Kenya Plans New National Taxi Pricing Model Targeting Ride-Hailing Platforms

Kenyas Transport Ministry is gearing up to impose a nationwide pricing system for both traditional taxis and ride-hailing services. This move could have a significant impact on the major players in the industry, such as Uber & Bolt.

The governments proposed policy is looking at creating a standardised fare structure right across the country - a move that could give taxi services a bit of a shake-up in how they price their rides.

Govt Looking into How Much Drivers Need To Sustain Themselves

According to the transport ministries work plan, officials are set to review the cost structures that drivers and taxi operators use. This review will help determine a minimum fare that drivers can actually live off, while still keeping transport prices affordable for the rest of us.

The new pricing framework is likely to involve setting some specific fare components - like:

• Base fare

• How much you get charged per distance

• Time-based rates (how much for every minute the taxi is moving)

• A minimum cost of a trip (no matter how short)

• Any additional fees that would be applied as required

The officials in charge of this effort say the move is necessary because the country is currently missing a comprehensive national taxi policy.

No Policy Leading to Disputes

The Transport Ministry has also noted that the lack of a unified set of rules was causing chaos in the industry. The situation has led to:

• Prices being undercut by one taxi operator after another

• Drivers earning barely enough to live on

• A lack of transparency over how fares are calculated

• Service quality has been going down

• And the competition is completely unstable

The officials reckon that a national taxi policy would really help get a balance between the interests of passengers, drivers, car owners and ride-hailing platforms.

The policy aims to ensure transport services remain affordable for everyone, while also making sure drivers get a fair return on their work.

The Rise of Ride-Hailing Services

Since around 2014, Kenya has seen some rapid growth in app-based taxi services - and this is all thanks to an increase in smartphone adoption and better internet access.

The Transport Ministry reckons that there are around 35,000 drivers currently signed up on ride-hailing platforms across the country, and many of them are operating on multiple apps to try and get as many rides as they can.

Together, these drivers are completing around 175,000 trips every day, all around the country.

But the rapid growth of the sector has also caused a lot of tensions among different stakeholders, including:

• Traditional taxi operators feeling the heat from the app-based services

• Drivers getting into disputes with ride-hailing companies over pay

• Vehicle owners disagreeing with drivers over revenue sharing

• Passengers getting frustrated with service quality

The Ongoing Row Over Ride-Hailing Commissions

After earlier complaints from drivers & taxi owners, regulators brought in the Transport Network Companies Regulations in 2022 through the National Transport and Safety Authority (NTSA).

One of the measures in these regulations capped the commission that ride-hailing companies can charge at 18 percent.

However, despite this rule being put in place, the disagreements have continued.

Some drivers and vehicle owners are in support of this commission cap, saying it protects their income and makes the business a bit more sustainable. On the other hand, ride-hailing companies are saying the cap might discourage innovation & investment in the market.