P2P Ride-Sharing in Kenya: What Is China’s Didi Getting Into?

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“I am no longer needed by my customers, but I do not need them either,” said Mourice, a driver who has switched from driving traditional taxis to Ubers.

A wind of ride-sharing has blown into Kenya as Uber entered this country in 2015, with the number of drivers increasing dramatically, from one thousand to ten thousand approximately. Following the booming trend of the ride-sharing market in Kenya, Didi, a Chinese unicorn share-riding company, invested in Taxify in 2017, a signal of Chinese capital setting foot in the African ride-sharing market. Over the past three years, Didi has steadily been expanding its global market through investment or technological cooperation, and now boasts partners from over 1,000 cities.

Kenya has been a burning market for ride-sharing. Indicated by an Uber staff in Kenya, “strong purchasing power, strong user adherence, convenient online M-Pesa payment service and speeding internet network, all contribute to a good environment for technological startups to grow.” Also, Kenya has been recognized as a window to African markets. The head of operations in Taxify said, “If one business can succeed in Kenya, then it can be successful in the rest of Africa.” More than eight ride-sharing applications have come out in Kenya market as a result, including big foreign multinational companies such as Uber (January 2015) and Taxify (July 2016), and local companies such as Little Cabs (July 2016) and Mondo (January 2016). These four platforms are now the most commonly used platforms by drivers.

The wind of ride-sharing has reshaped Kenya’s taxi market a lot. On one hand, the time saved for requesting a ride and the standardized price for each ride have brought a fairer game for passengers. One of our interviewees tore up his sticker with five drivers’ numbers on it behind his door and sold his car after Uber came into Kenya, celebrating that he no longer needed to endure drivers showing up two hours late and charging a ridiculous price from time to time. Besides, drivers’ incomes have also increased. One driver now is able to have 10 more trips a day than before to make profits. According to most drivers, compared with the 140,000 shillings (KSH) for a traditional taxi driver’s monthly revenue previously, they could earn 300,000 KSH per month easily when ride-sharing first arrived in 2016. Moreover, they could earn more as long as they were willing to work for a longer period of time.

Nevertheless, beneath the harmony, conflict embedded in a zero-sum game is happening with few people noticing. After the large amount of subsidies given by big companies to ride-sharing market dried up, lowering the price from 64 KSH per kilometer to 27 KSH per kilometer, thus increasing  the demand in ride service, drivers’ incomes dropped. Increased rider demand has occurred at the cost of their long working hours, with the drivers’ average working hours reaching above 12 hours per day. What is worse, with more and more new drivers entering the ride-sharing market and wanting to take a share of spoils, the income of drivers has seen further losses. Ashford, a Taxify driver, complained that, “I can now make 5,000 per day. But let me do a subtraction for you. The fare for lending the car is 2,000. The fuel needed to earn 5,000 is 1500. I need to pay for the tire, car wash and repair. That’s about 600. I also need to eat. That’s around 500. What do I left when I get home? I have children, parents, and a wife. My family cannot survive with 400 per day!”

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The anger from drivers has led to the formation of a union, the Drivers and Partners Association of Kenya (DPAK), which was established in August 2017 with a mission of protecting all of the drivers’ benefits. Currently, there are more than 5,000 drivers in DPAK, according to the union. Aside from protest and strike, they even have created a new ride-sharing platform, BebaBeba, which is said to belong to all the drivers, to fight against big ride-sharing companies. Mr. Mkomozi, the Secretary General of DPAK, has claimed that “platforms cannot sacrifice our benefits to please passengers. The current condition is just like two boys are chasing a girl while using a third person’s money. Therefore, we drivers need to unite together to fight against these platforms. As long as all of the drivers switch off other apps, Bebabeba will win the market.” According to DPAK, the drivers would have the right to set and negotiate price with passengers on BebaBeba, as well as the opportunity to buy five to ten shares of the new platform.

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DPAK held a meeting at Bluespring Hotel in June 24th, with about one hundred drivers gathering together to discuss the future plan for Bebabeba.

The future of the union is still in a sea of uncertainty. Many drivers think that their failure in the 2017 protests was because they did not unite together, and the government did not support them due to corruption, but now they are bonded together. At the same time, some drivers are not optimistic about Bebabeba. Jesse, an Uber driver who has never heard of DPAK, said “I know Bebabeba. It is fifty-fifty. It is all about strategy. Just increasing the fare is not the solution. Clients will not pay.”

Miscommunication between drivers and platforms has been accounted for in this conflict, according to an insider of the ride-sharing industry. In his opinion, as long as this ride-sharing business is profitable for drivers, the protests are thought to make no sense. “It is like you protest against a restaurant because the dishes are expensive. Drivers can leave this market if they are unhappy.” Moreover, consumers in Kenya are said to be very price sensitive for goods and services. A small increase in price per ride can cause a big proportional decrease in total demand of rides. Therefore, drivers requesting to increase the fare would eventually make them worse off. “They are being emotional,” explained by another insider in this industry.

At the same time, efforts have been put into resolving miscommunication and conflicts in the ride-sharing market. For example, Uber has doubled the frequency of information sessions for drivers, and creatively set up Vehicle Solution Finance (VSF), a service for drivers who do not own cars. The service provides credit statements to help drivers get car mortgages. This solution can effectively help eliminate the 2,000 KSH per day that it costs to borrow cars, since only four out of over 30 interviewed drivers reported that they owned their cars.

Besides, Taxify’s slogan of putting drivers in the first place also shows their concerns for drivers. They help drivers through sending reminder messages about peak hours and providing extra bonuses as driving time accumulates.

The result of these efforts is still unknown. On July 2, more than 3,000 online taxi drivers turned off their ride-sharing applications and went on strike, mainly requesting a chance to talk with platforms about reducing the percentage of commissions. The struggles between drivers and platforms are still far from a happy ending, and the consequences are still uncertain. The ride-sharing market of Kenya is full of dynamism, with promising potential and a growing trend. Didi should be prepared for the challenges and put efforts into localization if they really hope to rope Kenya into their global strategy.

Author: Jinhao Pan, China House Fellow

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