Taxi
This policy shift, aimed at increasing tax revenue and tightening regulation, has raised concerns over its potential impact on the livelihoods of thousands of riders and drivers who rely on these services.
The recent budget introduced a 15 per cent excise tax on ride-hailing and delivery services, alongside tighter regulatory oversight under the Transport Licensing Board.
These changes are part of broader efforts to expand the tax base and bring order to Kenya’s informal transport sector, which has historically provided crucial employment but remained largely unregulated.
However, for drivers and riders, the new measures come with several challenges.
One immediate issue is the rise in operating costs.
The excise tax is likely to push up the cost of rides and deliveries as app companies pass on the financial burden to drivers and riders.
Drivers already pay platform commissions of up to 25 per cent, and the additional tax could further reduce their earnings.
Boda boda riders, who often operate on even tighter margins, may face greater financial pressure.
Compliance with stricter regulations, such as obtaining licenses, and insurance, and adhering to safety standards, is expected to require additional fees and documentation.
This could discourage some operators, especially those unable to afford the costs.
Reduced earnings are another concern.
With higher operational costs and platform fees, many drivers and riders may find themselves taking home less money.
To maintain their income, they may be forced to work longer hours, which raises concerns about fatigue and road safety.
Increased ride fares, a likely consequence of the new taxes, may also lead to reduced customer demand as passengers seek cheaper alternatives like matatus or walking.
This decline in ridership would directly impact the earnings of operators.
Despite these challenges, the sector also has opportunities to adapt and grow.
The new rules could professionalize the industry by ensuring compliance with safety and operational standards.
Improved public perception of boda bodas and app-based taxis could attract more customers in the long run.
Drivers and riders can also organize themselves into unions or join existing associations to negotiate better terms with ride-hailing companies and the government.
A collective voice could advocate for lower commissions, subsidies, or fairer tax policies, helping operators adapt to the new landscape.
Diversification of services presents another avenue for resilience.
Many operators could explore opportunities to deliver goods or securing private hire contracts to supplement their income.
Embracing technology and supporting homegrown platforms, which may offer better terms, could also be a viable strategy.
Drivers and riders can seek alternatives to international platforms with high commission rates, focusing instead on apps that prioritize their interests.
Ride-hailing platforms have a critical role in shaping the future of the industry.
They must balance the interests of drivers and riders while adhering to government requirements.
Lowering commission rates could help offset the impact of the new taxes, making the platforms more appealing to operators.
Introducing flexible pricing models, such as dynamic pricing during peak hours, could allow drivers to earn more.
Supporting operators in meeting regulatory requirements, such as providing affordable insurance and helping with licensing processes, could also foster loyalty and sustainability within the sector.
For the government, a balanced approach is essential.
While the need for increased revenue is clear, protecting the livelihoods of workers in the informal sector should remain a priority.
Offering tax incentives or subsidies to operators who comply with the new regulations could encourage wider adherence.
Simplifying the licensing process and reducing associated costs would also help ensure that more operators can meet the new requirements.
Collaborating with ride-hailing companies to create programs that support drivers and riders, such as affordable financing for vehicles or motorbikes, could further ease the transition.
The future of Kenya’s cab and boda boda sector will depend on the implementation of these reforms and how stakeholders respond.
Poorly managed changes could drive many operators out of the industry, worsening unemployment in an already strained economy.
On the other hand, a well-regulated and professionalized sector could create more opportunities for operators while improving safety and reliability for customers.
For cab drivers and boda boda riders, adaptability and resilience will be crucial in navigating the challenges posed by the new taxes and regulations.
Embracing innovation, forming alliances, and advocating for fair treatment will be key to securing a sustainable future in Kenya’s rapidly evolving transport sector.
While the path forward is uncertain, a collaborative effort among drivers, companies, and the government can help ensure that the industry thrives under the new framework.
