Reasons Why I Think Uber Will Struggle in Kenya

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So Uber was launched in Kenya last  week  and if you are a Kenyan who has used it somewhere else then you must be excited about the launch.   Uber the Taxi service company that uses a mobile App to connect taxi drivers and passengers. From what I have observed so far Kenya is probably among the few countries which Uber has launched in without any controversy. Everywhere they have gone to outside US, they met stiff resistant both from the authorities and the taxi industry players. With that in mind will Uber a success story in Kenya?

It is tricky to tell but I think Uber will struggle to make in road in Kenya. And the following are some of the questions I have been asking myself about them for a while.

Without Mpesa as a payment option, how attractive will the service be?

I downloaded the app and tried to register into the system. In the process my phone number was required but when you reached the payment option, they only allow the Credit/Debit card. That is great, especially, when you come from the west where the cards are the dominant payment system but not in Kenya. For Kenya, Mpesa is the king and majority even those with cards don’t bother to use them for payment. By the end of November last year, the volume of the money sent by card payment reduced by 18.2 percent while that for mobile payment increased by a quarter according to Business Daily.

The latest Central Bank of Kenya (CBK) data shows that card payments plunged 18.2 per cent to Sh1.1 trillion as at the end of November, compared to Sh1.4 trillion a year earlier.

In contrast, the volume of cash sent through mobile platforms grew by a quarter to gross Sh2.1 trillion over a similar period – nearly double the value of card payments.

Enough with trying to show the important of Mpesa and other mobile money in Kenya, it is simple, Uber needs to get mobile payment option on their system as soon as yesterday

How will Uber Overcome Nairobi Traffic Gridlock?

Yes you can answer this quick and say just like any other car in Nairobi but that would be missing the point. What I am trying to get into is more of newness than the traffic itself. Uber at the moment has 10 cars or well some say 30 and around 20 drivers. Owing to the fact that they launched last week, that can be said to be understandable. Now Assume you are calling from Kawangware and the nearest Uber car is in Yaya. Moving from Yaya to Kawangware could take 1 hour or more due to traffic. Given the choice of picking random taxi around and waiting for Uber driver , I guess most people would take any cab available there. My thoughts here are guided by the fact that most Kenyans are last minute people and even calling a cab is done in the last of the last minute possible.

 

What incentives are they giving Taxi Owners to join them?

It is not a secret that Uber has money. They raised $1.2 Billion , that in terms of Kenyan shilling is close to 110.2 Billion and now the company is valued at $40 Billion (Ksh. 3.7 Trillion, ask your Finance Secretary what is the value of Kenyan economy). Having the money is great but normally they don’t use it to buy their own taxis, they rely on other people taxis and then employ drivers. In the local settings, this is important. Most Kenyan taxis are operated by individual owners. The question would be what would persuade them not to continue what they are doing and join Uber. Then there are those who already operating as companies, more like Uber itself but with their own taxis. KENATCO, for example already has 150 taxis and operate in Nairobi, Mombasa and Kisumu. On the positive side Uber would probably make taxi business attractive for the new investors.

 

Is using Uber really cheaper than the current market price?

Usually if you are in town and you want to go to Upper Hill, then you can negotiate with taxi drivers in town to pay around Ksh.400. If you good at bargaining then you can make them go down to Ksh.300, especially when there is no traffic. Now Uber has minimum charge of Ksh.500. That is 500 regardless of the distance. Below are how their prices look like:

  • Base Far KES100 + KES 4 per minute + KES 60 per km
  • Cancellation: KES 300
  • Minimum Fare: KES 500
  • To celebrate Uber’s launch into Nairobi all riders will get a 20% discount on their fares, for two weeks only starting today

So far I have talked to two people who have used Uber in different occasions and one complained that Uber is expensive while the other was happy with it. The sample data at this moment is too small to make any judgment and hence time will tell. But we still we need to go back to the Uber pricing. Think about the aspect of the charges being Ksh.4 per minute on top of the other things. If you were to stay on traffic for 3 hours which is very common in Nairobi, in a distance normally covered in 20 minutes, then you are looking at paying Ksh.640 extra.

How will they deal with the Question of Honesty and  Security?

Time to ask series of questions under the question

How will Uber lying drivers, saying they are Westlands while they are in Airport?….oooh the app, well, they still do the same. A friend of mine already has the nasty experience with a rogue Uber driver, although not as extreme as the ones I have mentioned above.

Most Kenyans use only the taxi operated by the people they trust especially at night….What steps has Uber taken to ensure that using Uber is safe?

One issues that I have seen people raised about Uber in other places is the rape cases. How safe will it be especially for Kenyan women?

What is your opinion on the topic?
Kennedy Kachwanya
Lead Blogger at Kachwanya.com
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Kennedy Kachwanya is a technology blogger interested in mobile phones both smart and dumb, mobile apps, mobile money, social media, startups ecosystem and digital Savannah. New media must not forget the strength of old tech.
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