Bus-hailing apps in Kenya are facing their first major regulatory challenge

Time-honored v. tech options
Time-honored v. tech options
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The move to disrupt Nairobi’s commuter transport system has hit a snag.

Transport officials announced on Monday (Sept. 30) they had blocked two bus-hailing apps from operating, noting they flouted regulations and were running on the wrong license. The Safaricom-backed Little and Cairo-headquartered Swvl were operating under a tours license instead of a commuter service authorization, according to the director-general of the National Transport and Safety Authority, Francis Meja.

The two companies, he also said, had “never contacted the authority to show any intention to operate as commuter service providers.”

The move deals a blow to the app-based hailing services both of whom started operating bus services in Nairobi this year. The two firms have looked to disrupt the unruly and colorful matatu bus system used by tens of thousands daily, but is still derided as chaotic and inconvenient.

Swvl and Little Shuttle allowed riders to book a seat and board at specific hours in dozens of routes across the capital using clean and quality vehicles. Since launching pilot phases in January, both companies have quickly scaled their operations, with Swvl injecting $15 million into the Kenyan market in August. In Egypt, Swvl is facing off with Uber, which launched its first global bus service in Cairo last year and is working on plans to offer its bus system to Lagos.

In an email to users, Little CEO Kamal Budhabhatti said he wasn’t sure if the decision to blacklist them came from authorities or if they faced pressure from “public transport cartels.” Matatu owners are part of what’s known as savings and credit cooperative organizations or SACCOs who lobby hard against government directives and have opposed previous efforts at reforming public transportation. The current tussle also bears resemblance to the regulatory challenges ride-hailing apps like Uber and Taxify have faced as they solidified their foothold across Africa.

While he didn’t want to “quarrel” with authorities, Budhabhatti said their service had “proved that public transport can be operated in efficient and profitable manner.” Little has stopped its operations starting today.

Budhabhatti in his email also referenced the rise of Safaricom’s wildly successful mobile money platform M-Pesa ($) arguing that when it was introduced in 2007, Kenya’s central bank worked with the operator to “formulate a legal model. I would have appreciated a similar approach on this matter. And I pray that happens.”

In a statement to Quartz, Swvl Kenya’s general manager Shivaji Muleji said they were committed to working with relevant authorities to end the current impasse. The firm also said it was still offering rides today; a quick check of their app confirmed so too.

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