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In Nairobi, a cab is a click away; but is the business model viable?

Saturday March 28 2015
uber

A smartphone displays the Uber app of the timing and availability of taxis at Raffles place financial district in Singapore. FILE PHOTO | AFP

Getting around in Nairobi without your own car can drive you crazy. The traffic gridlock and the arrogant and careless motorists with their daredevil driving will test your patience at the wheel.

But some taxi companies have come to the rescue of commuters, providing apps that will allow one to hail cabs from the comfort of the office or home — on a smartphone or computer.

One such app is Uber. I recently tried it out. After downloading the app on my phone, keying in credit card details and creating an account, I requested a driver to Hurlingham in the west of the city.

The site said the driver would take seven minutes but he arrived after half an hour. I could track the car’s movement on GPS and I could see as he weaved his way through heavy traffic on Valley Road and Kenyatta Avenue to Kimathi Street.

The Toyota Corolla NZE he was driving was decent and comfortable, complete with air conditioning. We made it to Hurlingham in time, and I parted with Ksh600 ($6.5).

The new “digital” taxi companies, Uber, Mara Moja, Sasa Cabs and Easy Taxi, are fighting for the Nairobi cab market, which has long been segmented into the high-end and the “local” cabbies. Their impact will largely depend on how the new apps help capture the market by providing a needed service.

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To start with, there are only 208,503 credit cards in the country, according to available statistics, and therefore it may be hard for Uber Taxi, for instance, to capture a sizeable chunk of the Kenyan market, as it requires one to have a credit card. Individual operators and other taxi companies accept cash and mobile money transfer, particularly M-Pesa. This sets them apart from Uber.

Taxi culture

In a recent commentary in USA Today, Jacob Cusher argued that Uber has not taken the local Kenyan taxi culture into account.

“The truth is that Nairobi is not Brooklyn or San Francisco with the challenges in the Kenyan capital ranging from infrastructure to technology, know-how and a different labour force. From the use of maps, credit cards, smartphone penetration, trust issues and payment model, Uber needs to rethink its model for it to prosper in Nairobi,” Mr Cusher wrote.

Alastair Curtis, Uber’s international launcher for Africa, said they understand the concerns about credit card use and are working to open up the platform for other payment modes like M-Pesa.

Easy Taxi, for its part, does not own the vehicles but instead works with partners to provide the service. Chief executive Peng Cheng said their partner drivers accept cash, M-Pesa and corporate payments so as to make it easy for their customers to use the service.

“We understand the concerns of using cards for payment in this market. The use of mobile money makes transfer of payment much easier. We want to provide passengers with as many options as possible for their convenience,” said Mr Peng.

Another concern is the low penetration of smartphones in Kenya, at a paltry 5 per cent.

“We believe that a majority of the Nairobi market we are targeting are tech-savvy. These are people on social media. That’s why Easy Taxi is available on multiple mobile platforms, including iOS, Android, Windows, Blackberry 10, and Firefox OS. For users who don’t have access to a smartphone, we are also available on any Internet browser through our web app,” Mr Peng said.

Smartphone users can download the Easy Taxi and Uber applications from an app store — Google Play or Windows store — and create an account.

For Easy Taxi, when you need a ride, you press “request taxi,” fill out your address and the application will search for the partner taxi driver near you. You will be able to track your cab in real-time.

The same applies for the Uber app.

In terms of pricing, Uber Nairobi has set the base fare at Ksh100 ($1.06), charged at Ksh4 ($0.04) per minute and Ksh60 ($0.64) per kilometre. The minimum fare is Ksh500 ($5.33), while the cancellation fee is Ksh300 ($3.19).

This model has been criticised as unworkable.

“It’s using the same model for its United States market, where it charges not just by distance, but also per minute. How can you charge per minute in a traffic-choked city? You will make the users pay thousands for a service that’s not worth the amount because of the traffic gridlocks,” Mr Cusher wrote.

Easy Taxi quotes a maximum threshold price beyond which the passengers cannot be charged over the quote price. This acts as a safeguard, especially for the traffic-choked roads. It also allows for bartering, which works to the passenger’s advantage.

Tracked and monitored

Passenger security is a key concern for all these taxi firms.

Mr Peng said that all of the vehicles are tracked and monitored.

One of the key limitations is that the cab drivers barely understand the business model and how they will make money.

“We do not employ drivers nor own these vehicles. All we do is to work closely with a large community of individual, entrepreneurial, and tech-savvy taxi drivers to provide a better transportation solution for Nairobi’s passengers. Our partner drivers make money whenever they complete an Easy Taxi ride and are paid by the passengers,” Mr Peng said.

Uber has a different approach: It plans to have a car pool, hire some cars and contract individual car owners to provide the service.

“Nairobi residents are progressive and tech-savvy. They love products that offer new experiences and that’s what Uber gives. With our taxi app, you will enjoy a seamless, efficient and safe ride at an affordable price,” Alastair Curtis said.

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