Grace Ashiru
Uber Kenya has filed a lawsuit with the Supreme Court of Kenya to overturn new restrictions governing the use of digital taxi-hailing apps. These regulations limit commission fees to 18%, down from 25%.
Uber says that the cap would make the company make less money and stop it from investing more in Kenya.
The rule is anticipated to become operational during the next few weeks. Since 2016, when drivers first challenged Uber’s 35% fare price decrease, which grabbed the attention of politicians, the laws have been in the works but have not yet been finalized.
TechCrunch got a copy of the filing, which said, “The introduction of 18% as the ceiling for the allowable commission has the potential to stifle innovation and make it less economically feasible for the petitioner to invest in the market.” Coulson Harney LLP made the filing.
The Kenya Revenue Authority is finishing up rules for a digital service tax and a value-added tax that would add 1.5% and 14% to Uber’s service fees.
This, in conjunction with the commission’s proposed cap, will significantly impact the revenue that the petitioner derives from the Kenyan market, which will, in turn, have a detrimental influence on the prioritization of investment in the Kenyan market.
Uber asserts that Kenya is a free market in which ride-hailing companies have the freedom to establish commercial agreements without the need for outside interference. Uber also says that the regulations were enacted without following the proper procedures or consulting the public.
According to Techcrunch, Uber was one of the companies that voiced opposition to the requirement that all ride-hailing companies obtain a transport network license from NTSA to operate. Uber argued that the company is not in the business of providing transportation but instead acting as an intermediate service.
Uber thinks the regulations are unfair because they only permit Kenyan personal identity numbers to obtain the required license. As a consequence of this, the permits are available only to organizations that are duly registered to do business in Kenya and have a physical presence there.
In addition, ride-hailing businesses are obligated to share drivers’ and riders’ data upon request from the authorities, which Uber considers a violation of the Data Protection Act.
In response to the new rules, the head of communication for Uber in East and West Africa, Lorraine Onduru, said, “We remain committed to Kenya and making sure that more drivers and riders can enjoy the benefits of ride-hailing.”
She also said that some of these rules “are not good for doing business in Kenya and are not good for drivers or riders because they discourage foreign investment in the country and limit the role private businesses can play in helping the Kenyan mobility sector grow and improve.”
Uber has said it will stay in the middle of the regulatory fights, but the company just left the Tanzanian market because the country put a cap on commissions at 15%, and things may get worse in Kenya.
