RIDE HAILING GONE HAYWIRE

Uber has two major competitors in Nairobi: Nairobi-based Little and Estonian ride-hailing company, Taxify. As with many transit options in Nairobi, competition for passengers is stiff, and each ride-hailing service has endeavored to differentiate itself.

Taxify, which is backed by German car giant Daimler, recently changed its name to Bolt. The name change, and specifically removing “taxi” from its name, suggests that Bolt is repositioning itself as a provider of multiple transit options, rather than just private cars. Moreover, the company’s CEO, Marcus Villig, has said, Bolt wants to move away from the use of vehicles with combustion engines and toward electric vehicles. In Nairobi, they were the first to launch an electric scooter service within the same app as their ride hailing service, and Mr. Villig has hinted that Bolt will soon add other electric and public-transit-oriented services in the coming years. Bolt’s footprint is large: with 25 million users in 30 countries across Europe and Africa, they are an international player and a true competitor on the same scale as Uber.

Little operates on a smaller scale, with services in Kenya, Uganda, Zambia, Tanzania, and Ghana, and focuses on attracting drivers and riders with seemingly small perks that have a big local impact. Little’s service is available to users who do not own smartphones, thanks to their partnership with mobile operator Safaricom. Little’s CEO, Kamal Budhabhatti, says that about 20% of their rides come from non-smartphones. Little attracts drivers by offering them traditional employment benefits like healthcare and discounted mobile phone service. But of course, among these three firms, there is still a race to the bottom in pricing, with Uber leading the charge. Having launched UberGO last year, Uber has now introduced an even cheaper service called Uber Chap Chap. Chap Chap, Swahili slang for “hurry, hurry,” is made possible by a deal with CMC Motors, a Kenyan car importing company. Through this partnership, Uber was able to acquire 300 Suzuki Altos, a functional and inexpensive sedan and offer them, with financing, to highly rated driv- ers. The minimum cost for a ride, just 99 cents, is possible because the Altos are about twice as fuel-efficient as the average UberX, at 58 miles per gallon.

Ride-hailing services have either introduced cheaper services or have brought minimum prices down to remain competitive.

But lower prices for riders means lower profit margins for drivers. Uber Chap Chap was initially intended to just operate in the Central Business District and its immediate surround- ings; since its launch, however, it has expanded its services to include most of Nairobi. While drivers were able to make a decent wage on the low-cost service with short rides, longer rides across town slash their profit margin to almost nothing. And what Uber does, so does Bolt. Both ride-hailing services have either introduced cheaper services or have brought minimum prices down to remain competitive. Throughout 2018 and into 2019, drivers have protested these price cuts, calling for ride-hailing companies to remove their lowest-cost services and for the government to step in and protect local drivers from the exploits of foreign-owned firms.