Uber Not Welcome In Kenya..Yet
From the outset,it is important to point out that this
article has little to do with Uber as an entity,which operates in 60 countries
across the world, but has more to do with its rigid business model and its
insensitivity towards existing market participants.
While it’s flattering to share first world problems with the developed
nations(going by the Kenya Taxi operators' agitations similar to the protests
recently witnessed in France,Germany and China after Uber’s entry in to their
markets),we should keep in mind that their solutions might not be a cut and
paste affair here in Nairobi.
The demographics in the Kenyan capital alone,even after it was recently voted the best city to live in in Africa,will tell you
that the playing field is far from being even. There’s no need to belabor the
point here,but one glaring statistic that sticks out like a sore thumb and
should not be overlooked for conformity’s sake is: 75% per cent of the population
falls below the age of 35 years, of which the unemployment rate is at an astronomical 67%,according to a report by the Kenya National Bureau of Statistics.
The transport industry has absorbed a huge part of this
deficiency and Taxis,being the preferred mode of hire for the middle class and
business persons,has many a people dependent on it,young and old,for their
livelihood.The Uber model which utilises a mobile app to help a client to locate a
taxi nearby(similar to a chauffeur) for hire,though ingenious and economical on
many fronts, might render the thousands in the Taxi Associations redundant.
Lackadaisical
services
Granted, the local taxi industry has been quite slow in
adopting change in as far as technology and best practices in the industry is
concerned; and granted, Uber has done its fair part in jolting them from this
deep slumber. The company might, however, be advised to adopt less aggressive policies while
entering markets in the developing world, otherwise it will always carry this hostility tag wherever it goes, which is
detrimental to business in the long run.
A few careless and unapologetic rants from our local tech
people as they look at this issue as being about keeping up with technology alone,at the cost
of the net social-economic benefit the company will bring to our country,is
really sad as it is unpatriotic.
Asking the taxi people to come up with their own app to
compete with Uber is tantamount to asking you,dear reader,to develop your own search engine- not entirely impossible,but definitely a herculean task.Might they be reminded that majority
of the people in the country don’t even use taxis due to their prohibitive
costs. The matatu industry continues to thrive despite
numerous attempts to impose non-consultative regulations like the cashless system owing to the large population that relies on it on a daily basis. That’s the reality on the
ground.
The taxi business,according to recent reports doing rounds in the
media,has been on a slump because the new entrant,for the last one year,has
been flexing their muscle with wanton bravado.
Unlike the Uber driver who mostly works on part-time basis
and thus has minimum fixed costs ,and whose employer has positioned the
business as a tech company (enjoying the accompanying incentives),the local
taxi driver has to contend with various fees and levies both from the county as
well as the National government,thus skewing the market towards the entrant.
The Competition Authority Of Kenya,unless admitting to being just
flower girls,needs to inform the public what they're doing to ensure that a few
years down the line, we won’t have added to the already long list of the unemployed thousands of job seekers,should the local taxi industry fold as a result of
lack of preemptive guidelines in this regard.
It is an opportune moment to remind the reader that the
taxi driver, the world over,is regarded as an indispensable resource when it
comes to street knowledge,having interacted with all kinds of clients-from
politicians to celebrities,from diplomats to prostitutes,ferrying merchandise
legal or illegal etc. Thus he is privy to what goes on around the city
undetected by the ordinary eye or even by the law enforcement.
One can only imagine the level of insecurity that would be
felt if the good cab drivers decided to exploit such opportunities. There will
be a rise in cases of extortion and robberies never before witnessed as the
local taxi people are forced to compensate for the loss of income.
Uber will
have created a monster. And, pray, who tells you that Uber will operate
smoothly when someone else’s children are starving now that their plate has
been snatched from their
mouth?
Protectionist
policies
Most developed Asian countries that were just
recently categorized as ‘developing’ adopted protectionist policies in order to
strengthen their local industries by restricting imports of goods and
labour. Once their industries were protected from foreign competition,they grew exponentially as governments additionally offered subsidies and tax cuts so as to enable them
enter the international business by selling their goods at competitive
prices with an aim of earning foreign exchange.
India for instance liberalised her economy in the early
90s,and only when it had to.Continuing with protectionist policies increasingly
curtailed their chances of entering into bilateral agreements which operates on
the principle of reciprocity.Their labour laws,however, still remain
unchanged.But look at what she had managed to accomplish in a few decades -a robust manufacturing
and production industry that cuts across sectors and is a force to be reckoned with worldwide.
Even today,one can hardly export anything to India due to
the already established industries that take advantage of the economies of
scale to price items way down for the entrant to be competitive.For instance,a
newspaper with the same readership as here in Kenya,like The Daily Nation,costs around
five Shillings,5/- or roughly $ 0.05 ( And there are thousands of publications in all known dialects.
This can be attributed to the fact that they own the entire process, from the raw materials,technology,processes,capital to the human resource.The end-user benefits.That
could explain why they are the one of the most informed and democratic people
in the globe because information is at the disposal of even the poorest of them.Now,can that be said of our
economic system?
