Ride-hailing app, Uber Kenya, enabled gig riders to earn an estimated additional KSh 2.2 billion a year – in higher income – 37% more than their next best alternative, according to the first Economic Impact Report launched by Uber at the Fairmont Norfolk Hotel in Nairobi on Tuesday.
- The report also states that Uber boosted Kenya’s nighttime economy by KSh 167 million and ramped up the value of the country’s tourism sector by KSh 2.7 billion last year.
- Restaurants and eateries also benefited from additional value of KSh 534 million from Uber Eats in 2023.
- The report was compiled by Public First, an independent consultancy based in London, to enable the ride-hailing platform to quantify the potency of their operations in Kenya, as well as its beneficial impact on drivers, delivery partners, merchants, and communities.
“Since Uber launched in Kenya in 2015 and Uber Eats launched later in 2018, not only have we helped facilitate efficient, safe and convenient mobility and delivery for Kenyans, but we have also helped to create thousands of new economic opportunities, empowering drivers and delivery partners to improve their livelihoods and support their families while creating additional value through new revenue streams for local businesses,” Imran Manji, Head of Uber East Africa, said.
The consultancy polled 1,132 adults in Kenya on their travel and food ordering habits. It also did an in-depth online poll of 1,014 drivers and delivery partners in Kenya to explore their experiences and attitudes.
70% of the drivers surveyed said they were positive about the Uber platform while 13% responded negatively. About 57% of the drivers on the app chose Uber as a means to self-employment, while 41% prefer the flexibility it offers them as they earn.
“Having calculated the earnings that drivers and delivery partners would sacrifice to retain control over their schedule, we estimate that this increased flexibility was worth KSh 1.6 billion to drivers and delivery people in 2023,” the report added.
Uber and the Economy
Uber’s convenience also saved Kenyans 3.4 million hours a year. About 95% of respondents surveyed in the report revealed that convenience was the main reason they used Uber to navigate urban traffic. More than 70% of the users rely on the app for emergency purposes, with over 60% tapping the platform for hospital visits.
During off-peak hours, restaurants supported by Uber Eats deliveries are not limited by physical distance between them and their customers. About 70% of individuals using Uber Eats stated that food deliveries had become more convenient, saving customers 448,000 hours in a year. Nearly 90% of customers use the app to easily discover new restaurants and try out new dishes enhancing their revenues.
“When we first started, we were taking delivery orders through WhatsApp and calls, and it was challenging to scale effectively. Uber Eats completely transformed our approach,” said co-founder and COO of Ando Foods, Vineet N.R.
About 36% of Kenyan adults have used the Uber Eats app to not only order food but also other essential items. More than 50% of the customers are using the app to order groceries. While convenience was the major reason why customers used Uber Eats for deliveries, other crucial factors like exemplary service and quick delivery time ranked above the fifty percent mark.
Taxes, Affordability and Driver’s earnings
Uber, like many other ride-hailing apps, have experienced immense challenges over the years – trying to balance between providing affordable rides for customers, ensuring drivers earn a satisfying wage, and making profits.
By introducing new products like the Electric Boda and Uber One, the company intends to incentivize customers to use the app more often. Uber One is a membership option that allows a customer pays KSh 280 per month, which would allow them to acquire 5% and 10% cashbacks on ordinary and premium rides respectively, as well as getting free deliveries on every Uber Eats order.
Imran Manji argued that while ensuring drivers earned more was important, pushing fares beyond the customers’ affordability could further jeopardize the industry. Uber is trying to be creative by exploring customized ride options that can allow drivers with certain cars to fetch customers who wish to pay more for premium rides.
They are also exploring partnerships with other companies to reduce the costs for drivers, for instance auto companies to subsidize vehicle maintenance costs for Uber drivers and the most recent free data option from Safaricom.
“We try to put drivers’ earnings at the center of everything we do. That means we go above and beyond to customize products,” Imran Manji told The Kenyan Wall Street.
The Uber Head of East Africa also relayed his concerns with the proposed re-introduction of the 6% Significant Economic Presence (SEP) tax. He feared that it would ultimately weigh down on the company’s revenues and market re-investment, prompting additional costs for customers. The SEP tax will replace the Digital Service Tax that was charged at 1.5%, according to a draft bill proposed by the Treasury. It is set to affect foreign tech firms and digital platforms – most of which are crucial for the gig economy.
“The promotions we are talking about come from Uber’s pocket. If we have to pay a lot more tax, we won’t be able to reinvest more in the market. Unfortunately, when taxes go up and revenue is capped at 18%, you have to absorb that. We hope that the tax doesn’t result to lower levels of investment in the country but that is definitely a concern,” Manji added.
The Safety Aspect
Almost 80% of Uber users reported that the app has transformed night travel. The report indicates that 70% of women who ride in the cabs regarded them as the safest way for travelling around at night. The app has also reduced congestion by promoting ride-sharing. About 63% of Uber customers have reduced their need to drive.
“Uber has a suite of safety features, such as the “RideCheck” feature, which detects if the ride stops for an extended period and sends a prompt to the driver and rider ensuring they are alright, following up with calls to each of them if they are unresponsive,” the report noted.
