by Matteo Rizzo
The politics of digital regulation in Tanzania: Uber, its drivers and the state
Uber launched in 2016 in Dar es Salaam and quickly established itself as the main ride-hail app in the city, controlling an estimated 70 per cent of its ride-hail market. Uber also became a significant source of livelihood to its drivers, the number of which was estimated to be 1,300 in August 2018. This article focusses on the decision by Uber to halt its operations in Tanzania in April 2022, and its subsequent resumption in January 2023, to explore the complex interplay of political, economic, and social dynamics related to the regulation of the digital economy within Africa. This article highlights some of the challenges of integrating global tech giants into local economies, and how different players, such as Uber, its drivers and the Tanzanian state attempted to defend their interests, and their differential power to fulfil them.
At the root of Uber’s withdrawal was a regulatory dispute with the Tanzanian government, specifically the Land Transport Regulatory Authority (LATRA). In March 2022, LATRA issued a new fare-setting order. This regulation introduced a fixed fare per kilometre (TSh 900) and per minute (TSh 100), a minimum fare (TSh 3,000), and, most critically for Uber, capped the commission ride-hailing platforms could charge drivers at 15%. LATRA also removed the 3% booking fee that Uber charged its drivers for each ride. This was a drastic reduction from Uber’s previous commission rate, which was reportedly around 25% to 33%.
A key political pressure for the new order by LATRA, and in particular of the lower commission for drivers, was the protest by Uber drivers earlier in 2022, when for two days drivers held a digital walk-off / log out, which was decisive in forcing LATRA to intervene. LATRA’s actions can therefore be viewed as an assertion of state control over a burgeoning sector, which crucially came about due to pressure from ride-hail drivers. The imposition of fixed fares and commission caps reflects a common regulatory impulse in many countries to protect consumers from potential price gouging and ensure fair earnings for drivers.
In Tanzania, this also aligns with a broader political narrative of safeguarding national interests and ensuring that foreign companies operate within a framework that benefits local stakeholders. By limiting the commissions of international players like Uber and Bolt, LATRA’s regulations could theoretically level the playing field for local ride-hailing companies, which tended to operate with lower commission rates (e.g. Ping and Little). This aligns with a desire to foster domestic economic growth and reduce reliance on foreign-dominated services.
On 14th April 2022, following unsuccessful negotiations between LATRA and Uber, the techno giant suspended its operations, stating that “We will only return if the regulation is addressed”. Uber argued that these new rates and the commission cap created an “unfriendly business environment” that made it financially unsustainable to operate. However, Uber’s decision to suspend services was a strategic move, leveraging its market presence to pressure the government into reconsidering the regulations. For its drivers and car owners who relied on the platform for income, it meant immediate uncertainty and a loss of livelihood. This made it impossible for drivers to sustain their protest. Riders, who had grown accustomed to the convenience and often cheaper pricing of ride-hailing services (compared to non-digital taxis), faced reduced options, though competitors like Bolt and Ping continued to operate. The pressure on both Uber and especially the government to find an agreement rapidly built up.
The eventual resolution of this political stand-off, and the modalities of Uber’s return to operations in January 2023, underscore the political economy of negotiation and the power of each party. After months of dialogue, and a change in leadership, LATRA softened its stance: it allowed ride-hailing companies to charge up to 25% commission and a 3.5% booking fee additionally. This new total commission, at 28.5%, was almost a full U-turn, away from the 15% commission brought about by the March 2022 order, and towards the 33% level before then.
The resolution of this regulatory stand-off shows how the Tanzanian state attempted, due to significant pressure from drivers, to lower the commission rate charged by the app. However, this move was met by Uber’s strong opposition, which took the form of the halting its operations. This in turn weakened drivers’ capacity to sustain their protest, and also caused riders’ complaints about the loss of the service. Under pressure and without the power to respond differently, the new level of commission which was agreed, was an almost total abdication to the demands of Uber. As such, it was also a potent demonstration of the ongoing political struggle between global tech platforms and national governments seeking to assert regulatory control and protect local interests.