NTSA Draft Regulations for Digital Hailing Services Proposes Annual Licence Fees and Capping Commissions

Uber won't like commission cap

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ntsa draft regulations ride hailing services
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Ride hailing services are some of the quintessential indicators of a new world order that was made true thanks to the smartphone revolution. Suddenly, we could hail a taxi from our phones instead of calling our usual trusted taxi guys.

This has been the case for the last decade. Uber for example started their operations in 2009 and they are in operation in several countries around the world. They ventured into the Kenyan market in 2015 and quickly we saw their competition starting their businesses here within a year.

We have also seen a departure from taxi hailing services. Companies like Little and SWVL have launched services where you can book a seat on a mass transit bus. This has been met with a lot of swingback from NTSA, and it is all due to the outdated regulations.



The government knows that they are behind on regulation on these new kind of businesses and the NTSA is working on that.

The National Transport and Safety Authority (NTSA) has been working on draft regulations on the operation of digital hailing services.

The new draft, THE NATIONAL TRANSPORT AND SAFETY AUTHORITY (OPERATION OF DIGITAL HAILING OPERATORS) REGULATIONS, 2019 has interesting points about regulating the sector.

Licencing of Operators

NTSA seeks to licence digital service operators, just like how they do with the legacy operators like matatus and buses. Any person will not operate a digital hailing service without a valid licence from the authority. This means like Bolt for example would not operate without a licence from NTSA if these draft regulations were made law.

They have also proposed a number of requirements to be licenced as an operator. In order for them to get a licence, they will need a number of documents. This include a certificate of compliance, valid and binding agreements between operator and registered owners of vehicles and compliance with labour laws.

The operators also need to submit quite a number of documents to get the licence in the proposed draft regulations. This include such documents like a copy of certificate of registration, binding agreements between operators and owners of vehicles, list of all vehicles, list of directors, copies of lease or ownership of head office, copy of KRA PINs, list of staff for the operator, contracts of the drivers of vehicles, valid certificate of roadworthiness from NTSA, valid insurance cover for each vehicle, a full scale colour illustration or decal to identify the hailing service, data security policy for protecting driver and passenger information and letter of recommendation from the country government transport committee.

The proposed regulations also suggest that this licence will be only valid for a period of one year  from the date of issue or renewal. In case of a renewal, NTSA will conduct an audit to confirm the level of compliance

Requirements for a digital hailing service taxi

NTSA’s draft regulations for these sort of taxis don’t look too different from what we see for other cars.

There is the usual requirements proposed like certificate of ownership of vehicle, valid certificate of roadworthiness from NTSA, valid insurance cover and the application form accompanied with the prescribed fee.

However, there are some unique requirements. NTSA proposes that these taxis need to have a digital hailing service identifier or decal on the front or at the back of car. If for some reason the car ceases to provide these services, they are supposed to return this identifier within 5 business days.

Also, cars that are older than 11 years from the date of manufacture will not be licenced as a digital hailing service vehicle.

Requirements for the digital hailing service driver

NTSA also proposes a number of requirements that are targeted towards the driver of the taxi.

They have to apply for a driver licence which is accompanied by the prescribed fee. They are also to carry a number of documents while applying for this licence which include a valid driving licence, certificate of good conduct, medical test, copy of PIN certificate and Tax compliance certificate.

Drivers are also prohibited from picking up passengers at cab stands, responding to street hails or soliciting rides.

Regulations on how digital hailing service operators operate

In this section, NTSA proposes a number of things that we have seen operators currently do and enforce.

This includes such things like vehicle make and model, vehicle registration number, driver’s names, driver’s photo, fare estimates, print or electronic receipts, ensuring security and protection of both driver and passenger.

However, they have added a number of things. They require operators to have a system where passengers can retrieve lost items. They also propose that they have an office that is staffed between 8am and 5pm on all business days.

They also say that they should configure their platform in such a way that after 8 hours of providing services in a 24 hour period, the driver shall log out of the platform for not less than 4 consecutive hours.

Operator commission limit

This will be the biggest bone of contention between operators and the regulator during this draft period.

NTSA proposes that no digital hailing service provider shall charge a commission of more than 15% per trip. Little Cab and Bolt currently charge this as their cut from the total earnings but this will be a problem for Uber. Uber charges a 25% cut and you bet they will contest these proposed changes.

Also, the operators are prohibited from levying or charging other charges, levies or fees over and above the commission.

Penalties

Just like every other regulation, there are penalties levied when an entity flouts them and NTSA has a number of proposals.

They propose that if any entity contravens any provision of these regulations is liable on conviction to a fine not exceeding KES 20,000 or to imprisonment for a term not exceeding 6 months or both.

Proposed Licence/Renewal Fees

NTSA had proposed licencing a number of things which include the digital hailing service operator licence, digital hailing service vehicle licence and the digital hailing service driver badge. They all have their various charges.

  • Application fee for a digital hailing service operator licence – KES 500,000
  • Annual renewal of the digital hailing service operator licence – KES 300,000
  • Application for a digital hailing service vehicle licence – KES 3,500
  • Annual renewal fee for the digital hailing service vehicle licence – KES 3,500
  • Application and renewal fee for digital hailing service driver badge – KES 1,000
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1 COMMENT


  1. Taxi hailing apps in Kenya are dominated by global giants Uber and Bolt and these entities are backed by deep-pocketed corporate Goliaths in tune of millions of dollars.

    The ksh 500,000 NTSA application fee is a drop in the ocean to the two international companies as captured in the THE TRAFFIC (DIGITAL HAILING SERVICE) RULES, 2020, LEGAL NOTICE No. THE TRAFFIC ACT (Cap 403)

    Kenyans startups that want to compete in this arena will be locked out due to the high fee. This will have effectively killed the Kenyan innovative IT sector that have already developed their apps and others that are still coding the apps. They cannot afford the ksh 500,000 application fee. NTSA will have auctioning their rights to develop and operate the taxi hailing apps to the international multi million dollar companies, namely uber and Bolt at a price of ksh 500,000.

    The two duopoly later will dictate the fare and sooner or later it will be expensive to the Kenyan passagers and the millions earned (15%) will leave the country since the taxi hailing companies are international companies.

    The local 100% Kenyan owned companies should be charged an affordable license fee or given free license to encourage local innovation.

    Another requirement in this Act is for the Kenyan drivers to have a tax compliance certificates. Most of the drivers cannot get this certificates coz of the high penalties that was imposed by KRA for not doing returns and this dates back to the time people used to do paperwork returns. This will knock out thousands drivers and they will end up being jobless.

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