Government Mandates Immediate Fare Review

NAIROBI, KENYA – Commuters across Kenya are set to face significantly higher costs for digital taxi services after the government ordered ride-hailing companies to increase their fares by up to 50 percent. The directive, issued on Tuesday, November 19, 2025, by the Ministry of Transport, mandates that app owners align their rates with the 2023 pricing advisory from the Automobile Association of Kenya (AAK). This move marks a decisive state intervention in the protracted conflict between digital taxi drivers and platform owners like Uber, Bolt, and Little Cab over sustainable earnings.

Under the new structure, the per-kilometre rate for vehicles with engines up to 1050cc will rise to KSh 33.1 from a previous low of around KSh 22. For vehicles with engines between 1051cc and 1300cc, the rate will increase to KSh 36.8 from approximately KSh 26. The directive was delivered by Paul King'ori, the Director for Road and Railways Transport, on behalf of Transport Cabinet Secretary Davis Chirchir, following a protest by hundreds of drivers at the ministry's headquarters in Nairobi. The app companies have been given a seven-day deadline to formally respond and outline their steps for implementation.

A History of Driver Discontent and Regulatory Action

This government-mandated price hike is the latest development in a sector marked by persistent tension. For years, drivers have protested what they term as exploitative fares that fail to cover soaring operational costs, particularly fuel and vehicle maintenance. These frustrations have led to multiple strikes and protests, with drivers demanding better compensation and working conditions. In August 2024, both Uber and Bolt increased their fares by about 10 percent in response to driver pressure, but many drivers felt the adjustments were inadequate.

The government's involvement is not unprecedented. In July 2022, the state intervened by capping the commission that digital taxi operators can charge drivers at 18 percent per trip, a significant reduction from the 25 percent previously charged by some platforms. This regulation, part of the Transport Network Companies (Owners, Drivers and Passengers) Regulations, 2022, was intended to protect drivers from excessive fees. However, driver associations have continued to lobby for more comprehensive reforms, including fair pricing mechanisms and better legal recognition.

Economic Impact on Kenyans and the Ride-Hailing Market

The fare increase presents a mixed bag of consequences. For drivers, it is a hard-won victory that promises improved livelihoods and the ability to meet rising operational expenses. However, for the Kenyan public, particularly in urban centres like Nairobi, it means an immediate increase in the cost of living. Ride-hailing apps have become an integral part of the transport ecosystem, and a 50 percent jump in fares will strain household budgets.

The directive could also reshape the competitive landscape of the ride-hailing market. While companies like Uber and Bolt have historically competed on price to attract riders, the new standardized rates may shift the focus to service quality, reliability, and driver satisfaction. In the long term, the Ministry of Transport has indicated plans to develop a National Taxi Pricing Policy, with assistance from the World Bank, to create a more stable and sustainable regulatory framework for the sector.

This move comes as the sector also faces new fiscal pressures. The Treasury has reintroduced a 6% Significant Economic Presence (SEP) tax, replacing the 1.5% Digital Service Tax, which will affect non-resident companies operating digital marketplaces, including ride-hailing platforms. Industry players had previously warned during public participation that such a tax would inevitably lead to higher fares for consumers. As the new rates take effect, all eyes will be on how consumers adapt and how the ride-hailing companies navigate the evolving regulatory and economic environment.