Regulatory changes affecting ride hailing services in Tanzania

The Land Transport Regulatory Authority (LATRA) recently issued a Gazette Notice Number 7284 (the “Notice”), on 30th December 2022 on new fares for online taxis and motorcycles. The Notice comes after concerns raised by industry stakeholders on the previous issued LATRA Order Number 01/2022 (the “Order”) of 14th March 2022 which capped the commission for ride-hailing companies in Tanzania at 15% from the previous 33%. It also removed the booking fee which was a source of income for the companies. The Notice requires that the new fares be implemented within fourteen (14) days from the date of the publication of the Notice.

Ride-hailing services in Tanzania are regulated by LATRA which is established under section 4 of the Land Transport Regulatory Authority Act No. 3 of 2019 (the “Act”). The Act is implemented by the Land Transport Regulatory Authority (Private Hire Services) Regulations Government Notice Number 78 of 2020 which is made under section 45 of the Act. The establishment of LATRA in 2019 brought new regulatory changes for ride-hailing taxi services such as the review and setting of rates and charges for all regulated sectors under the Act. To date, LATRA is the sole regulatory authority responsible for ride-hailing services in Tanzania.

In this article, we analyse the recent issued Notice by LATRA on new fares for ride-hailing taxi services in Tanzania, the Notice seeks to address some of the challenges brought by the Order issued in March 2022.

Changes brought by the Notice

Commission and booking fee

Pursuant to the Order, LATRA capped the commission for ride-hailing companies at 15% from the previous 33%. It also removed the booking fee which was a source of income for ride-hailing companies. However, in the Notice recently issued by LATRA, ride-hailing operators are now free to charge up to 25% as commission and up to 3% as booking fee.

Approved minimum fare

Pursuant to the Order, the approved minimum fare for ride-hailing taxi services was TZS 3,000 (approx. USD 1.28) however, under the Notice the approved minimum fare for ride-hailing taxi services depends on the carrying capacity of the taxi. For an online taxi with carrying capacity of not more than four (4) passengers the minimum approved fare is TZS 3,000 (approx. USD 1.28) while for an online taxi with carrying capacity of not more than six (6) passengers the minimum approved fare is TZS 4,000 (approx. USD 1.71).

Fare per kilometer and minute

Pursuant to the Notice the fare set for an online taxi per kilometer and minute depends on the carrying capacity of the taxi. The fare for an online taxi with capacity to carry not more than four (4) passengers is TZS 800 – TZS 1,000 per kilometer (approx. USD 0.34 – 0.43) and TZS 80 - TZS 100 per minute (approx. USD 0.034 – 0.043). For an online taxi with capacity to carry not more than six (6) passengers the fare is TZS 1,000 - TZS 1,200 (approx. USD 0.43 – 0.51) and the fare per minute is TZS 80 - TZS 150 (approx. USD 0.034 – 0.064). Pursuant to the Order, the ride-hailing fare per kilometer was TZS 900 (approx. USD 0.39) and TZS 100 (approx. USD 0.043) per minute.

Conclusion

In recent years, ride-hailing taxi services have become of great importance in Tanzania because of how cost-efficient these services are. To strike a balance so that there is continual operation and availability of these services, LATRA has, through the Notice, managed to maintain the advantages that come with ride-hailing services while ensuring that the Government is able to collect revenue from those operating such services and protect the consumer at the same time without disrupting the market.