Rwandan cab firm Yego stirs Kenya's digital taxi market
Tuesday March 07 2023
Rwandan cab-hailing services firm Yego is gradually ruffling feathers within Kenya’s digital taxis ecosystem, just four months after entering the market.
In addition to the low commissions charged on drivers since entering the market at the end of October, the operator last week signed a deal with drivers that could embolden them to dissent against leading ride-hailing providers Uber, Bolt, and Little.
Key in a memorandum of understanding signed between Yego and four associations of digital taxi drivers was a review of pricing — a thorny issue that has haunted Yego’s rivals for years.
Read: Rwanda riders protest against cashless fare system
“The challenge that we have today is that every company charges an arbitrary price, which may or may not be scientifically calculated and may not have taken into account all the costs that drivers have. Our view is that to bring fairness and transparency into this entire industry, fares should be computed on a scientific basis, taking into account all the fixed and variable costs a driver incurs and a reasonable profit for them to feed their families and save for their future,” said Yego chief executive and founder Karan Vir Singh.
Computation of fares
Mr Singh said they had agreed with associations representing about 20,000 active drivers in Nairobi and 50,000 drivers countrywide to procure services of computation of fares from an independent party.
“An independent party is best placed to set fares that favour both driver and customer,” he said.
Read: Cameroon bars Russian taxi app
Digital Taxis Association Chairman David Muteru said drivers pushed for an independent body to compute fares in a bid to address challenges that many have been grappling with.
“We have agreed to approach independent auditors to calculate prices so that app companies don’t set prices. We have agreed to approach the Automobile Association of Kenya as the independent party to calculate prices scientifically and then everybody will abide by that,” said Mr Muteru.
And in a move portraying Yego’s concession to demands by drivers, the company also committed not to deactivate their accounts without sufficient reasons, or their knowledge.
The firm says it is in talks with three lenders to have them access financing to purchase vehicles, in a deal that will see it act as the middleman who will vouch for them to financiers and collect repayments daily on behalf of lenders.
Read: Uber, Bolt drivers in Kenya stage go-slow
“We are in discussions with two of the big banks and another financial institution to be able to get financing for drivers at lower than the current interest rate and also to make it easy for them to access financing based upon the credit score we give them,” said Mr Singh.
This is in addition to linking drivers to medical covers and pension services and topping up their contribution to the National Social Security Fund (NSSF).
“We are engaging with the government to see if we can, somehow, bring this ‘unorganised’ sector under the coverage of NSSF. Since this is an informal sector, they are not our employees, but we want to bring them into getting something similar to NSSF. To be able to do that, there will be some contribution from the drivers and our part,” says Mr Singh, adding that exactly how that will be implemented is an issue still in discussions.
Feeling emboldened, drivers say they will be knocking on the doors of other ride-hailing firms with similar demands, warning that they will not engage with any that fails to consider their plight.
They said the signing of a “working formula” with Yego is a first and will benefit them in many aspects.
“After this signing, we also hope to approach other (ride-hailing) companies where we will also sign agreements with them. We will work with those who agree and switch off those who don’t agree,” said Mr Muteru.
Read: Uber resumes Tanzania services
Digital taxi drivers have for long been at loggerheads with ride-hailing companies – which provide a platform linking them with customers – mainly on the commissions the companies take.
Despite a state directive that they charge a maximum of 18 per cent commission, drivers still complain that some still go beyond 20 per cent.
But the entry of Yego last October brought a new disruption in the industry when the company announced it would only take 12 per cent commission.
Kenya last year imposed a permanent cap on commission paid by drivers to digital taxi operators per trip.