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Wednesday, 24 May 2017

Kenya’s Struggling Uber Drivers Fear a New Competitor: Uber

NAIROBI, Kenya — James Njoroge, an Uber driver in Nairobi, earns barely $5 at the end of a grueling 10-hour workday ferrying customers through snarled traffic across the Kenyan capital. Now a new competitor is in town, threatening to undercut even these meager earnings.

That rival is none other than Mr. Njoroge’s own employer.

Uber in Kenya, already one of the company’s most affordable services in the world, charges customers in Nairobi, Kenya’s capital, a minimum fare of $2.90.

Uber is aiming to beat back competing services by pushing its prices even lower. In April, the San Francisco-based company announced it was introducing an even cheaper service at half that price, $1.45, by allowing its drivers to use much older, lower-quality cars.

Drivers say they’re bearing the brunt of the price cuts. In February, drivers went on strike to protest fare cuts that they said made it difficult for them to break even. The new pricing is much lower than that.Continue reading the main story

The prospect of losing what is already a threadbare living is making Mr. Njoroge, 29, nervous.

“We’ve been working for them so much, but now they’re slashing us,” he said recently, slowing down his Toyota, a seven-year-old model, hardly brand-new but newer than the cars expected to be part of the fleet for the coming service, uberGO. He waited patiently for a herd of goats, led by two teenagers wearing Adidas hoodies, to cross the road. Traffic swiftly packed up from behind. “Kenyans always go for cheap-cheap, so this is worrying,” he said. “I don’t know what to do.”

Uber has quickly expanded across parts of Africa, where it is seen by those signing up as drivers — or “partners” in the Uber lingo — as a rare job opportunity on a continent with stubbornly high levels of unemployment.

But the service has stirred debate over how low fares should go, and the company has faced a series of strikes from South Africa to Lagos. This month, drivers in Lagos, Nigeria’s biggest city, went on strike after fares were slashed by 40 percent.

Faced with fierce competition from other ride-hailing apps, Uber’s latest service in Kenya, critics say, would pit its own drivers against each other in a kind of cannibalistic race to the bottom, eroding what little they already earn.

“To live in Nairobi, it’s very hard,” Mr. Njoroge said recently in his home in Umoja, a dusty but vibrant neighborhood on the outskirts of Nairobi where, within a short space of time, a fight broke out, a minibus with “Rock Gospel” stenciled on its side unloaded passengers, a man hawked grilled meat and a fashionably dressed woman crossed paths with a strutting rooster.

“You have to hustle on all sides,” he said. “If we don’t have many clients,” he said, referring to competition from uberGO, “we’ll need to find new options for work.” Mr. Njoroge already has two other side hustles.

Uber insists that the new service would allow drivers to save on fuel and other expenses, ultimately making their jobs more profitable.

“Revenues might not be higher, but the costs will be lower, so ultimately profits will be higher,” Alon Lits, Uber’s general manager for sub-Saharan Africa, said in an interview. “We believe our economics make sense,” he said, but added that the company was in the process of getting feedback from drivers in order to “interrogate our assumptions before moving forward.”

In Nairobi, Uber and its competitors like Taxify, an Estonian company, and Little Cab, a company owned by Kenya’s mobile network giant Safaricom that offers free Wi-Fi in its cars, are aiming to capture clientele from a rising, but fragile, middle class that still values affordability, sometimes at the expense of quality of service or even vehicle safety. Competition is fierce even among apps for notoriously dangerous boda-bodas, or motorcycle taxis, which are a major cause of road accidents.

In February, a series of strikes by an informal union of Uber drivers forced the company to raise the minimum fare to $2.90 from about $2, and rates to 39 cents per kilometer, up from 33 cents. But many drivers say uberGO, which is 29 cents a kilometer, is a fresh attempt to bring down rates, given that many cost-conscious customers are likely to use the cheaper service. The company last month said it was even offering $30 — six times Mr. Njoroge’s net daily earnings — as an inducement to drivers to sign up to the new, cut-price service.

Mr. Njoroge and many other Uber drivers expressed anxiety not just about losing customers but also about failing to meet car loans — loans that Uber helped them secure in the first place and that require drivers to stay with the company until they’re paid off.



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