Digital-taxi-hailing firms are now enticing drivers on their platforms using medical and accident insurance covers in the race to calm an increasingly restless workforce that has in recent months resorted to strikes to push for better working conditions.
Yego Global, a Singapore-headquartered company that recently launched its operations in the country says it will go further to set up a Sacco, pay for medical insurance costs and offer personal accident cover for its drivers as players fight to keep drivers on their platforms.
The firm joins other players including Little, Uber, Bolt and Farasi Cabs registered by the National Transport and Safety Authority (NTSA) that are changing tack as the battle for market share increases.
In 2019, Little partnered with APA Insurance to provide third-party insurance covers for Little cab drivers. It also partnered with Britam insurance to protect riders from financial costs for medical bills, in the event of an accident while riding with Little.
The riders are to pay the trip insurance for as little as Sh4.5 per ride.
Uber partnered with Jubilee Insurance to provide drivers with comprehensive insurance and loss of income benefit insurance.
The organisation of Online Drivers chairman Justine Nyaga says that drivers are expected to pay for the premiums under those partnerships, as they are referred to as independent contractors in agreement with the operators.
Yego says 10 percent of its annual profits will be directed to the Sacco, where drivers also make their contribution.
It will also give a minimum accident cover of Sh250,000 which will cover disability or death, a plan expected to incentivise the driver and rise its market share.
The company has announced this amid an ongoing global conflict to classify drivers as employees entitled to overtime pay, social security, unemployment insurance and workers’ compensation.
Yego Global Ceo and founder Karanvir Singh said the Sacco will help the drivers receive payouts after their retirement age like a pension fund, citing the average age of taxi drivers as mid-40s in Kenya.
“The Sacco has been registered. It will be run by drivers, however, the company will provide office space, technology, and pay salaries of those who manage the Sacco,” Mr Singh said in an interview with Business Daily.
“10 percent of the company’s profit will be transferred to the driver Sacco, on an annual basis in perpetuity. We wanted to create a fund that will provide for drivers once they have retired just like NSSF.”
Qualifying criteria for life-long benefits like pension will be decided by the group. The amount of contribution will also be determined by the management. While Yego just oversee, Mr Singh added.
Yego, which charges a 12 percent commission per ride, said it is working with two insurance companies to create an insurance cover for drivers.
“We are happy to contribute but this depends on how they work with us. As a company, we also have to survive. But if the drivers work well with us, we will contribute to paying National Hospital Insurance Fund (NHIF) for them,’’ it said.
“The challenge we have with that is if we do that we will need to have some kind of arrangement. We are willing to do a lot for the drivers but they have to see where they benefit the most.”
The global online taxi industry has also seen a rising debate on whether drivers should be part of the gig economy or termed as employees.
In the US, President Joe Biden proposed a new rule that classifies drivers as independent contractors rather than employees, meaning that they would not be entitled to minimum wage protection, overtime pay, or paid when they are at work but don’t have a passenger in their car.
In the UK, courts ruled in 2021 that Uber must classify 70,000 drivers as “workers” allowing them to receive a minimum wage, vacation time, and access to a pension plan.
The recent digital ride-hailing regulations in Kenya have however not specified such benefits.
Yego has been operating cabs and motorbikes in Rwanda before establishing itself in Kenya in 2019, where the company sees replicating the model locally.
The technology company already had over 12,000 drivers on the app by early December 2022.
It has set starting fare at Sh200 for the Yego compact — the low-priced option with small-sized class — while mid-sized cars at Sh250 and larger XL starting at Sh300.
The Kenyan digital taxi market has been characterised by increased price wars as companies cut trip rates and offer promotions to pull riders.
Uber and Bolt lowered their commission to 18 percent in October last year in line with new industry regulations that sought to address drivers’ persistent protests over the high cost of living and fuel costs making them take home lower earnings.
Little has been charging 15 percent.
“The challenge that this industry has is if you look at the quality of the service that passengers experience has fallen. Why? Because the driver is overwhelmed working 24 hours or longer while struggling to survive. We designed the app to address that.”
The app has also added a pair-ride solution allowing a passenger to get an instant ride by pairing with the closest driver around through the app by putting the drop location.
