Technology

How to unlock big potential of ride-hailing apps

taxis

Taxis in Nairobi. FILE PHOTO | NMG

Running a business in these emerging market streets can be an extreme sport, especially where the value is being realised in new ways by rethinking business models and how to assign assets, whether physical, digital or human toward a task. The biggest challenge often comes on the regulatory front, where the customer experience and supply-side dynamics are markedly different from what has previously been. The mobility space has over the past decade not only seen vast amounts of capital invested but a constant evolution of process as market-fit is sought.

The Lagos Dynamic

The Lagos State Government effective February 2020, banned the operations of all commercial motorcycles (Okada) and three-wheelers (Keke), coming after months of speculation following the proposed introduction of hefty untenable licensing and miscellaneous fees to the platforms and operators with a heavy push from the ‘unions’, with the latter painted as only rent-seeking providing no tangible benefit to the ecosystem. This came after the Governor of Lagos State was on camera calling for harmonisation to drive inclusivity, accountability, and transparency by leveraging ‘the solution that some of them are bringing’ referring to the platforms.

Nairobi’s Conundrum

Nairobi is a lab, an experimental playground where a lot gets tested and the hypothesis proved. However, money is made out in the open market and not in the labs.

The National Transport and Safety Authority has drafted regulations to govern the ride-hailing sector including vehicle, driver and “digital hailing service operator” licensing, with the potential to bring several benefits to the mobility industry.

However, the clause proposing a 15 percent commissions cap and prohibition from levying any fees over and above this, is ill-informed and also counterintuitive with the sum effect of disincentivising investment and innovation in willing buyer, willing seller open market conditions.

Capital flight, job, licence fee, and taxation income loss can be triggered by unstable market conditions driven by regulatory blind spots where the spirit, the word and the enforcement of the law tend towards the asphyxiation of entire companies and the livelihoods that they support.

At a time when all effort should be applied towards the creation of decent work and economic opportunities against the backdrop of sustainable cities and communities’, regulators and indeed even national governments through their respective ministries should proactively engage with investors, seeking first to understand then to be understood, with public-private partnership on the table to collaboratively unlock long-term value across entire supply chains.