Kenya is set to introduce minimum fare regulations for ride-hailing services. William Ruto has directed the National Transport and Safety Authority (NTSA) to engage ride-hailing companies and implement a pricing framework that will establish a minimum taxi fare across platforms such as Uber and Bolt according to the Daily Nation.
The proposed minimum fare framework comes amid growing concerns over the sustainability of Kenya’s ride-hailing ecosystem.
Over the past few years, aggressive price competition between platforms has driven down ride costs for consumers. Drivers have complained about shrinking incomes accelerated by high fuel prices, vehicle maintenance costs, insurance expenses and platform commissions.
Government officials say unchecked fare competition has triggered a race to the bottom that can destabilize the sector and may make it difficult for drivers to sustain viable livelihoods.
Ride-hailing services have traditionally relied on algorithm-driven pricing models. These include dynamic pricing that adjusts fares based on demand and supply. By having a minimum fare, the government hopes that it can place limits on how low prices can go by introducing a minimum fare. This might help curb one of the core competitive tools used by platforms.
Discussions are expected between the NTSA, ride-hailing operators and driver representatives to settle on the framework for the minimum fare structure. Some of the main considerations that may inform the pricing model are fuel costs, vehicle maintenance, insurance, distance and commission structures on the platform. The success will depend on striking a balance between protecting driver earnings and ensuring the platforms are still affordable to passengers.
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Also Read: Bolt Raises Fares by 6% to Cushion Drivers Against Rising Fuel Costs
