Uber Raises Fares In South Africa As Competition Mounts For Drivers

Written by Dana Sanchez

Competition is mounting for drivers and customers in Africa’s competitive taxi markets, and No. 1 ride-hailing app Uber has decided that it’s raising fares to keep drivers happy.

In Africa, tapping into dissatisfaction with Uber seems to be the unofficial expansion strategy of the app’s competitors, Quartz reported. More and more ride-hailing services are using Uber’s weaknesses to capitalize on their expansion in Africa.

Right now, drivers rather than customers appear to be where the battle is playing out.

Uber cut fares by 20 percent in South African cities in April, hoping demand would rise. That didn’t happen. Drivers lost income.

Now Uber is hiking fares back up again, Bloomberg reported. Uber has about 4,000 drivers in South Africa and wants to almost quadruple that number to 15,000 in the next two years.

South Africa isn’t the only country where Uber is rolling out the red carpet for its drivers.

The San Francisco-based company announced a slate of new and expanded driver-friendly features Monday in the U.S., including greater control over ride destinations, incoming ride requests and the timing for cashing out payments from Uber, as well as new rewards for drivers to get discounted rides when they are passengers in other cars, according to Mashable.

The $62.5 billion company faces multiple lawsuits and attempts by drivers to unionize in the U.S., along with competition from rivals who say they’re more driver friendly — including Lyft.

In Africa, tapping into dissatisfaction with Uber seems to be the unofficial expansion strategy of the app’s competitors, Quartz reported.

“We cut prices to encourage more riders to use Uber,” said Alon Lits, general manager for sub-Saharan Africa, in e-mail to Bloomberg. “At the time, we promised that if those price cuts didn’t work out for drivers — because they weren’t busy enough and therefore earning more — fares would go back up,” he said.

Uber faces increasing competition with similar ride-hailing services entering the African market. Estonia-based Taxify started service in Johannesburg and Cape Town this year.

Uber raises fares in South Africa

Taxify’s rates are higher than Uber’s, but Taxify believes it has a winning strategy — be nice to drivers, Quartz reported.

When Uber lowered its rates, South African drivers went on strike and marched to the company’s local headquarters. In South Africa, labor laws favor employees. Taxify may not be cheaper, but it promises to be better.

Taxify works a lot like Uber. Customers use an app downloaded on their smartphones to get a ride. But Taxify customers can also hail a taxi the old fashioned way — by phone, IndependentOnline reported.

There are still many people in South Africa who don’t have smartphones, said Trevor Joseph, CEO of Revnetek SA, the IT company that has the licence to operate the mobile-based app, in a Star interview.

Uber’s competition in Africa

  • Saudi Arabia-based cab service Mondo Ride has targeted Tanzania and Kenya for its first expansion outside the Middle East, Quartz reported. Mondo Ride uses boda bodas, local motorcycle taxis, as part of its adjustment to the local market and has promised to avoid surge pricing.
  • Local developer Maramoja launched a year ago in Kenya citing a better understanding of the country than the competition. Maramoja charges according to zones. The app also tries to tap into existing usier networks, recommending drivers through social media favorites via friends or followers.

“Kenya doesn’t have a taxi market, it has a taxi culture. And Kenyans aren’t a consumer group, they are a community,” Maramoja said on their blog, according to Quartz. “People’s stories and networks matter because more than anything, they are what people trust and what drive their decisions.”

But Maramoja ran into technical glitches, making its Android and web app difficult for users until a recent update.

  • In Nigeria, Afrocab had similar glitches since it’s 2012 inception, eventually rebranding to just Afro with a back-to-basics approach that keeps Nigerians in mind, according to Quartz:

The homegrown app’s smartest feature is that it literally haggles—tapping into the shopping culture of Nigerians. A prospective user and driver negotiate a price using the plus and minus signs on either side of a proposed price, until they agree on the fare. It’s a nod to a market practice that many Africans are proud of.

  • Oga Taxi — Pidgin for “boss” — describes itself as Nigeria’s first and biggest taxi app” with  safety as its No. 1 priority, promising background checks on drivers and users and providing a built in SOS-button.

Some taxi firms couldn’t compete with Uber, like South American Easy Taxi, which departed the African market. Easy Taxi operated in Nigeria and Kenya, where it was for a while the most downloaded app. Ironically both Uber and Easy Taxi’s parent AIG/Rocket Group were both funded by Goldman Sachs, Quartz reported. Easy Taxi was also funded by Africa’s first e-commerce billion-dollar “unicorn” — Africa Internet Group.

Uber has inspired new players in the market, but none made much of a dent in
Uber’s African expansion. It remains the most ubiquitous hailing app and has both Kenyan and South African government officials on its side in clashes with metered cabs.

It also had deep pockets, recently landing its largest ever single cash infusion of $3.5 billion from Saudi Arabia.