Ride-hailing needs better policies, not controls

The proposals set out in the Competition (Amendment) Bill, 2026, could subject ride-hailing platforms to closer regulatory scrutiny. They come in response to a petition by ride-hailing drivers, who argue that the multinational technology companies behind these platforms deploy algorithmic pricing systems that determine fares in ways that disproportionately favour the platforms to the detriment of those who provide transport services.

This is not the first-time ride-hailing drivers have turned to regulators in pursuit of higher earnings. Since 2022, largely at their urging, policymakers have introduced a succession of intervals, including caps on platform commissions, the abolition of booking fees, fare revisions and requirements for greater price transparency. Yet drivers’ grievances have persisted. Their continued discontent suggests that regulatory interventions, while capable of addressing specific market practices, cannot resolve all the industry’s challenges.

These interventions may have fallen short because they have been shaped largely by drivers’ perspectives while giving insufficient weight to the interests of other stakeholders, notably, consumers and the technology platforms that underpin ride-hailing services. Drivers are entitled to fair remuneration and decent working conditions. However, these objectives must be reconciled with consumers’ demands for safe, affordable, reliable transport and the legitimate interests of platform operators and investors, who depend on a stable and predictable regulatory environment to sustain long-term investment and innovation.

Kenya’s policymakers now face a delicate balancing act. The proposed reforms to improve driver welfare are well intentioned but they also carry the risk of regulatory overreach. Kenya is already among a small group of countries, including Portugal and Tanzania, that cap ride-hailing platforms’ service fees at 18 per cent. In many other markets, the ceiling is 25 percent. Platform operators contend that tighter caps constrain commercial flexibility, discourage innovation and weaken investor confidence in a fast-evolving digital economy.

Yet regulators are now mulling another constraint: the introduction of a mandatory minimum fare across all ride-hailing platforms. Industry modelling suggests that setting the floor at Sh500 could shrink the market by as much as 36 per cent. Such a contraction would significantly diminish an industry estimated to contribute roughly Sh50 billion to Kenya’s economy each year.

The economics are difficult to ignore. A higher fare floor would price many consumers out of short-distance journeys, prompting commuters to switch back to matatus or motorcycle taxis. As demand for ride-hailing services declined, drivers would receive fewer trip requests, reducing their overall earnings. A policy intended to improve drivers’ livelihoods could therefore produce the opposite effect, leaving both workers and platforms worse off.

A nuanced understanding of the ride-hailing industry is indispensable. The loudest complaints often come from a vocal minority that has yet to appreciate how platform-based transport markets function. Most operators offer tiered services, from compact three-passenger vehicles suited to short urban trips to larger, more comfortable vans designed for longer journeys and higher occupancy. Smaller cars provide an accessible entry point for newcomers and gig workers while larger vehicles generate stronger returns and better suit experienced drivers seeking stable, long-term livelihoods. Earnings are therefore not the problem; limited understanding is.

As Parliament and regulators consider the sector’s future, priority should rest on fostering competition, enhancing transparency and expanding sustainable opportunities for drivers. Regulation should encourage innovation and growth, rather than inadvertently stifle both.