What you need to know:
- Users of ride-hailing services should be prepared to dig deeper into their pockets after the Land Transport Regulatory Authority approved higher fares in response to rising operating costs after fuel prices jumped to record levels this week
Dar es Salaam. Users of ride-hailing services should be prepared to pay more after the regulator hikes the fares in response to rising operational costs.
The Citizen is reliably informed that the Land Transport Regulatory Authority (Latra) has reviewed the fares, but they are yet to become effective. The fares will increase from Sh450 to Sh900 a kilometre.
“In view of the foregoing - and in efforts to maintain competition and affordable ride-hailing taxi services - the board at its 6th ordinary meeting held on January 27, 2022, approved the ride-hailing taxi services fares…,” Latra stated in an order dated March 14, 2022.
The fares increase comes in response to increasing fuel prices. But the regulator has not mentioned that as one of the factors.
According to the statement, some of the factors considered in increasing the fares include the cost of providing ride-hailing taxi transport services; use of electronic system capable to record movement and computing fare; use of distance and time variables in determining ride-hailing fares, and consideration of macroeconomic variables such as exchange rate, depreciation and inflation rates which affect operational costs.
Other factors are taxes and statutory fees; urban road infrastructure, road congestion and safety requirements; and affordability of transport services.
The new fares will become effective 14 days after a notice of the increase is placed in widely-circulated newspaper, Latra stated.
Boon or bane?
The fare increase is being received with mixed feelings. While drivers of ride-hailing taxis - such as Uber, Bolt, Ping and Little Ride in Tanzania - think it will slightly improve business, company insiders have different views on the future of the industry.
Bolt driver Sule Dito told The Citizen yesterday that the business was challenging for them with the current fares, considering about the fuel prices have been increasing.
“As I speak to you, I am from dropping a customer in Kariakoo. I transported a passenger who requested a ride from Tabata Bima to Kariakoo at a cost of Sh3500,” he said.
Mr Dito stressed that a lot of adjustments are required for them to operate profitably, because they (drivers) are also using data bundles to communicate with a customer.
“Once a customer requests a ride, I have to call immediately before starting a ride. This means my phone must always have airtime. In short, the operational costs are high,” he said.
Latra director general Gilliard Ngewe earlier this week told The Citizen they have done adjustments to ride-hailing fares to enable operators do their business profitably.
“Customers will be paying Sh900 per kilometre from the previous Sh450 while other routes a customer will pay Sh1,350 from Sh900,” he said.
The presence of ride-hailing operators in Tanzania has made access to transport easier and more affordable to the people, while creating thousands of jobs to the drivers working with the operators.
However, an insider from one of the ride-hailing firms accuse Latra of “shifted from regulating the sector to dictating commercial terms” by doubling the market rates.
“Since 2020, Latra has made great and commendable progress in regulating this sector, making Tanzania the first in Sub Saharan Africa to do so. However, the implementation of the regulations and the constant threats from the Latra director general to suspend operator licenses at short notice are creating an uncertain and unfriendly environment for these private investors. Some are even contemplating to close down and exit the market,” said the insider on the condition of anonymity.
Commenting on accusations, Mr Ngewe said the law allows them to intervene and increase the price whenever there are complaints.
Latra has also capped the maximum commissions for the platform operators at 15 percent – a move that the operators say is digging deeper into their pockets.
“Basically, that is demanding for the investors to reduce their already small revenue share. Such orders directly interfere with arrangements between the operators and the drivers, who entered into agreements out of their own free will,” the source added.
“Having the regulator impose themselves on the business of private investors and dictate rates that they are allowed to charge their clients, is over-stretching and increasing the uncertainty of the stability of the market for investors.”
“There is an urgent need to get to the bottom of this situation before it escalates, in order to prevent any of the private investors from exiting the country for reasons that would tarnish the ongoing efforts to welcome more FDIs into Tanzania,” the source said.