Making Sense of Uber vs. Regular Taxi Hullabaloo in Kenya

Kenya taxi
IMG Credit AFP
IMG Credit AFP

It has been all over the news over the last couple of weeks. Regular taxi operators are complaining that Uber cabs are ‘ruining’ their existing business. It has been ugly and we have heard reports of Uber cab drivers receiving threats and being attacked. Clearly, there is a problem, and it needs to be addressed. We have a classic case of technology causing innovative disruption. Normally a lot of times we get excited when we hear disruption and this is very common with techies.

It sounds so rebellious, non-conformist and going against the status quo.

Well, the words or the phrase ‘disruptive innovation’ were coined by a professor at Harvard Business School, Clayton Christensen.  It means a process where innovations in product or service take root initially in simple applications but eventually moves up the ladder displacing established competitors. We all love when such a process takes place, but there is a loop-side to it. What if the ‘new’ product becomes the new status quo?

Uber has caused disruptions and the disruption could be positive and negative. Positive in that the service is cheaper for users and negative in the sense that the existing cab drivers businesses are facing huge potential losses.

Comparison between Kenya and the United Kingdom

Double standards in terms of operation..

In many countries, taxi organizations have taken Uber to court for example The United Kingdom, France, Brazil, Spain, etc. I doubt the Taxi Association of Kenya is planning to use that route seeing that some of their members have resulted in taking the matter into their own hands.

Now I will try compare and contrast the situation in Kenya and the United Kingdom. In Britain, the public service transport system is pretty organized. There are black cabs and private hire type of cabs. My concentration will be on black cabs. The fares are metered which means that the meter calculates the fare to be paid for the journey. The London taxi association sued Uber on the ground that the app acts as a meter which is against the law.

The court, however, held that the app does not act as a meter because it has an element of Gps which was not envisaged in the cab meter. Another issue why the London cabs protested against Uber very importantly is the fact that to become a black cab driver you go through some training and tests before being licensed to drive a cab. With Uber, anyone who meets their requirements can join and start transporting people. It looks a bit unfair even to me.

On to Kenya. From my personal observation, if you use an ordinary taxi in Kenya, you negotiate your fare. Which means if you are not a good bargainer, you probably pay hefty amounts for your travels. Also, there are several taxi associations in Kenya. How effective they are is debatable. Before this Uber debacle, the last time I heard of them was in 2010 when they were protesting some changes in the by-laws of the then Nairobi city council. They even won that case.

“Traditional taxis” not following the law themselves

The second issue I have noted is that it is not easy to differentiate between a cab and a car in private use in Kenya. Compare that with New York where the cabs are yellow or in London where the cabs are black. In Kenya public service vehicles including cabs should have a broken yellow line painted on them. Not many taxis have that yellow line painted on them. This means that it could be difficult to pick out a cab out of cars in private use. For Uber cabs, they are also pretty hard to single out of a group of vehicles as they do not meet the public service vehicle requirements.

This means that regular taxis, Uber taxis, and cars in private use look the same. While it is not a question of looks, Identification of a car in public service from one in private use is vital. It helps one to call out the driver, for security reasons and also shows that it is regulated by the government. Standardization is critical to the public service vehicle industry, and the Kenyan taxis have ignored the requirements laid down by the law.

The Nairobi city council tried implementing a change so that the cabs are painted yellow but, that became problematic because if you want to alter the color of a car you need to inform the Kenya Revenue Authority. This would mean extra costs incurred in changing the vehicle’s log book. That was rejected and cabs have the general ‘yellow line’.

What does this mean then?

It means that some if not all cabs in Nairobi have been operating ‘uber’ style. That is where you get a car, put it on the road and start operating a public service vehicle without following the rules. So it defeats logic for ordinary cab drivers to come out and demand the rules you defy to come to your aid.

That aside the problem that most regular cab drivers have is with Uber’s pricing model. It’s quite cheap. I personally wish that the Taxi organizations would have reported Uber to the Competition Authority (CAK) for predatory pricing. Predatory pricing is whereby a firm prices its goods or services at such a low price that the only way competing firms can compete is by making losses.

CAK would have provided a useful input on the matter especially because several multinational tech companies have been accused of such anti-competitive moves. Google has been accused of the same in search, Microsoft in operating systems and Amazon in retail.

Anyway, the government has acted swiftly, and a committee has been formed to formulate rules on how the taxi business will proceed peacefully. Well, whatever the outcome, it will certainly not be satisfactory to all parties. Furthermore, I think Uber might suffer as its niche is when it operates unregulated. Seeing that the competition authority is involved, I hope they will come up with a solution that is consumer friendly and resolves the matter amicably.