Four months since Uber suspended its car operations in Tanzania, Bolt has joined the bandwagon, limiting its car services to corporate clients only. This means the majority of Bolt clients will now be forced to use motorcycles and three-wheelers or find other alternatives.
Land Transport Regulatory Authority’s (LATRA) response following the announcement by Bolt was the advice to customers to use services from other operators, including LittleRide, Paisha, and Ping, pointing out that the three have agreed to comply with the new regulation hence available for business.
Bolt and Uber problem started after the release of the new fare setting order by LATRA, the agency responsible for the land transport sector which covers the road, rail, and cable transport.
On March 14, 2022, LATRA released a fare setting order for ride-hailing services which stipulated ride-hailing fares per kilometer to the tune of Sh900 and Sh100 per minute.
The minimum fare was set to be Sh3,000 while the approved maximum commission for platform owners was 15 percent. Before the order, Bolt was taking 20 percent of the fare as commission and Uber was charging 25 percent.
While both Bolt and Uber decided to engage the regulator for dialogue, the former went on to comply with the change. The regulator issued a compliance order to companies that did not comply as a preparation for the suspension of the license when intentional non-compliance is observed.
It is against this backdrop that Uber decided to halt its car operations in Tanzania and file complaints for review at the Fair Competition Tribunal, which, according to LATRA, it was later retracted.
Bolt’s strategy was to buy more time and allow for dialogue as it’s August 16th statement showed, saying: “Bolt has continued offering services to demonstrate goodwill and create an opportunity for amicable resolution. “Unfortunately the engagements have taken longer than expected, hence, exerting undue pressure on the sustainability of Bolt’s business in mainland Tanzania.”
By all counts, it took less than three months to put Uber and Bolt businesses in jeopardy. What appeared to be a stakeholder’s consultative meeting by the regulator on December 21, 2021, ended up becoming a painful experience for Bolt and Uber.
Both companies disagree with the commission cap, saying it endangers their business sustainability.
LATRA’s sweeping powers
While there are multiple angles to this story, they all converge on one fact: the regulator’s powers.
A story like this does more harm than good to Tanzania’s investment prospects. No investor would want to put significant investment in a place where rules are constantly changing.
No one wants to spend a significant amount of his investment in hiring lawyers and moving from one office to the next just to operate.
LATRA has insisted that its decision is based on the complaints received from drivers who have argued that the fares set by operators are small and the commissions are too big.
Ride-hailing services have been known to receive similar complaints in other parts of the world, some involving court cases and even in some cases operators have been blamed for questionable business conduct.
What was missing in Tanzania’s case, however, is a failure of the regulator in considering the tripartite interest in the ride-hailing services.
These are the interests of passengers who want affordable and reliable rides; the interests of operators who invest in marketing and technology; and drivers who provide the vehicle, time, and skills.
In this case,it seems that the regulator was prepared to use the full force of its sweeping powers to make sure companies comply and punish those who did not comply.
The fallout shows that there was no adequate consultation and efforts to find consensus among different conflicting interests in the ride-hailing business.
Willingness for dialogue
Following a change in leadership at LATRA, it seems there is some willingness to find solutions through dialogue.
LATRA’s Director General Mr. Habibu Suluo told journalists recently that the regulator wants the companies to continue doing business in Tanzania.
“This issues started in March , I was appointed to the office in July 2022,” Suluo was quoted as saying. “We encourage the spirit of dialogue and we believe this issue will be resolved amicably through dialogue.”
In conclusion, the future of both Bolt and Uber in Tanzania will depend on the outcome of this dialogue. Up until this time, there is no indication that there will not be positive outcomes.
Perhaps it will also be a good time to reflect on some of the sweeping powers given to regulators and bureaucrats in the country, especially when it comes to businesses and investments. This is one of the areas that discourage investment in the country.
Tony Alfred K is analyst, writer and editor working with The Chanzo. He can be reached at firstname.lastname@example.org and on Twitter at @tonyalfredk. These are the writer’s own opinions and they do not necessarily reflect the viewpoint of The Chanzo Initiative. Do you want to publish in this space? Contact our editor at email@example.com.