Alex Ndungu Njeru: Competition and The Uber War In Kenya


Kenyan Society.

One of the most ubiquitous clichés in politics is, “you (status quo) cannot stop an idea whose time has come?” This phrase is bandied around all too often in your common day political rally, but perhaps the phrase has more utility in the economics and commerce spheres than it does have in the noisy cacophonous world of politics. After all, changing status quos in Africa, particularly in governance and government continues at a glacial pace.

Last week, for example, the taxi union, the “Kenya United Taxi Organization threatened to bring business to a stand-still if the government failed to drive Uber, the technology based cab service provider out of town for what the organization termed as, “uncompetitive business practices.” The previous week the taxi lobby had been accused of destroying Uber-ran taxis and threatening their drivers. This week the government in its wisdom, has, perhaps with an election in the horizon given in to their demands. With the transport cabinet secretary, James Macharia, saying that there is need to review the transport sector’s policies to accommodate and regulate innovations. Well, this move is imprudent and raises a couple of philosophical and moral concerns.

First, the government has a duty to protect the property and liberty of all Kenyans. Yes, and that includes Uber drivers, their cars, and their customers. By not acting firmly with the property destroying taxi lobby, the government has already abdicated from this hallowed role of keeping the peace and protecting the property and rights of all individuals. Secondly, taxi services are not a public good, I mean most Kenyans do without and live without them. As such, I cannot see a justifiable prerogative for the government to regulate a space and industry that is not a concern for many Kenyans. As a matter of fact, the taxi service industry has not failed and it is rather surprising that in this protracted debate nobody seems to think that consumer choice has weighty significance.

The market, through the consumers has the ability to regulate the taxi services market, and this rather unobservable regulation is already happening, but it is not Uber that is being regulated, it is the traditional taxi players. Consumers are sending a message that they are tired and fed-up of the dirty, conniving and at times plainly criminal traditional taxis.

Although the taxi Uber wars seem like a detached affair, they are very much an indicator of normal happenstance in the world of government and regulation. The regulators, in this case, the Ministry of Transport and the Ministry of the Interior have been captured by those they seek to regulate. This is not a peculiarly Kenyan thing, although it does happen a lot in this country as in the case of the Energy Regulation Commission and players in the petroleum sector in Kenya. Adam Smith once retorted that, “people of the same trade seldom meet, but when they do the conversation ends in a conspiracy against the public.

The Uber wars as they are are a microcosm of the problems that belie Africa’s economic development. In most cases Africa is always playing catch-up. The recently released World Bank’s World Development Report 2016, detail a sad state of how developing countries fail to achieve the digital dividends of technological progress. This is very much a case of placing the cart before the horse, of putting regulatory measures before innovative progress, of defining innovative space rather than unbounding innovating space for innovative enterprise.

In this current taxi wars, the government should take a back seat and watch as the forces of creative destruction usher in a truly progressive industry, which delivers satisfaction for the customers and gives value to the drivers and other players. That should hold true for most other industries. Besides, Uber and other technology based services like Air BnB are helping solve some of economics age old challenges, information asymmetry. These days, a potential customer does not have to waste a few minutes sometimes in terrible weather to hail down a taxi, and similarly an Uber driver does not wait for hours on end touting his cab services to every passerby. Technology has brought the taxi guy and the customer together, that’s progress and we need more of that in our Matatu sector and many more sectors.

Alex Njeru


Programs Manager: Eastern Africa Policy Centre.

Photo: The East African