Uber driving its "Partners" to debt
According to the World Economic Forum 2018, four specific technological advances high-speed mobile internet, artificial intelligence, big data analytics, and cloud technology are set to dominate the next four years, positively affecting business growth.Uber is just one of many tech companies that are shifting and upsetting local businesses and economies in Africa and across the world. We cannot stop the convenience of the new wave of technology. It also stands to gain billions from the African continent according to a BBC report published last year.
One such example is Kenya, a country that has adapted Uber as one of its main sources of transportation. I will be focusing on how the revolution of this technology has affected taxi drivers in Kenya. Local governments must work together with existing international technology companies to regulate, intervene, and protect Kenya's economic interests. African government and private sectors must wake up and support young technology entrepreneurs and startups that create new opportunities and revenue for Kenyan people and their economy.
Uber set up in Kenya in 2017 and already has over 360,000 active drivers. CAPITAL FM Kenya reported that most of these fall under unskilled workers. According to World Bank, 22 percent of the Kenyan population are unskilled workers. Work is changing. Unlike a generation ago, where one must report at certain hours at a physical location, as an Uber driver, you manage your own schedule. Kenyan drivers prefer to work independently, the flexibility allows them to explore other business ventures.
Image Caption: Uber
In Kenya, Uber drivers’ biggest problem is driver benefits, particularly paying back car loans. In 2018, Uber introduced “UberCHAPCHAP” a value based service to customers who wish to travel short distances for less money. Uber signed an agreement with Suzuki Motor Corporation that aimed to expand the product to other Sub-Saharan African markets. They agreed to see themselves as partners to bolster local efficiencies, where drivers of the 800cc Suzuki Alto (UberCHAPCHAP) would offer a subsidized price for the car at $8,043. Partner drivers for the first time had a chance to own their own vehicles, a partnership that was welcomed as innovative.
Image Caption: Reuters
The East African newspaper reported that once approved for a car loan, the driver attracts 14 percent interest rate per annum for a period of 3 years. Riders are required to pay $225 per month. In reality,the pay is barely enough for a livelihood in Kenya, let alone to pay a loan. Drivers’ average monthly wages under the UberCHAPCHAP are $108. The low wages may also be attributed to external constraints like traffic and competition from other taxi hailing apps.
I spoke to Mwangi, a cab driver I once knew while I worked at Easy Taxi (a former e-hailing cab in Kenya). Mwangi, who has been a taxi driver for 17 years, said while he had fewer clients before, they paid well. That’s now changed thanks to Uber and Mwangi is “really struggling to make ends meet.
Image Caption: Business Insider by Pulse Magazine Kenya
In 2018, the Business Daily Africa stated that 500 UberCHAPCHAPS are on Kenyan roads since its launch in February 2018. Since then The East African reported, over 30 of these cars auctioned to the general public by banks to recover their loan.
Mwangi fears the worst. His child, Ndungu is going to high school next year and he simply cannot support his education, family bills, rent, and sustain his car loan payments.
“I don’t know what to do, I may have to sell this car and go back to the countryside to farm,” he tells me.
Similar riders face the same plight, preparing to give up their car, their main source of income. Uber distances itself from the matter, as the banks regulate under local laws dealing directly with the driver.
However, I refuse to believe that the government cannot step into this matter. I believe they can employ policies that protect Kenyan unskilled workers not only under Uber but other international e-commerce services and platforms. I believe the Kenyan government can invest more funds in supporting tech entrepreneurs who can build our own apps. It will not only create an industry but create employment to bridge the massive gap of unemployed youth.
Image Caption: Voice of America
To learn more and view the first Taxi app in Kenya developed for drivers by drivers click BebaBeba Website here.
