Estonian mobility company, Bolt, has revealed that it will switch off operations in Tanzania following a new 15% service fee order that went into effect on the 15th of April 2022.
The startup claims to have reached to relevant stakeholders in the country, including the Land Transport Regulatory Authority (Latra), to renegotiate the new terms.
Bolt’s East Africa Regional Manager, Kenneth Micah said, “Bolt has requested a meeting with the relevant stakeholders to further discuss this particular matter with the hope of reaching favourable tariff and commission regulations, even as we continue to seek and explore alternative lobbying options provided within the legal framework including Latra regulatory framework.”
This comes a week after Uber suspended its operations in Tanzania due to the tough regulatory environment in the East African country.
Latra, the authority saddled with the responsibility of regulating taxi services, reviews and set fares in Tanzania in a guide fare instructed ride-hailing companies in Tanzania to lower their service fee to 15%.
Bolt, which charges its partners a 20% commission, however, said that it will switch off its car category if nothing changes. This would leave the market to smaller players like Little, which charges a 15% commission, and Ping. Uber had previously charged a 25% commision.
“While we acknowledge and appreciate Latra’s mandate, we strongly believe that the introduction of control tariffs in a well-functioning and competitive ride-hailing sector is detrimental to a free market economy. Nevertheless, Bolt has implemented the directive under duress and for a limited interim period,” said Micah.
“We are complying temporarily to demonstrate goodwill and our commitment to engage with Latra for more favourable regulations that enable further investment. We are cognizant of the fact that should Latra maintain the status quo, the market will eventually cease to be viable for Bolt, and this will necessitate turning off our car category.”
Latra had previously reviewed the rates for ride-hailing companies, including the maximum distance (per kilometre) rate and commission. In the new directives, Latra requires ride-hailing companies to reduce the “dead kilometres” — the distance drivers are expected to cover to pick up a passenger.
And also to provide a platform where drivers can be “heard” when passengers lodge complaints. The authority also doubled the per-kilometre rate for ride-hailing companies due to rising fuel prices.
Bolt, which has operations in seven markets in Africa, including Kenya, South Africa, Uganda, Ghana and Nigeria, said switching off its service in Tanzania would adversely affect more than 10,000 drivers.