Despite fierce opposition from traditional taxi drivers, Kenya has become one of Uber’s fastest-growing African markets, and allowing cash payments played a crucial role in the growth, according to Alon Lits, Uber general manager for sub-Saharan Africa.
Uber launched in Nairobi in January 2015 and recently expanded to Mombasa. Users must download a mobile app that allows them to call a taxi and pay for the service via mobile.
A three-month trial period in Kenya starting in May 2015 allowed Uber customers to pay cash instead of mobile money. Paying with cash was so popular, Uber’s business doubled, Lits said in an RFI interview. “That growth has continued since that initial cash experience.”
Most payments for Uber in Kenya are now made in cash and exceed the number of rides paid for by mobile money service M-Pesa, Lits said.
Over 100,000 Kenyans are using the Uber app each month to request a ride, and accepting cash payments as an option was the turning point for the ride-hailing service in Kenya, Lits said.
In North America and Europe, Uber accounts are tied to a customer’s credit card, eliminating the need for cash, BusinessInsider reported. But in sub-Saharan Africa, only about a third of people own a bank account and low credit card usage presented an obstacle to Uber’s growth.
Lits said Uber’s experiment in Kenya to let riders pay fares with cash or via mobile money boosted growth in Nairobi.
In 2007 Kenya launched M-Pesa, a transformational mobile phone-based platform for money transfer and financial services.
Since then, M-Pesa has undergone explosive growth, Forbes reported. M-Pesa is nearly ubiquitous in the daily lives of Kenyans with a range of services that include money deposit and withdrawal, remittance delivery, bill payment, and microcredit provision.
Nearly a decade after its launch, M-Pesa has transformed economic interaction in Kenya. Its success reshaped Kenya’s banking and telecom sectors, extended financial inclusion for nearly 20 million Kenyans, and helped create thousands of small businesses.
At first, traditional banks tried to limit M-Pesa by seeking regulations from the Kenyan government. Increasingly they offer mobile banking services that attempt to disrupt M-Pesa’s monopoly of the mobile money market. To compete, many of these services are offered at lower fees than M-Pesa’s.
In the same way, traditional Kenyan taxi drivers say Uber has unfair advantages and they have asked for Uber to be regulated, calling for it to brand its vehicles and identify Uber cars to level the playing field.
At least two Uber taxis have been attacked and there have been reports of Uber drivers harassed and intimidated by conventional cabbies.
Uber already operates in South Africa and Nigeria.
There are plans to roll out the service in three more African countries over the coming months.
Uber plans to expand in Tanzania, Uganda and Ghana this year, setting up East and West Africa hubs in Nairobi and Lagos to act as launchpads. It will focus on convincing traditional taxi drivers to work for the ride-hailing service, Lits said, according to BusinessInsider.
That strategy will involve persuading traditional taxi drivers that they can continue working on their own, but can also choose to use the Uber smartphone app to pick up passengers and make some extra money.