulations for the most part are far well drafted but there are issues that are still contentious and the biggest is the pricing mechanism. And this is the genesis of the noise we see today.”

One of the reasons why the regulations are dicey is the argument that online taxi driving is gig work which Ms Ndungu explains that the driver comes to work when they want. 

However, this is naturally not how many Kenyans have taken this job as some treat it as their 9-5 work. Others have bought vehicles and specifically invested in the online taxi business.

According to Ms Ndungu, the earnings challenge is related to vehicle ownership.

“That is the biggest issue,” she says. “Sometimes, it is a valid concern that they are not earning enough but then when you dig a bit deeper, you find ‘Linda’ the driver has taken a loan that she pays daily.”

She notes that in some cases, the owner of the car which is on loan, is not the driver on the platform.

Therefore, the driver becomes obligated to not only pay the owner of the car Sh1,000 or Sh1,500 for ‘renting the asset’ and another similar amount towards the loan.

Data charges

As such, the actual driver on the platform is left with little since they also have to cater for fuel, data charges, and general maintenance of the vehicle.

“What does that mean for me as Linda the driver? The money that I am making every day; I have to give away so I will rightfully say I am not making enough money. But then the reality is maybe, I am not making enough because I do not own the vehicle,” she says.

It is for this reason that Bolt developed a partnership with Hakki, a car financing microfinance business, to assist drivers in owning vehicles.

“We are cognisant that some drivers may have the financial pressure of having to repay loans and for this reason, in addition to trip promotions, we have partnerships with vehicle servicing companies such as AutoXpress and Kingsway Motors and others to provide vehicle maintenance services to drivers at a discounted rate to introduce savings in operating costs for drivers,” said Mr Manji on what Uber does on its part.

Mr Nyaga however does not believe this narrative that lack of vehicle ownership affects the take-home pay for drivers.

“Those are loans like what any other Kenyan takes but their salaries are still enough to handle their daily needs. That cannot be an excuse,” he insists.