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    One Week, One Trouble: Why Are E-hailing Startups in Unending Battles With Governments Across Africa?

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    In the bustling streets of Abidjan, N’Cho, a seasoned driver for the ride-hailing platform Yango, finds himself at the crossroads of convenience and compliance. His trusty red Toyota Corolla now bears a conspicuous insignia, marking it unmistakably as a Yango vehicle. This new mandate from Ivory Coast’s Directorate General of Taxes (DGI) is just the latest in a series of regulatory impositions tightening their grip on e-hailing services across Africa. Although the notice is silent on penalties for non-compliance, it underscores the growing maze of regulations that startups like Yango are struggling to navigate.

    Across the continent in South Africa, the National Land Transport Act was recently amended to bring e-hailing services under stricter regulatory control. No longer can operators rely on charter permits or meter taxi licenses; they now need the same operating licenses as other public transport providers. The amendments also endow the transport minister with broader powers to enforce safety measures and regulate pricing, signaling a significant shift in governmental oversight of the sector.

    In Lagos, Nigeria, the clash between innovation and regulation takes a more aggressive turn. The Lagos State Ministry of Transportation recently impounded Uber vehicles, citing the company’s refusal to integrate its API with the state’s database, which tracks driver and rider information. This requirement, aimed at enhancing oversight, has led to dramatic disruptions for drivers. Reports surface of officials posing as passengers, only to ambush drivers, deflate their tires, and seize their vehicles.

    One driver recounts a particularly harrowing encounter: “I came to Alausa to drop a passenger, and somebody ordered me. Thinking it was a passenger, they tricked me into a compound. Before I knew what was happening, they took my keys and deflated my tires.” Such methods leave drivers feeling frustrated and bewildered, caught in the crossfire of regulatory enforcement.

    Uber’s troubles extend beyond Lagos. In Abuja, the capital, the company faces the threat of license revocation for not securing necessary operating permits from the Federal Capital Territory Administration. The FCTA has sanctioned only two ride-hailing companies, excluding Uber, underscoring the competitive and regulatory challenges the company faces in one of its largest African markets.

    In Cameroon, Yango was suspended in 2023 for allegedly flouting local regulations requiring drivers to have the same paperwork as traditional taxi drivers. Similarly, in Morocco, Yassir’s operations are deemed illegal by the Casablanca-Settat region due to a lack of proper authorization. Uber, too, has felt the squeeze, ceasing operations in Morocco in 2018 after enduring years of legal and operational hurdles.

    CountryNew Laws IntroducedNew Taxes IntroducedOther Regulatory IssuesActions Taken Against E-hailing Companies
    CameroonNo specific e-hailing laws yetGeneral transportation laws apply; licensing for drivers and vehicles is requiredSome crackdowns on unlicensed operators
    Cote d’IvoireNo specific e-hailing laws yetDrivers of e-hailing companies are now required to indicate the e-hailing brands they are working for. 
    EgyptRoad Transport Services Using Information Technology (2018)14% Value-added tax (VAT) on e-hailing servicesOperation licence now required,at a cost of EGP 30 million every five years.Strict driver and vehicle registration; minimum fleet size requirements; data localization requirementsSome companies fined for non-compliance
    GhanaNational Road Safety Regulations, 2022;  Guidelines introduced by the Ministry of Transport, National Road Safety Commission, and the MTTD of Ghana Police Service.Quarterly income tax for e-hailing drivers.Licensing for drivers and platforms for fee; data sharing and pricing regulations under development
    KenyaDigital Service Tax (DST) (2020, affecting e-hailing)1.5% DST on e-hailing revenuesLicence required from the National Transport and Regulatory Authority (NTSA) to operate. Temporary bans and licence suspensions for non-compliance
    MoroccoE-hailing allowed in some cities (eg. Casablanca) only when operators operate under registered taxi unions .Suspension of licences of ride-hailing companies, including: Heetch & Uber.
    NigeriaLagos State Guidelines for Online Hailing Business Operation of Taxi in Lagos State, 2020 (‘’the Guidelines’’); Finance Act (2020 amendments)VAT and corporate income tax under Finance ActDriver and vehicle registration; operating licenses for app providers for as high as ₦20 million. 
    SenegalNo specific e-hailing laws yetGeneral transportation laws apply; focus on licensing and safety
    South AfricaNational Land Transport Amendment Act (NLTA) (2023)None specific to e-hailing in the NLTAOperating licenses for drivers and platforms; safety and pricing regulations under development
    TanzaniaLand Transport Regulatory Authority Act No. 3 of 2019Focus on safety and consumer protection. New guidelines require ride-hailing e-hailing companies in Tanzania to lower their service fee to 15% from the 25%
    ZambiaRoad Traffic (Public Service Vehicles) (Amendment) Regulations, 2024 (E-Hailing Regulations)None specifically mentionedRoad service licence for drivers; vehicle specifications and insurance; data sharing.
    A Table of New E-hailing Regulations in Africa (2020-2024)

    The regulatory landscape for e-hailing startups in Africa is a minefield. Governments are asserting control and demanding compliance with local laws, aiming to standardize and secure the industry. However, these efforts often result in significant operational disruptions for the companies and their drivers. Several factors drive this perpetual regulatory tug-of-war:

    1. Lagging Regulatory Frameworks: Traditional regulations struggle to keep up with the rapid advancements in technology. E-hailing services disrupt conventional taxi systems, creating friction with existing laws. Governments, in their attempts to update these laws, often introduce inconsistent and ad hoc regulations that leave startups grappling with operational uncertainties.
    2. Revenue and Taxation: The significant economic activity generated by e-hailing services attracts government interest in capturing appropriate tax revenues. Regulatory measures, such as requiring companies to share databases or imposing licensing fees, are often motivated by the need to increase state revenues. While these measures aim to formalize the sector, they also pose compliance challenges.
    3. Competition with Traditional Services: E-hailing services frequently clash with traditional taxi unions and transport operators, who see them as unfair competition. These traditional operators often wield significant political influence, swaying regulatory actions against e-hailing companies. Governments, balancing the interests of these groups with the modernizing pressures from e-hailing services, tend to implement regulations favoring the status quo.
    4. Safety and Consumer Protection: Governments justify stringent regulations on the grounds of public safety and consumer protection. Ensuring that drivers are properly vetted, vehicles maintained, and prices regulated are common rationales. While these goals are legitimate, their implementation can be burdensome and cause operational friction.

    As African governments tighten their grip on the e-hailing sector, the future for these startups remains uncertain. The ongoing battles and the need for constant adaptation highlight the complexity of achieving a balanced regulatory environment that fosters innovation while ensuring safety and fair competition. For drivers like N’Cho, this regulatory maze is a daily reality, as they navigate the ever-changing landscape of e-hailing in Africa.

    Charles Rapulu Udoh has carved a niche at the forefront of Africa’s booming tech scene. With years of experience, Udoh has become a go-to expert for multi-million dollar deals in venture capital, private equity, and intellectual property across a vast landscape — from Delaware and New York to Singapore and South Africa. But his expertise extends beyond just the legalese. Udoh is also a corporate governance, data privacy, and tax whiz. An award-winning writer and researcher, he’s passionate about chronicling Africa’s startup story, cementing his position as a true pioneer in the field.

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