Uber Reveals Shortcomings in African City Urban Transport

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By Wachira Kigotho

June 2 — Global taxi hailing service Uber Technologies Inc. is making inroads in East Africa as it plans to start operations in Dar-es-Salaam, Tanzania and Kampala, Uganda within the month after successfully launching in the Kenyan cities of Nairobi and Mombasa.

Uber has also announced plans to expand its visibility in West Africa by starting operations in Ghana's capital Accra in the coming days. The company already has branches in Abuja and Lagos in Nigeria, as well as in five South African cities: Cape Town, Durban, Johannesburg, Port Elizabeth and Pretoria.

Uber launched its service for the first time in Kenya in January of last year and has shown how inefficient the hailing taxi service is in urban areas in Kenya. Uber's entry in Accra, Dar-es-Salaam and Kampala is likely to highlight similar urban transport shortcomings that have emerged in cities in Kenya, Nigeria and South Africa, observers told Bloomberg BNA.

Taxi Competition

Uber aims to improve mobility in major cities in East Africa and elsewhere in Sub-Saharan Africa by reducing congestion and providing high quality affordable urban transport service, according to Kagure Wamunyu, Uber's operations manager in Kenya.

“Uber is a new and exciting taxi transport service that is changing the way people in most African cities move around,” Wamunyu said.

But success in Kenya hasn't been easy, as the service faces tight competition from locally established taxi operators such as Jatco and Kenatco. The San Francisco-based company has also faced stiff opposition from unregulated taxi operators over its pricing model.

The conflict, which saw some Uber drivers physically attacked by rivals last year, hinged on low metering gauge charges that Uber had introduced. Uber's cheap alternative ride hailing services to residents of Mombasa and Nairobi didn't sit well with local taxi drivers whose services were expensive and too often in ramshackle vehicles, according to Stephen Mutoro, the Secretary General of the Consumers Federation of Kenya.

Samantha Allenberg, Uber's spokeswoman in East Africa, said customers in Nairobi and Mombasa paid 60 cents per kilometer covered. Local taxi companies charged almost double, making taxi services nearly unaffordable to most people, she said.

Uber's Popularity Growing

To make Uber more popular in Kenya, the company has recently introduced a cash payment option in addition to the MPesa electronic payment system. MPesa is a mobile phone-based money transfer service launched by Safaricom Ltd. Popular in Kenya and Tanzania, the services allows users to deposit, withdraw, transfer money and pay for goods and services easily with a mobile phone.

Uber has also opened dialogue with Kenyan authorities in regard to protection of its drivers and customers. “Safety, reliability and choice are what continue to draw people towards Uber's driver-partners as well as alternative transportation service providers,” Allenberg said.

Mutoro said that safety within the taxi transport sector shouldn't be negotiable. “If the government cannot protect investors and their clients it is sending a wrong message to potential investors into the country,” he said.

Amid efforts to avert taxi wars and to bring sanity into the urban transport sector, cabinet secretary James Macharia said there is urgent need to accommodate and regulate innovations and avoid tax evasion.

“We are working on a specific dedicated policy to address the emergence of these innovations and to ensure smooth regulation in urban transport sector” Macharia said.

To contact the reporter on this story: Wachira Kigotho in Nairobi at correspondents@bna.com

To contact the editor responsible for this story: Joseph Wright at jwright@bna.com