Uber and Little Cab’s battle to control the streets of Nairobi

By The Guardian.

Uber is in the middle of a bruising battle for dominance in east Africa’s largest economy: Kenya. The ride-hailing company started operating in the cities of Nairobi, Mombasa, Kisumu and Thika last year.

It has already outlasted the online cab operator Easy Taxi, which opted out of the Kenyan market in May this year following a decision by one of its backers, Goldman Sachs, to direct all its investments towards the more profitable Uber.

However, Uber now has a new domestic rival: Safaricom. It’s one of Kenya’s largest companies, 40% owned by Vodafone, with $380m (£265m) profits in 2015. Its own taxi-hailing brand Little Cab, developed in partnership with Kenyan software company Craft Silicon, launched in July with a pricing system significantly cheaper than Uber.

In response, Uber slashed its taxi fare prices by 35% in August. For the drivers, Little Cab currently takes a 15% commission off the taxi fare, while Uber takes 25% commission.

For Kenyans, the battle for dominance brings the prospect of cheaper, easier to organise and more reliable transport by taxi, but it is unclear whether it will solve its capital Nairobi’s costly congestion and “mind-boggling” air pollution.

Rather than encouraging more car use, Uber has argued in the past that it doesn’t compete with public transport. It says many people use ride-hailing companies to travel from a bus or train station. It has also argued that they drive down car ownership by making the taxi system cheap and convenient.

Ride-hailing growth

Nairobi takes pride in calling itself Africa’s Silicon Valley. Numerous tech startups and a high smartphone use and internet penetration rate have led to the growth of a thriving IT sector.

More than 30 million people in Kenya now have mobile phones, with just under 15 million having access to mobile data/internet. It is this growth, in part, that has attracted numerous internet companies to set up shop in the country, including Uber and now Little Cab.

The competition between ride-hailing companies has been welcomed by consumer bodies and residents in Nairobi.

“Competition is good for the consumer. Already we have seen price cuts and the two companies will be forced to be innovative to maintain their grip,” says Stephen Mutoro, the chief executive of the country’s largest consumer rights body, Consumers Federation of Kenya. “Better days lie ahead for the commuter.”

Magdalene Anyango, an advertising executive in Nairobi, says the arrival of both companies has helped cut her travel costs and made them more transparent. “First, whenever I hail a taxi I know exactly how far they are from my location. I know what I will be charged and I can get one at any time,” she says.

Kenya’s transport sector is generally characterised by chaos. Charges for cab rides are unpredictable and can depend on weather, traffic or the general mood of the provider.

“There was no way of telling what your cab guy would charge you. One day you’d pay $15, the next day you’d pay $30 over the same distance just because you needed to catch a flight at 3am,” says Anyango. “Also, it eliminates employee fraud. An employer can’t use an Uber or Little and falsify the claims. We get an e-invoice whenever any of our employees use the service.”

Other taxi operators in Nairobi have been less welcoming to Uber and Little Cab. In March this year, an Uber taxi was burned in Nairobi.

“To date, there are places we cannot go to although the police have assured us of our safety,” says John Nganga, a driver on the Little Cab platform. “There will always be people fighting to control their turf.”

Support from taxi drivers

In spite of these dangers, the workload for Nganga has gone up so significantly that he is considering upgrading his car. Both companies help new and existing drivers access credit to either buy their first car or get a bigger one.

Not all traditional taxi operators are worried about Uber and Little Cab, despite the loss of custom. “Hundreds of thousands of people come into the city every day,” said Peter Kimani, a taxi driver for the last 35 years. “They just look across the road, spot a taxi and ask for your services. We will continue to exist for them.”

“Those services may be cheaper but the difference is the customer experience. I can even carry you on credit if you are a regular,” added Kimani. “They always think about money and targets. They are like robots.”

However, Nganga believes it is only a matter of time before those drivers not using the two ride-hailing platforms cross over.

“Being on these services not only gives you an opportunity to earn a living, but network as well. I carry people from much more diverse backgrounds than I previously did,” Nganga says. “Exposing me to opportunities not necessarily related to my taxi business.”

Even older, more sceptical taxi drivers have been willing to adapt. “We couldn’t understand how this would work. Everything on the phone? Some of us have been in the business since the late 80s. This seemed a bit too much,” says new Uber driver David Kamanja. The 67-year-old has been operating his taxi from the same spot, outside Nairobi’s Hilton Hotel for decades.

Uber and Little Cab may not have cut congestion or air pollution, but city officials in Nairobi remain supportive. “Although these options have not solved all our transport woes, we recognise the fact that they continue to make things better for our residents,” said Mohammed Abdulahhi, responsible for transport and infrastructure at the County Government of Nairobi.

“In this case, these services have provided a cheaper and more reliable option for travellers. This way, the city becomes even more attractive to travellers and investors.”