Uber’s Rough Ride Into Africa

Uber, the ride hailing app that is transforming the global sharing and urban transportation economy, has entered the African market with much f a n f a r e . F r o m i t s l a u n c h i n Johannesburg South Africa in 2013, the company has established operations in Egypt, Kenya, Nigeria, and Morocco. Uber is also planning to launch operations in Accra Ghana. However the ride hailing app’s entry into Africa’s biggest markets has been anything but a smooth ride. To be sure, consumers have all but  welcomed the service’s touch of button convenience and ease of use-a boon for the company. In Kenya, one of the company’s fastest growing markets, the platform reportedly has over 100,000 monthly users requesting rides on the app which has also seen driver registrations soar to over 1000.

At the same time, there has been an intense response by competitors who are rolling out their own versions of the the  app often at lower rates than uber’s.  In some cases, Uber has received a backlash from traditional cab drivers and others who have felt that the company disrupted their businesses. And so just like in many places around the world, Uber has been   met with protests in Africa. In Kenya,for instance, there have been reports of Uber drivers being attacked and in some instances their cars being burnt. Similar attacks against Uber drivers have occurred in Egypt and South Africa. In South Africa the operations had to the halted briefly for a while in the wake of the attacks.

Moreover, as Uber has sought to carve out a piece of the African market for itself, competition has intensified. To respond to growing competition Uber in Kenya cut its rates by 35% promoting an uproar from its drivers who fear loss of incomes from the rate reductions. The drivers are pressuring the company to similarly cut the amount that is take from what drives rake in from 25% to 15%. Uber’s competitors, on the other hand have mounted a prices war with cheaper versions of their rides. Even big players have entered the hailing space with lower rate apps. One s u c h p l a y e r i s K e n y a n telecommunications giant, Safaricom, which recently launched its taxi hailing app, Little Cab. Nigeria has its own local plays such as Oga Taxi.

The competition is also not just local. International players are also entering the playing field. One such competitor is Taxify, which has entered the African market as well with rates that are higher than Ubers. Others such as Saudi Arabia’s Mondo Ride have also entered the market. Other competitors such as Easy Taxi have exited the ride hailing market.  Still, even with the rising competition, Uber seems to be weathering the stormatleast for now. The company is able to combine its global scale and ability to localise its strategy in the face of  growing competition. One the early adaptations that the company has had to make has been to its payment model under which it has began to accept cash payments for its its rides.

More over, Uber is registered in Kenya for instance not as a taxi company but as technology company. As a technology company it reportedly does  not have to pay the monthly fees that are required from traditional taxi drivers. This could possibly allow it to discount its fare to drive demand, and perhaps maintain a balance of not furthering dissatisfaction with its drivers. If there is one thing that is clear about the coming of Uber on the African market, it is that the company’ foray into Africa will be game changer for Africa’s ride hailing market.