Uber drivers in Kampala are going offline and refusing to take passengers in protest after the company cut fares this month. A section of the drivers says that with the reduced fares, being an Uber driver is no longer a viable business option.
The ride-hailing app cuts fares on 9 February, just weeks after a second competitor started operations. The new base fare- the charge for pickup- is now Shs1,100 from Shs1,300; a kilometre costs Shs750 down from Shs900 while a minute on the trip is Shs150 from Shs200. The minimum and cancellation fares fell to Shs3,000 from Shs5,000.
But some drivers Uganda Business News spoke to are not happy with the changes. They said they are earning much lesser than they used to and that the company’s incentives are inadequate.
When it reduced the fares, Uber told the driver-partners that they’d be guaranteed to make at least Shs 15,000 per hour during peak times and Shs 10,000 during off-peak hours.
But the guarantee comes with conditions. Uber only gets to top up if the drivers are unable to make as much in one hour, and if they responded to 90% of incoming requests. But if these conditions were fulfilled, the drivers say, one would earn more than that amount (Shs15,000 and Shs10,000), which renders a top-up irrelevant.
The fare reduction is intended to getting more riders in Kampala to use the ride-hailing app. The company reasoned that the rise in users would “mean that drivers spend less time waiting around and more time moving people and earning fares.” This would lead to “higher driver earnings.”
In Kenya, Uber said that a 35% cost cut led to a 100% increase in requests from first-time users, and over 70% more trips for drivers.
Even then, some drivers in Kenya went on strike a week ago because of lower rates. They are demanding that Uber reduces their cut to 10% from 25%, and also start charging riders as soon as a request is made – not when they are in the cab and the trip has started, as is currently the practice.
Kampala drivers have not formally made demands to Uber, but agree that changes like those demanded by their Kenyan counterparts would ameliorate their concerns.
When Uber launched last May, it attracted many ‘special hire’ drivers. But while they got more passengers through the app, the fares calculated were much lower than what they would usually charge riders for the same distances while not on Uber. Those fares were higher than what the app is charging now.
The second type of driver who joined did so to get an additional income. We spoke to one, who said that initially, he made no less than Shs200,000 a day when online for a few hours in the evenings. But he left Uber in November and deleted his app when the money he was making no longer justified the hours he put in – after the California-based company stopped giving bonuses to supplement drivers’ earnings.
Of the 25 drivers he knew at the app’s launch, none of them is still a driver-partner. “We all pulled our cars out,” he said.
Uber fares are calculated based on the amount of time spent on a ride and the distance travelled. The driver-partners are not part of the discussion to decide on rates and say that “all decisions are made by emails”. The company, they say, favours riders while there is little to gain for the drivers. With the fares reduced, the drivers say there is little incentive to stay.
Uber is currently limited to the interlinked Kampala and Entebbe, while in neighbouring Kenya it operates in three different metropolises: Nairobi, Mombasa and Thika. Uganda Business News understands that the Silicon Valley company does not want to expand to other parts of Uganda before it feels that it has conquered the Kampala market. Its target is about two million riders, taking at least 6-10 trips a week.