Uber entry revs up competition among transit apps

Uber, the ride-sharing service that has set out to revolutionise the transit system globally, had a soft launch last month in Nairobi.

The $40 billion (Sh3.7 trillion) Silicon Valley start-up that has made waves in several cities from New Delhi to London made Nairobi its sixth stop in Africa after Johannesburg, Cape Town, Durban, Lagos and Cairo. The firm currently has a presence in 200 cities in 53 countries.

Alastair Curtis, Kenya’s Uber representative, said in an online statement that uberX is “a low-cost alternative to move you around Nairobi in a safe, cheap and reliable way.”

He added that the company’s innovative system provides users — both customers and drivers — with high standards of safety, accurate GPS location tracking, cashless transactions and prompt feedback channels.

Users install the app, which allows them to locate the nearest Uber drivers to their location, and can then request a ride, routes to be used and get a fare quote. iPhone users can even get an estimated time of arrival.

Smart solutions

Uber is just the latest in a slew of smart solutions designed to help Kenyans get from point A to B without getting bogged down by road rage.

Data from the Kenya National Bureau of Statistics (KNBS) shows that the total number of registered motor vehicles stood at 161,813 in 2009. In 2011, the figure jumped to 205,841, a 30 per cent increase. As at last year, this figure stood at 218,057.

This has presented a challenge for the country’s road network which, for several decades, remained undeveloped, a factor that has contributed to traffic snarl ups in the country’s cities and major towns.

A 2011 study by technology firm IBM, monetised the man hours lost in Nairobi’s traffic jams and found that the Kenyan economy loses Sh50 million a day. The same study found that driving in Nairobi is the fourth most painful traffic experience in the world, after Mexico City, Beijing and Johannesburg.

Poorly regulated public transport has exercarbated commuters’ woes, which has created the space for ride-sharing services like Uber, which plan to attempt to solve the chaos of urban transit.

Under Uber’s price formula, passengers will be charged a minimum fare of Sh500, with Sh4 accruing for every minute and Sh60 for every kilometre. Users will face a Sh300 fee for cancelling taxi orders.

And while the system has proved disruptive to the established taxi industry world over, Uber has run into its fair share of problems.

The service was shut down in New Delhi in December when an Uber driver was accused of raping a passenger, courts have limited its operations in Spain, France, the Netherlands and Belgium, and it has been sued in the US states of San Francisco, Los Angeles and Oregon.

To address safety concerns in Nairobi, the firm is carrying out biometric criminal background checks on all its partner drivers.

But industry players said transit apps like Uber might find Nairobi a difficult market to operate in, given the city’s relatively unstructured and loosely regulated transport system.

The other apps jostling for relevance in this space include Pewin Cabs, MaraMoja and SasaCab. But Easy Taxi enjoys the most positive uptake.

The application uses GPS mapping to allow users connect to Easy Taxi-approved cabs nearest to them, estimate the amount of fare needed and direct the taxi to their location.

Gain foothold

According to Peng Chen, the managing director of Easy Taxi Kenya, the adoption of smartphones in the country and increasing awareness among consumers has provided rich opportunities for companies seeking to disrupt traditional urban transport.

“Kenyan drivers are more smartphone savvy, and at the same time, more people today are used to the idea of smartphones as a service. Ordering a taxi or food through an app is more commonplace,” he said.

Mr Chen added that frustrations with the city’s transport system has helped services like Easy Taxi gain a foothold in the market.

“Everyone who uses taxis in Nairobi has had an incident at some point, and we are trying to minimise the pain that comes with urban transit,” he said.

Easy Taxi rolled out Easy Taxi Corporate towards the end of last year in an attempt to tap into the lucrative corporate segment.

“The practice in many corporate organisations is that employees use taxi services and then keep the receipts, which are then taken to the finance department for reimbursement,” said Chen.

“Easy Taxi Corporate eliminates the paper work and allows employees to use taxis, and because everything is logged in, an expense report is created at the end of the month and sent to the company for billing.”

The company said it has already signed up several clients, who are saving between 20 and 30 per cent on previous costs.

It remains to be seen how established taxis will respond to the growing uptake of transit apps as the increase in transport options heats up the competition for commuters’ cash.

By Brian Ngugi Nov. 29, 2022
Financial Standard
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