Bolt’s Fragile Presence in Tanzania and Its Effect on Africa’s Ridesharing Ecosystem

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Bolt, the famous carpooling company, was forced to change its business model following a regulatory policy by the Tanzanian government. The regulatory wrangling, which began earlier in March, is based on mandates from the Land Transport Regulatory Authority of Tanzania (LATRA) for ride-sharing operators to collect a maximum commission of 15% from their drivers. The company, feeling the impact on its business, disputed the charges.

Although the company has continued to engage with relevant stakeholders in hopes of reaching favorable fee and commission regulations, the introduction of its new business model means the engagement was futile.

The Estonian ride-sharing company argues that a 15% commission, unlike its previous 20%, is unsustainable for its operations in the country, hence the need for a change in operating model. So, rather than closing its operations in the country, Bolt turned to corporate customer service. By a Techtrend reportthe company said, “Bolt has no choice but to mitigate losses in the market until it sees a significant improvement in the regulatory ecosystem,”

A check on Bolt website reveals, “Bolt charges a 15-20% commission on the final price per order depending on the city. Commission charges apply to both cash and card rides and cancellation fees,” one wonders why Bolt would call the 15% bad for business when the rate is applicable to passengers elsewhere.

Unlike Bolt, Uber, another ride-sharing giant and competitor that charges a higher 25% commission, suspended operations in Tanzania in April. According to the company, the newly introduced service charge is unfavorable to businesses. However, the company said it would resume operations if the regulatory policy is reviewed and made favorable.

Both of these ridesharing companies have a long history of contracting with their host country’s governments or partner drivers. Far from Tanzania in East Africa, the drivers of the two companies in South Africa embarked on a two-day strike protesting for lower commission fees, higher pay rates, a faster approval process and a moratorium on vehicle impoundment. Uber has already hiked fares three times this year to offset rising fuel costs. Bolt’s prices also rose 20% for similar reasons. Beyond that, many drivers have complained to mecareless treatment without advantages and little room for negotiation.

These strike actions occurred at different times in the countries where they both operate. There was a demonstration at Uganda, Nigeria etc The list of frictions companies have with those affected by their activities goes on and on.

It is perhaps not wrong to say that the case of Tanzania could stimulate a similar regulatory trend in other African countries where these companies are operational. And that will obviously have an impact on the economy.

Effects on the economy.

Since 2013 when Uber, Africa’s first ride-sharing company, was launched in Johannesburg, South Africa, the ecosystem has grown and is growing at a rapid pace. With Uber entering the African market, a host of other transport companies such as Pewin Cabs, CabMan, Bolt, etc. have tried to eat cake from this mobility model heralded by technology. The carpooling market in Africa has an expected market volume of $5.702 billion by 2025.

This space has also become a net employer of labor and a significant contributor to the African economy. For example, Uber, operating in Egypt, Nigeria, Ghana, Kenya, Tanzania, Uganda and Ivory Coast, recently celebrated crossing 1 billion drives in Africa with 59,000 drivers in Africa. Additionally, the company said it has created 6 million economic opportunities in more than 50 cities. Similarly, Bolt, its main competitor, has more than 700,000 drivers in around 90 cities in eight African countries. This is beneficial for a continent where as much as 60 percent of the young population in Africa is unemployed.

Moreover, the exit of these giant companies in certain cities and countries would certainly hurt their revenue and affect their expansion. But, on another note, it can result in some indigenous brands being scaled up and new ones being born.

The Bolt-Tanzania saga is yet another testament to the struggle between regulatory agencies and innovators on the continent. Like the ridesharing space, startups in other sectors of the tech ecosystem are struggling with regulatory policies. Hence the need for deliberate and impactful collaboration between governments and innovators to tackle the current technological kryptonite on the continent.

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