In 2016 Kenya proposed a set of regulations built around ehailing services, with it set to finally come into effect in the next few weeks. Among the regulations, there would be a limit or cap set on the service fees or commissions that ehailing services like Uber could charge.
Capped at 18 percent, it is far less than the 25 percent that Uber currently charges.
According to filed documents seen by TechCrunch, Uber is planning to contest the decision in Kenya’s Supreme Court. The company explains that the cap, as well as regular evaluation of its pricing structure, would severely hamper its earnings in the region. This in turn, Uber argues, would also greatly limit the investments it could make in the country.
The company is also position its argument by stating that Kenya is a free market, along with highlighting the fact that the regulations were gazetted without any proper process being followed.
“The introduction of 18% as the ceiling for allowable commission has the potential to stifle innovation and reduce the petitioner’s economic feasibility of investing in the market,” explained the aforementioned documents filed by Coulson Harney LLP, the law firm representing Uber.
“The Kenya Revenue Authority is presently in the process of finalizing digital service tax regulations as well as VAT regulations that would impose additional taxes of 1.5% and 14% on the petitioner’s (Uber) service fees. This coupled with the proposed cap in the commission, will have a major impact on the petitioner’s revenue from the Kenyan market which in turn will have an adverse impact on the Kenyan market prioritization for investments,” it added.
It looks like Uber is fighting this law based on the precedent it could set too, with ehailing operators in the region also needing to obtain transport network license from the National Transport and Safety Authority (NTSA).
Uber says that it is simply an app platform and not a transport operator.
Should it be forced to comply with the Kenyan Ministry of Transport and Infrastructure’s new regulations, the company may have to comply with similar legislation in other parts of the world.
With Uber having already halted operations in Tanzania over new laws it deemed restrictive, for now, the company has not indicated a desire to leave Kenya.
“We remain committed to Kenya and ensuring that more drivers and riders can experience the benefits of ride hailing,” noted Lorraine Onduru, head of communications for Uber East and West Africa.
“Some aspects of these regulations, such as the commission reduction and requiring companies to be registered in Kenya, are not conducive to doing business in Kenya and are not good for drivers or riders as they deter foreign investment into the country and limit the role private businesses can play in supporting and growing the Kenyan mobility sector,” she concluded.
Either way, this will prove a rather interesting case to see develop should it indeed head to the Supreme Court.