China also has over the years adopted dumping as one of its entry strategies in
to foreign markets.Most nations under the WTO have developed retaliatory
anti-dumping policies,since most of these goods,owing to their low cost below
that of production,contravene other laws,for instance,the ones relating to fair
competition and anti-counterfeiting.This mode is highly discouraged,but
inevitable,as the dumping country aims at increasing its market share or drive
out competition.
It’s a practice perfected in Europe and Northern America
and welcome here in the name of mitumba business.A customer would rather buy a
quality second-hand designer shoe imported from say,England,rather than buy a
new one made by the Bata shoe company here at Limuru that is
thrice the price. It’s unfair,but that is the price we pay for a free economy
since everyone is welcome!
Fascism
Every nation deserves the leaders that it
has.
The sins of our fathers have caught up with us yet again as
a nation.The result of appointing selfish, unpatriotic and myopic leaders,
occasioned by the strong arm rule of the time, led to our country being the
continent’s biggest whore,
with the market being penetrated by anyone who could grease the palms of the
policy holders-A sad state of affairs still evident today if the
B.A.T,Chickengate and other scandals are anything to go by.
Having received kickbacks, present-day policy makers have
shamelessly continued to compromise the future of our children by bending the
rules to suit the entrant's needs,who in their own countries would be heavily
penalised for contravening such rules.
Regulations relating to the Environmental Impact
Assessment, for instance, on emission standards, use of non-biodegradable
substances and restoration of depleted lands can be removed by a stroke of the
pen if a multinational company works in cahoots with the relevant policy maker
(PS or CS) to compromise the mover of the bill or leader of government business
for amendments of the unfavourable clauses,or make them
non-obligatory before the law is enacted.
Local ownership
Our good Attorney General recently proposed a raft of
amendments in the recently enacted Companies Act 2015 that left most of us
feeling helpless and lost for words.
The AG used his powers under the Act to suspend
Section 974(2)(b) that requires a foreign owned company entering the
Kenyan market to “demonstrate
that at least thirty percent of the shareholding is held by Kenyan citizens by
birth…or attract a fine of Shs.5million.”All this in the name of
encouraging foreign direct investment.But we all know whose side of the bread
is being buttered.
If the Government legal advisor does not appreciate the
wording and spirit of the clause as it is,what hope is there that the junior
technocrat,who will be ambushed in his office with an envelope containing some
few green notes,will not alter policy to an unscrupulous entrant’s
advantage?
Patriotism
It might be a little too late to adopt protectionism as a
policy across the board in order to allow our local industries to thrive,but if
a few good men in positions of influence did their part,our children might have
a chance to regain the pride of their nation;and NOT have to import everything including the spare parts and wonder why the unemployment rate remains on an upward trend when all production jobs have been exported!They will be able to exploit the
local market with the Sons of
the soil advantages,and not
have to tremble when a new entrant threatens their livelihood with technology
or other innovative processes before consulting the industry player concerned.
With the right attitude from such opinion leaders,The
United Kenya Taxi Association would not need to worry even if 10 Ubers were to enter the market since appropriate measures would ensure that equity is observed,and not equality,when it comes to legislation and the entire business environment.
And let no one fool you that Uber is invincible.Technology
is no longer a privilege of the few as it was years back.Our own CID and
the Integrated Control & Command Centre at Vigilance House have more than
enough technical expertise to enforce restrictive barriers on unfair trade
practices if backed by the law to do so.
Among the countries that that have banned certain websites
from operating within their jurisdiction for whatever reason,China takes the gold medal.
Social media platforms like Facebook and Twitter,which
are revolutionary to say the least,are kept out by the Great Firewall.The
excuse used in banning the websites appears dictatorial but if you read between
the lines,you’ll notice a strong element of patriotism because,the ban is not on social media
itself,but on the companies and what they stand for.Why give foreigners the
exposure of a market of a billion people when your own people can be facilitated
to capitalize on the same.
Presently, China has its own Twitter, with twice as many
users(with pioneering interactive features as well) known as Sina Weibo –which also has active western users like
Kobe Bryant and Lebron James who have gained a massive Chinese following.
They also have Renren,
which is their own version of Facebook. The point here is,a new crop of
millionaires and billionaires has arisen as a result of selective protectionist policies
from the great people of China.
So Yes! Uber can be banned.
It is noteworthy that Uber has been banned in more
than 10 countries worldwide,including Spain,Japan,Brazil,France,Germany and in India.It
should be banned here in Kenya also until it appreciates the unique local
dynamics of the country.
Policy
Policy
Perhaps the only person the Taxi Association needs to worry
about is the person sitting at the helm of the Transport docket;not even Uber as an entity.
Innovation shakes things up and has no time to wait for anyone to lace their
shoes.Let the Association face it.We are yet to see the last of this.
But The Cabinet Secretary for Transport and his office,is
either a theoretical,textbook referring,clueless position leader,or his indifference and snobbishness knows no bounds. That’s all I will say about him.
Taxi stakeholders should endeavour to make his tenure at
the office untenable,of course within the confines of the law, and lobby for
real representation in the Transport Ministry,and at the same time restrain
themselves from inconveniencing the hard-working citizens of Nairobi with
their planned protests.
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