Uber asks court to strike down Kenya's new ride-hailing law that caps service charge at 18%

Uber has appealed to Kenya’s high court to strike down the new digital taxi-hailing regulations, claiming some aspects are unconstitutional, discriminatory, discourage foreign investment and violate its rights and those of its drivers and partners.

The regulations, which are due to go into effect in a few weeks, have been in the works since 2016, when drivers protesting a 35 percent cut in fares for rides by Uber caught the attention of lawmakers.

In court filings seen by TechCrunch, Uber challenged Kenya’s decision to cap the commission it charges for a ride at 18 percent and criticized the pricing structure, saying it would reduce its profits and discourage further investment in the country. Uber currently charges a 25% commission on the profit per ride, and the new rate will force it to lower its service fee by 28%.

The company maintains that Kenya is a free market where shipping companies have the right to negotiate commercial agreements without outside influence. He also argued that the regulations were made and promulgated without due process and public participation.

“The imposition of 18% as a cap on the allowable commission has the potential to stifle innovation and reduce the economic feasibility of the petitioner to invest in the market,” said documents filed by Coulson Harney LLP, the law firm representing Uber, citing of the new law by the Ministry of Transport and Infrastructure, giving the country’s National Transport and Safety Authority (NTSA) the mandate to implement it.

“The Kenya Revenue Authority is currently in the process of finalizing the digital services tax provisions as well as the VAT provisions which would impose additional taxes of 1.5% and 14% on the importer’s (Uber) service charges. This, coupled with the proposed cap in the commission, will have a major impact on the petitioner’s revenue from the Kenyan market, which in turn will adversely impact the prioritization of the Kenyan market for investment,” he adds.

Uber also shied away from the condition that all ride-hailing companies must obtain a transport network license from the NTSA to operate, saying it is not a transport service but an app offering an intermediary service.

He said the regulations were discriminatory as they only allowed people with Kenyan Personal Identification Numbers (PINs) to obtain the compulsory licence. Additionally, only legal entities that are legally incorporated in Kenya and have physical offices in the country will be eligible for a permit. Ride-hailing companies in Kenya, including Bolt and Little, are also required to share data about drivers and riders when requested by the authority. Uber said that would be a violation of the new Personal Data Protection Act.

Uber’s head of communications East and West Africa, Lorraine Onduru, hinted that Uber has no immediate plans to stop operations in Kenya, as it did in Tanzania after the new fares were introduced.

“We remain committed to Kenya and ensuring more drivers and riders can experience the benefits of a ride hailing.”

However, she stressed that “some aspects of these regulations, such as the reduction of commission and the requirement for companies to be registered in Kenya, are not conducive to doing business in Kenya and are not good for drivers or riders as they deter foreign investment in the country and limit the role that private business can play in supporting and developing Kenya’s mobility sector.”

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