Kenyan Start-Ups Make The Ride Tough For Uber 15/08/2016 by Maina Waruru for Intellectual Property Watch 1 Comment Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)NAIROBI, Kenya — After making a dramatic entry into the African market late last year that was marked by as much drama as elsewhere in the world, global taxi hailing service Uber is facing tough times in the Kenyan market, thanks to a number of innovative tech start-ups that are giving the company a run for its money. Local start-ups in the East African country have come up with innovative apps similar to that of Uber, but which have additional features suited to the local market situation and demands. While Uber in Kenya has a provision for cash payments in a country where electronic payments remain a preserve of the elite, local firms have come up with a payment feature where fares can be paid by use of the popular and ever-growing mobile money service M-Pesa, a Kenyan creation that has caught the attention of the entire world of money transfers. Furthermore, the Kenyan small and medium enterprises (SMEs) have managed to develop apps that operate on non USSD enabled phones (non-smartphones) in a country where millions own handsets long forgotten in the western world, that just perform ordinary voice and data tasks. Indeed, according to the Communications Commission of Kenya, out of the country’s population of 44 million people, more than 36 million own mobile phones, and of those more than half own old-fashioned non-smartphones. With no less than six companies coming up in Kenya – a country renowned for tech start-ups – in the last 8 months, Uber analysts say it could finally have met its match in the African market if the price wars precipitated by the new entrants is anything to go by. Already the company behind M-Pesa, regional telecoms giant Safaricom, has partnered with local software firm Craft Silicon to come up with a Little Cab, a company now offering free Wi-Fi in their vehicles as an additional value to their riders, besides accepting mobile money payments and operating on all phones both old and smartphones. “The possibility of working on your laptop while stuck in traffic jam while riding is going to be irresistible to many taxi service users and this may see Uber adding this feature to survive the onslaught by local companies,” said Bitange Ndemo, entrepreneurship lecturer at the University of Nairobi. “Recognising and appreciating local market dynamics such as developing apps that operate on ordinary phones and use mobile payments is the kind of innovation that will give local firms an advantage over Uber, and it should not surprise anyone if the global operator comes up with similar features to stay afloat” added the former Communications and Information ministry principal secretary. Other homegrown taxi hailing firms include Jumia Group, Dandia and Maramoja, Pewin and Kenya Taxi Cab Association in addition to Dubai-owned Mondoride and Estonian firm Taxify. With the coming of the innovative features in the taxi-hailing business, the obvious result has been a significant drop in charges, with Uber recently lowering prices by as much as 35 percent in response to the entry of Safaricom-backed Little Cabs and attractive features including free Wi-Fi localised features offered by the upstarts. “This reduction in prices might be an indication that Uber has met its match in the Kenyan market but expect the giant to fight back hard and fiercely,” Dennis Mugendi, a local tech analyst, told Intellectual Property Watch. The coming up of the small firms has stalled fierce conflicts and resistance to Uber’s entry into the Kenyan market by local drivers who have opted for taking up technology to survive an onslaught by Uber. The new innovations appear to not be considered infringing, and no legal action has been taken against the new competitors. According to technology analyst Dennis Mugendi, adapting to local circumstances is the best way for Uber to shake off local competition. “I still don’t understand why Uber is not adapting to the Kenya ecosystem. If you fail integrate mobile money in Kenya you are preparing to fail, but let’s not get ahead of ourselves, Uber has the customer love and the market headstart already” he observed. This is not exactly lost on Uber Africa executives. Samantha Allenberg, African spokesman for the company, was in early August quoted in Kenyan media saying that the company was not averse to adapting to individual market conditions in Africa. To its credit, the firm in Kenya has adopted cash payments in appreciation of the fact that the market still largely operates on cash payments and it may be a matter of time before they start using mobile payments for fares. “Uber just like any global brand in Kenya gained traction among the middle class because it was cool and cool is big for the burgeoning middle class in the country. Now that the initial excitement is over, consumers are no longer looking for what is cool, they have already taken and shared their Uber selfies and tweeted about it, it’s now about price and the added value,” said James Gakuta, another tech analyst. “Uber may not have seen this coming especially in Kenya where startups are hatched day and night … but expect the giant to fight back with prices cuts and innovative value addition features,” remarked Kenyan analyst Alfred Bernard, in reaction to the features introduced by local competitor Little Cabs. Globally, Uber has fought bruising battles with indigenous companies, the most prominent being China’s Didi Chixing, which is backed by global technology firms including US giant Apple. The bottom line, according to Dr Ndemo, is that the battle for control of the hail-a-taxi business in Africa will be fought and won by innovative solutions developed by local telecoms firms more than price cuts or anything else. In Africa, Uber is present in cities across South Africa, Egypt, Ghana, Morocco and Nigeria, and millions of people use the service each month. Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related Maina Waruru may be reached at email@example.com."Kenyan Start-Ups Make The Ride Tough For Uber" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.