Bolt, a ride-sharing company worth $8.4 billion, almost went out of business in Tanzania because of rules put in place by the country’s government.
The strict laws in Africa have abruptly halted the company for many of the continent’s IT enterprises. Bolt has limited their business activity to just working with corporate clients to prevent this from happening.
A directive issued by Tanzania’s Land Transport Regulatory Authority at the beginning of March this year marked the story’s beginning.
Because of this order, ride-hailing companies were only allowed to take a maximum of 15% commission from their drivers. Bolt gave in, explaining that the only reason it was acting in this manner was to gain time for the stakeholders’ ongoing conversations and considerations.
Also, it was said that the company’s future in Tanzania wouldn’t look good if LATRA stuck to its decision.
After they issued that injunction four months ago, LATRA has not changed its position, and Bolt is no longer willing to put up with it. The Estonian ride-hailing company has said that a 15% fee is not good enough for its business in the country, instead of the 20% that had been used before. The company said in a statement given to TechTrends that Bolt has no choice but to take steps to protect itself from market losses until it sees a major change in the regulatory ecosystem.
Bolt has changed its business model so that it can stay in the East African country. It will now only do business with corporations. At the beginning of this year, Uber, a more significant player in the ride-sharing industry that charged its drivers a commission of 25%, did not spend much time wishing that LATRA would reverse its mind.
Uber ceased its operations in Tanzania in April, the same month that the higher prices were put into effect. The company said it would only come back to the country if Tanzania fixed the regulatory problems, but it hasn’t come back yet.
Although Uber’s decision may be justified, it is difficult to comprehend why Bolt would consider a commission rate of 15% to be incompatible with its business model, considering that the company states that it already pays that rate to drivers in several other cities.
One possibility is that the issue is not with LATRA’s rules but with Tanzania’s comparatively weak currency, which could result in a company’s revenue decrease. Such decisions by Uber and both show what has been said for a long time: African rules make it hard for tech companies and innovative startups to do business.