Dominant tag haunts local market leaders in Kenya

Bob Collymore, Safaricom Chief Executive. FILE PHOTO | NMG
Bob Collymore, Safaricom Chief Executive. FILE PHOTO | NMG 

Taxi hailing company Uber last month bowed to pressure from driver partners and raised fares in a bid to end the long drawn tussle between the company and operators in a case that also brought aboard the parliamentary transport committee. 

After debuting in Kenya two years ago, the global disrupter of transportation sector fast became a favourite for most middle class Nairobians eager to move around the city in a convenient cost friendly manner. 

The US firm slashed fares by almost half in mid last year to attract more riders thereby improving drivers’ earnings by making more trips.

This would later come to haunt the company when drivers went on strike early this year protesting poor returns. The driver partners, through the Digital Taxi Association of Kenya asked the National Assembly to change the law so that players in the cab industry are subjected to equitable and inclusive regulation. 

Some of Uber’s competitors such as Little Cab and Kenya Taxi Cab Association separately petitioned Parliament to take measures to curb what they termed as abuse of dominance by the American firm. 

“We are in proactive discussions with the government and policy makers to ensure that we can continue to provide an innovative transport option to Kenyans.” Uber head of communication, Ms Janet Kemboi, said in an interview. 

The Competition Authority of Kenya (CAK) while dismissing the petition to set minimum charges for the taxi sector said Uber at a revenue market of 30.63 per cent and a fleet stake of 28.6 per cent was not dominant. 

“Fixing of minimum (floor pricing) prices as requested by the petitioners will only benefit the taxi operators, extinguish efficiencies and innovation and quality to the detriment of consumers,” said director-general of the regulator, Mr Kariuki Wang’ombe.

After a push and pull, the company raised its fares from Sh35 to Sh42 per kilometre while the minimum fare jumped to Sh300 up from Sh200 saying it made the decision to hedge the driver partners from rising inflation and high cost of fuel. 

While Kenya’s standing in the World Bank ease of doing business improved 21 places to stand at position 92 out of 190 countries surveyed based on reforms undertaken by the government, some investors are worried of what they term as ‘over-regulation’. 

Last month, British consultancy firm Analysys Mason is said to have recommended among other things, that Safaricom’s telco business be split from the successful M-Pesa brand, a recommendation that sent jitters in the market. 

The Safaricom chief executive Bob Collymore told Smart Company that they should not be punished for their success.

“These measure (splitting Safaricom) is a little bit like asking Rudisha to carry failing competitors on his back. The consequence of this is that this is not to become an attractive place for anyone to invest or for anyone to innovate if you are then going to be forced to share your investment with competitors who have chosen not to do so,” Mr Collymore said .

ICT secretary Joe Mucheru said splitting the teclo would not endear Kenya to future investors. 

Investors fear unpredictability, policies that might hurt their portfolios in the future. This, however, does not mean companies should not be closely monitored or regulated. Regulation is necessary to protect the interests of all stakeholders while the ideals of free market economy are maintained.