Will Safaricom's Little Cabs Slow Down Uber's Momentum In Kenya?

Kenyan telecommunications company Safaricom is known for pioneering innovative solutions, the most popular of which is mobile banking service M-Pesa. This time, the company, Kenya's biggest operator by subscriber volume, is playing catchup by venturing into the cab hailing space currently dominated by Uber in Kenya.

Safaricom has partnered with Craft Silicon, a software development firm based in Nairobi, to launch Little Cabs, a partnership that will see the network equip Little Cabs assigned cars with free Wi-Fi, M-Pesa payment options and connectivity to its network.

Little Cabs takes over from Easy Taxi, a hailing service that was backed by the Africa Internet Group, parent company of online retailer Jumia.

Easy Taxi withdrew from Kenya after two years of operations, part of its withdrawal from Africa and shift towards Asia and Latin America. The change will see more than 2,000 drivers who were on Easy Taxi rebrand to Little Cabs starting this month.

“Little Cabs is a local competitor, which will be cheaper and better for the local community,” - Safaricom CEO Bob Collymore said in an interview with Reuters.

"The motivation for this venture", he added, "is to find new revenue flows for the company."

Safaricom's M-Pesa service has over 20 million users in Kenya, and this could give it an advantage in the battle for market share. However, it should be acknowledged that Uber has made concessions for the Kenyan market, introduce payment for rides through either cash or M-Pesa.

Little Cabs may be another step for Safaricom to diversify its product offering and position itself as a platform for a range of services. With M-Pesa, Safaricom already offers users credit links to local banks, payment options for M-Kopa Solar, a rural solar provider, and the Big Box, a digital and Internet TV platform for homes.

Despite having a backer like Safaricom on board, Little Cabs' success against Uber is not guaranteed. The telco does not hang on to innovations that fail to make an impact on the market.

It should be interesting to see how Nairobians will respond to this new venture, especially as Uber continues to grow its reach on the African continent. The past few weeks have seen a flurry of expansions, with the service now available in 10 sub-Saharan Africa cities, launching in Dar-es-Salaam, Kampala and Accra in the past one month. The service is also available in Kenya's second-largest city, Mombasa.

It remains to be seen what Little Cabs' relationship with traditional cab operators will be. Uber has had a rocky relationship with established operators, with some alleging that the Silicon Valley-based company is operating illegally in Kenya, and that their low fares are due to the fact that the drivers are not taxed and do not pay for operating licenses. Others have gone as far as attacking Uber drivers and damaging their vehicles, which saw the Government of Kenya intervene to remedy the situation.

Uber's focus appears to be on improving the experience for both riders and clients, meaning that the competition has to find a value proposition that would attract users their services on both fronts in order to compete.

The road for Little Cabs may be a little rocky. With little brand recognition, they will have to rely on Safaricom's muscle in order to gain traction.The free Wi-Fi and M-Pesa payment option are a nice touch, but these are hardly useful when you can't find a driver where you are, or if you have to wait for ages before they get to your location.

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