At first, work as an Uber driver seemed to offer Harrison Munala everything he’d hoped for when he moved from a town in the western part of Kenya to its capital, Nairobi.
Uber seemed like the answer to Munala after he had spent nearly 15 years of informal employment as a house cleaner and school bus driver. Many of the energetic hustlers with middle-class aspirations who flock to East Africa’s economic hub thought so, too.
Work with Uber was so good that, about three years ago, after a year having driven a car he rented privately for 15,000 shillings a week (at the time, about $150), Munala, who is now 34, borrowed money from his sister for the down payment on a Toyota Passo, a compact car. And he took out a loan from Izwe, a pan-African microfinance and loan company.
Now, Munala figured, he could work for Uber and pay off the car. Then he could expand his business, buy another car and hire someone else to drive.
“I felt like I made it in life,” he said.
Four years later, remembering those dreams makes him grimace.
Uber slashed its fares — and Munala’s income. It also introduced new categories of cars, allowing smaller cars. And more people started to take the smaller cars because they were cheaper and more fuel-efficient.
That adversely affected the drivers who were already saddled with the larger, four-door cars with more powerful engines that Uber had previously required.
More and more drivers flooded the platform, changing the basic earning premise that had prompted people like Munala to take out loans to become drivers.
And car maintenance is costly. Fuel prices are high. Instead of owning an asset, Munala is saddled with growing debt.
He fell behind on his rent. He, his wife and their three children were evicted from their home in August. They are sheltering in a church while he tries to raise money to build a house.
He tells his story sitting on the roof of his former apartment building, looking out over Kwangware — a low-income neighborhood of tin and mud houses sandwiched between verdant, former colonial enclaves in west Nairobi.
On the way up the dark stairwell, he passes the unit where he used to live. The door is padlocked.
Munala described his defeat in a WhatsApp message— in retrospect — as almost inevitable.
“When you have a family to feed, kids to pay school fees for, rents to pay, a loan to pay and your work is too much and exploitative, what happens?” he said.
Uber’s hard sell
Uber came to Kenya, a country of densely populated cities without efficient public transportation, and aggressively signed up drivers while increasing ridership by dropping prices.
Interviews with more than 80 current and former drivers in Nairobi and the port city of Mombasa show that, in Kenya’s biggest markets, untold numbers of Uber drivers are drowning in debt.
But Uber drivers in Kenya are not alone in their experiences. In 2017, Uber agreed to pay the U.S. Federal Trade Commission $20 million to resolve allegations that it misled drivers with exaggerated earnings claims and did not provide accurate information about vehicle financing information.
In December 2018, researchers from Washington University in St. Louis concluded that driving for UberX “increases hardship among the [low- and moderate-income] population, primarily by decreasing overall take-home pay.”
Uber spokesperson Noah Edwardsen said he was “not familiar” with the research, adding that another study from 2018 “showed ride-share can help offset dips in income and reduce the need to cut back spending due to income shocks.”
To qualify for the Uber sticker, many Kenyan drivers borrowed heavily to lease cars, sometimes through programs facilitated and promoted by Uber, sometimes through other companies.
Uber employs more than 12,000 drivers in Kenya. All of the more than 80 people who were interviewed expressed distress and said they were barely making ends meet. A labor economist at Stanford University’s Graduate School of Business who drove for Uber for research has similar findings.
Paul Oyer said that, at least in the United States, drivers who work on the platform might be satisfied with the business if they already own their cars or have other sources of income.
But, he said, “it doesn’t make a lot of sense to go out and invest a lot of money in a car for the sake of driving it for Uber — there isn’t enough money to be made for your time and the costs of car ownership.”
The vast majority of the Uber drivers interviewed in Kenya said they do not own their cars and instead drive “partners'” cars — renting them from other people.
Lorraine Onduru, a spokesperson, said Uber was offering “vehicle solutions products” to drivers already on the platform.
“Agreements with third parties are discussed and agreed between the driver and the financial institution,” she said.Loading...
Onduru said that there are channels through which drivers can transmit questions to Uber and that the banks with which Uber’s programs are affiliated offer financial literacy workshops.
Well before the coronavirus worsened the situation, some drivers were living out of their vehicles. Other drivers had sold their TVs and other electronics to keep their cars from being repossessed — sometimes without success.
Many said they did not understand the contracts they had signed with Uber or with lenders. But Uber said that, at the onboarding process, it hosts training sessions to ensure that drivers do comprehend the terms and conditions.
Some Uber drivers in Kenya do pay off their loans. Some tie their success to strategic timing or to other sources of income. But many who have managed to pay off their cars still express dissatisfaction with Uber, saying that, even now that they own the cars outright, they are not making money.
Peter Mwinga, who quit driving for Uber last year, said he earns more selling fruit and vegetables out of the back of his Toyota Fielder, which he still has not paid off after three years as a driver. Standing next to the vehicle parked on the side of the road, filled with produce, he said he “wouldn’t advise” someone to join Uber.
A toxic relationship
When Uber started operating in Kenya in June, 2015 it built on the remains of an empire whose structure had changed little despite independence. Kenya is the former British base in Africa, and the colonial economy, based on extraction, relied on masses of workers who profited little.
Today, these laborers, classified as “informally employed,” account for 80 percent of Kenya’s population, according to a 2016 World Bank report. Many work in construction, clean houses or sell secondhand clothes, moving from sector to sector, rarely making ends meet. Young women walk through rich neighborhoods, offering to work as maids.
For a lot of laborers in Kenya, little appears different from colonial times other than the color of the leader’s skin.
Kenyans embraced Uber’s arrival. People needed jobs, and the taxi industry was privatized. Before Uber, a taxi rider could be charged almost as much in Nairobi as in New York. Most people got around on crowded “matatus” — unreliable buses that charged less than 50 shillings a ride, or about 50 cents.
Uber was a welcome addition: Drivers got more customers, prices were controlled by the app — a bit lower than if you called a private car — and riders could get an Uber quickly.
At the outset, Uber drivers were making 60 shillings per kilometer — about 97 cents a mile. The company took a 25 percent commission and established requirements for cars it would sign up: They had to be relatively new and about sedan size, and they had to have large engines, four doors and four seats.
The government paid little attention to the new company’s entry.
Private taxis, however, balked, saying Uber was hurting their business. In a few instances in 2015 and 2016, Ubers were burned and drivers were harassed. Over time, however, as customers became accustomed to the convenience and lower prices, drivers lost their regular clients and had to move onto the app to stay in business.
Uber grew its ranks by approaching taxis at airports and mall parking lots.
“It didn’t have to be a hard sell to drivers once the client numbers started going up,” Julie Zollmann, a doctoral candidate at Tufts University who has been studying finance, technology and livelihoods in Kenya since 2010, said by email.
“It solved a big problem for independent drivers who were only otherwise getting a few trips per day and, at that time, the rates were significantly higher than they are now,” she wrote.
Indeed, by then — as Munala did with Izwe — would-be drivers were using their savings and taking out loans through other finance platforms to lease cars that met the Uber standard.
Private taxi drivers, too, were selling their cars to buy Uber-compliant vehicles.
“There was a time when we were only selling cars to Uber drivers or guys who were doing business with Uber,” said Raymondu Gitau, a manager at Bolpak Trading Co., a dealership in Mombasa.
Via nbc news
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