Uber stays in Kenya as rising costs and regulation reshape ride-hailing

Uber is becoming more selective about where it operates in Africa, but Kenya remains firmly inside its plans for the continent. The ride-hailing company says it continues to see “strong potential” in Kenya even as it winds down operations in Nigeria and Uganda and faces a new regulatory environment around commissions and platform data.

The latest withdrawals leave Kenya as Uber’s only East African market. The company entered Kenya in 2015 and has since built a substantial presence in a market where drivers, passengers, platforms and regulators have repeatedly disagreed over how ride-hailing should be priced and regulated.

“Kenya remains an important market for Uber, and we continue to see strong potential for the business here,” the company said.

The statement comes days after Uber ended its operations in Nigeria and Uganda on September 2 following what it described as a review of its business priorities and investment focus across Africa. Uber has not given detailed country-specific reasons for either exit. Reuters reported that the company did not specify the precise reasons for leaving Nigeria, while Uber said the decision was limited to the two markets.

The exits follow Uber’s withdrawal from Tanzania earlier this year, making the company’s continued presence in Kenya more significant.

Kenya offers Uber something its other markets have not

Uber’s Kenya business is operating in a difficult market, but it is also one where the company has room to compete across different customer segments and vehicle categories.

That flexibility has become particularly important as Uber argues that restrictions on fares and commissions can limit its ability to develop new products. Uber’s East Africa general manager, Imran Manji, has described Tanzania’s regulatory restrictions as an obstacle to expansion, arguing that fare controls and commission limits constrained the company’s ability to introduce services such as premium rides and electric motorcycles.

Tanzania illustrates the stakes. Its transport regulator, LATRA, introduced a more tightly controlled pricing framework in 2022, including guide fares, a minimum fare and a lower commission ceiling. Uber subsequently suspended its operations before returning under a revised framework. Manji has now linked the company’s eventual exit from Tanzania to those restrictions.

Kenya has taken a different regulatory path, even though it has also attempted to control the economics of ride-hailing.

The country’s 18 percent commission ceiling was introduced after drivers protested against platform charges that had reached roughly 25 percent or more. Uber subsequently reduced its commission to 18 percent, before the government embedded the ceiling in the 2022 Transport Network Companies, Owners, Drivers and Passengers Regulations.

That history matters because the commission dispute has never been simply a fight between Uber and the government. It grew out of a wider problem with the economics of driving for digital platforms.

The driver problem has not gone away

Kenyan ride-hailing drivers have repeatedly argued that the money left after platform commissions, fuel, maintenance, insurance and vehicle financing can make the work difficult to sustain.

Fuel prices have added to that pressure. In April, EPRA’s fuel review pushed Nairobi petrol to KSh197.60 per litre and diesel to KSh196.63. Bolt responded in May by raising fares by 6 percent, saying the increase was necessary to address driver concerns while keeping fares competitive for passengers.

The pressure is not new. Ride-hailing drivers have staged protests over fares and commissions for years, forcing platforms to revisit their pricing models.

But raising fares creates a second problem: passengers are also under financial pressure.

A TIFA Research survey reported by TechTrendsKE in August found that 59 percent of Nairobi ride-hailing users opposed a proposed government minimum fare. Sixty percent said they would switch to other forms of transport if ride-hailing prices rose significantly, while another 22 percent said they would use ride-hailing less or switch to cheaper options.

That leaves platforms with a narrow economic space to work within.

Drivers need sufficient income to keep operating. Platforms need enough revenue to maintain their businesses and compete. Passengers, meanwhile, can switch to another app, use a matatu or simply make fewer trips when prices rise.

The result is a market where improving one side of the equation can quickly put pressure on another.

The 18 percent cap is now in limbo

That balance has become more uncertain after the High Court blocked enforcement of Kenya’s 18 percent commission ceiling.

The court found that the government had not demonstrated the necessity and proportionality of the restriction through the required regulatory process. It also found problems with the legal basis for the price-setting provisions. The court has suspended its declaration for 12 months, giving the government time to address the regulatory defects.

The ruling does not require Uber, Bolt or any other platform to increase commissions.

That distinction is important.

Platforms now have greater room to determine how trip revenue is divided, but competitive pressure could still discourage them from immediately charging drivers more. Drivers can compare platforms, passengers can compare fares, and companies remain under pressure to keep both sides of the marketplace active.

The court also challenged separate rules requiring digital taxi platforms to retain detailed passenger, driver and journey information for three years and provide it to the transport regulator. That makes the judgment broader than a dispute over platform fees. It also raises questions about how Kenya regulates the data generated by digital mobility platforms.

Kenya’s affordability problem complicates the argument for higher fares

Uber’s own explanation for remaining in Kenya includes a commitment to keeping mobility affordable while supporting sustainable driver earnings.

Those objectives are difficult to separate.

Kenya’s ride-hailing market has become deeply embedded in everyday urban transport. The TIFA research found that the average user makes 6.8 ride-hailing trips a month, with 72 percent of those trips classified as essential travel.

That means a substantial increase in fares would not simply affect discretionary trips. It could change how people commute, shop and conduct business.

At the same time, keeping fares low without addressing driver costs risks reducing the number of drivers willing to remain on platforms. Bolt’s decision to raise fares in response to fuel costs shows how quickly the economics can become visible to passengers.

For Uber, the attraction of Kenya therefore lies partly in whether it can maintain enough demand while giving itself and its driver partners room to respond to changing costs.

Uber’s Kenya position is about more than commissions

The company’s continued presence also reflects the depth of Kenya’s digital mobility ecosystem.

Uber competes with Bolt, inDrive, Little Cab, Faras and other services, giving both riders and drivers alternatives. Platforms are also adapting to different forms of transport and delivery. Bolt, for example, has expanded its ride-hailing offering to include tuk-tuks in Mombasa, while continuing to adjust fares in response to operating costs.

That competition limits how far any individual platform can move prices without risking demand or driver supply.

It also gives Kenya an advantage over markets where regulation leaves less room for platforms to adjust their products.

This helps explain why Uber can regard Kenya as strategically important even while withdrawing from other African markets. The country has a large urban customer base, an established digital payments ecosystem, a mature app-based transport market and a regulatory system that, despite intervention, is still being contested and revised.

The High Court ruling could ultimately give platforms greater flexibility, although the government still has a year to revisit the regulations.

For drivers, however, the end of the enforceable 18 percent ceiling does not automatically mean better earnings. If platforms raise commissions, drivers could see their net income fall. If platforms keep commissions stable but fares remain constrained by passenger demand, the underlying cost problem remains.

That leaves the Kenyan ride-hailing market with a difficult equation.

Uber wants sustainable business economics. Drivers want sustainable earnings. Passengers want affordable transport. Regulators want to protect consumers and workers without making digital mobility commercially unviable.

Uber’s decision to remain in Kenya suggests the company believes those competing interests can still be reconciled here.

Its exits elsewhere in Africa show that it is no longer willing to assume that they can be reconciled everywhere.

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