Ride-hailing app Uber Kenya has significantly influenced the country’s economy, contributing an estimated KSh 14 billion in 2023, according to its first Economic Impact Report. Launched on November 26, 2024, at the Fairmont Norfolk Hotel in Nairobi, the report details Uber’s contributions to job creation, income generation, tourism, and more. Compiled by Public First, a London-based consultancy, the findings highlight Uber’s impact on drivers, delivery partners, merchants, and local communities since its entry into Kenya in 2015.

Uber’s Economic Impact

Increased Earnings for Drivers

Uber Kenya has enabled gig riders to earn an additional KSh 2.2 billion annually, translating to a 37% increase compared to their next best alternative income source. Approximately 70% of surveyed drivers expressed a positive outlook toward Uber, citing flexibility and the opportunity for self-employment as key motivators. About 57% of drivers chose Uber to gain independence, while 41% valued the ability to set their schedules. The report estimates that this flexibility was worth an additional KSh 1.6 billion to drivers and delivery partners in 2023.

Nighttime Economy and Tourism

The report notes that Uber contributed KSh 167 million to Kenya’s nighttime economy, fostering safer and more accessible night travel options. Almost 70% of female riders regarded Uber as the safest means of transport after dark. This has encouraged increased activity in nightlife sectors, such as entertainment and dining.

In the tourism sector, Uber’s services added KSh 2.7 billion in value, enhancing the travel experience for visitors. Tourists rely on Uber for safe and reliable transport, particularly in urban centers. This accessibility aligns with Kenya’s position as a leading travel destination, where convenient transportation plays a critical role in maintaining visitor satisfaction.

Boost to Restaurants and Eateries

Uber Eats, which launched in Kenya in 2018, has had a transformative impact on the food delivery market. The platform contributed KSh 534 million in additional value to restaurants and eateries in 2023. Approximately 90% of Uber Eats users reported discovering new restaurants through the platform, while 70% said food delivery had become more convenient, saving an estimated 448,000 hours annually for customers.

The app’s ability to connect customers with restaurants outside their immediate vicinity has broadened market reach for eateries, particularly during off-peak hours. For instance, Ando Foods—a popular Kenyan food business—experienced a significant operational shift after integrating with Uber Eats, moving from manual orders to an efficient digital platform.

Uber’s Role in Mobility

Convenience and Time Savings

Uber’s platform saved Kenyans an estimated 3.4 million hours in 2023 by providing efficient urban mobility solutions. Over 95% of users cited convenience as their primary reason for using the app, while more than 70% relied on Uber for emergencies, including hospital visits. The platform’s ride-sharing options have also contributed to reducing congestion, with 63% of users reporting a decrease in their need to drive personal vehicles.

Electric Boda and Uber One

To cater to diverse customer needs and address sustainability concerns, Uber has introduced innovative products like the Electric Boda and Uber One. The Electric Boda initiative aims to reduce carbon emissions by integrating electric motorbikes into the fleet. Meanwhile, Uber One offers a membership plan for KSh 280 per month, granting users benefits such as cashbacks on rides and free Uber Eats deliveries. These initiatives are designed to enhance affordability, attract more users, and support environmental sustainability.

Challenges in the Ride-Hailing Sector

Balancing Costs and Earnings

Uber faces the challenge of maintaining affordable fares for customers while ensuring fair earnings for drivers. Imran Manji, Head of Uber East Africa, emphasized the importance of balancing these priorities to sustain the industry’s growth. He noted that introducing premium ride options allows drivers to earn more, while partnerships with auto companies and Safaricom help reduce operational costs. For example, Safaricom’s free data offering for Uber drivers minimizes expenses, improving their net earnings.

Taxation and Market Sustainability

The re-introduction of the 6% Significant Economic Presence (SEP) tax poses a significant challenge to Uber’s operations in Kenya. This tax replaces the 1.5% Digital Service Tax, potentially increasing costs for foreign tech firms and digital platforms crucial to the gig economy. Manji expressed concerns that higher taxes could limit Uber’s ability to reinvest in the market and provide promotions that benefit both drivers and customers.

Technological Advancements and Safety Features

Enhanced Safety Measures

Uber has implemented various safety features to protect both riders and drivers. The “RideCheck” feature, for instance, detects prolonged stops during rides and prompts checks on both parties to ensure their safety. These innovations have enhanced user confidence, with the app regarded as one of the safest transportation options in urban Kenya.

Data-Driven Insights

Public First’s consultancy leveraged extensive data collection to compile the Economic Impact Report. The study included a poll of 1,132 Kenyan adults to understand travel and food ordering habits and an in-depth survey of 1,014 drivers and delivery partners. These insights underscore the platform’s widespread adoption and its role in shaping Kenya’s gig economy.

Future Outlook for Uber Kenya

Expanding Services and Partnerships

Uber plans to further diversify its service offerings in Kenya. By exploring partnerships with local businesses, such as vehicle maintenance providers, Uber aims to lower operational costs for drivers. The company also intends to expand its Electric Boda initiative to promote sustainable transportation solutions nationwide.

Supporting Local Communities

Uber remains committed to empowering local communities through job creation and economic opportunities. The platform’s focus on inclusivity ensures that individuals from various socio-economic backgrounds can benefit from its services. Moreover, Uber’s emphasis on customer satisfaction and technological innovation positions it as a key player in Kenya’s evolving mobility landscape.

Navigating Regulatory Challenges

As Uber navigates Kenya’s regulatory environment, maintaining open dialogue with policymakers will be crucial. Collaborative efforts to address taxation and labor issues can help ensure the ride-hailing sector’s continued growth. By fostering an ecosystem of cooperation between regulators, drivers, and customers, Uber can sustain its positive economic impact.

Conclusion

Uber Kenya’s contribution of KSh 14 billion to the economy underscores its transformative role in the country’s transportation and gig economy sectors. From increasing driver earnings to boosting tourism and supporting local businesses, Uber’s operations have far-reaching benefits. However, challenges such as taxation and cost management require strategic solutions to sustain growth. As Uber continues to innovate and expand, its commitment to empowering communities and promoting sustainable development will remain central to its mission.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

27th November, 2024