The government’s plan to set a minimum fare floor for ride-hailing services has ignited a major debate over the future of Kenya’s gig economy, with industry experts warning that a sharp increase in taxi fares could reduce demand, hurt drivers’ earnings, and weaken one of the country’s fastest-growing sources of employment.
The discussion follows a directive by President William Ruto on May 22, instructing the Ministry of Transport and the National Transport and Safety Authority (NTSA) to engage with ride-hailing companies and drivers to implement regulations, including a minimum taxi fare framework.
President Ruto, however, framed the intervention as long overdue. “We need urgent regulations that have already been developed,” he said. “I have instructed the ministry to work with stakeholders to make sure those regulations are implemented so that we can streamline the whole digital taxi platform.”
Industry consultations have discussed a minimum fare of between KSh400 and KSh500, higher than the current minimum fare of approximately KSh220 charged on some platforms.
The proposal comes at a time when ride-hailing drivers are struggling with rising fuel costs, insurance premiums, vehicle maintenance expenses, loan repayments, parking charges, and increasing traffic congestion, all of which have squeezed take-home earnings.
However, analysts argue that the solution may not be as simple as raising fares.
How Much Drivers Are Currently Earning
According to an Ipsos report released in March 2026, Kenya’s gig economy supports approximately 1.5 million workers and generates more than KSh130 billion annually, making it one of the country’s most significant sources of digital employment.
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Ride-hailing accounts for roughly one-fifth of the sector, second only to e-commerce. More than half of ride-hailing drivers depend on platform work as their primary source of income.
The report found that 53 per cent of ride-hailing drivers rely on the platforms as their main source of income, while many others use them to supplement household earnings. The sector has become a critical source of livelihoods amid persistent youth unemployment and a challenging job market.
Data from the report also shows that the average ride-hailing driver earns approximately KSh63,000 per month, while the top 20 per cent earn around KSh184,000. Motorcycle riders earn an average of KSh56,000 per month.
Breaking those figures down, the average driver earns about KSh2,100 per day before expenses, assuming a 30-day working month.
However, drivers must still pay for fuel, vehicle financing, maintenance, insurance, data, and platform-related costs, meaning net earnings are often considerably lower.
Why Higher Taxi Fares Could Backfire
Digital marketing entrepreneur Moses Kemibaro argues that while concerns about driver welfare are legitimate, policymakers risk aggravating the problem rather than solving it.
“A move from KSh220 to KSh500 would represent an increase of approximately 127 per cent. That is not a routine fare adjustment. It is a major intervention in one of Kenya’s most important digital marketplaces,” Kemibaro said in an analysis of the proposal.
According to him, the debate should not focus solely on how much drivers earn per trip but on how many trips they can complete each day.
Ride-hailing, he argues, operates as a marketplace involving three parties: drivers, passengers, and platforms.
Drivers need sustainable earnings, platforms need enough demand to keep the system functioning, and passengers need fares they can afford.
“The passenger is therefore not a secondary consideration in this debate. Ultimately, the passenger is the source of the revenue everyone else is trying to divide,” Kemibaro noted.
He warns that significantly higher fares could push consumers toward alternatives such as matatus, boda bodas, tuk-tuks, carpooling, walking, or informal off-platform arrangements.
If passenger demand falls sharply, drivers could find themselves earning more per trip but completing fewer trips overall.
“The question is not whether Kenya should regulate this market. It should. The question is whether a blunt minimum fare is the most effective instrument for addressing the problem,” he stated.
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Kenya’s Gig Economy Safety Valve
On his part, technology entrepreneur and digital economy expert Mbugua Njihia has raised similar concerns, describing Kenya’s ride-hailing industry as a critical economic safety valve for thousands of households.
According to Njihia, the sector has become far more than a transport service; it has evolved into a major driver of employment, financial inclusion, asset ownership, and digital commerce.
“At a time when youth unemployment remains a pressing national challenge, the gig economy has quietly functioned as a massive socioeconomic safety valve,” he said.
Njihia argues that fare floors are often assessed only from the driver’s perspective, without fully considering how passengers respond to higher prices.
“The issue is not whether drivers deserve better earnings. They do. The real question is whether administratively raising fare floors improves net driver income, or whether it suppresses demand, reduces trip volumes, increases idle time, and pushes both drivers and passengers into informal alternatives.”
He notes that transport inflation has been among the fastest-rising costs for Kenyan households in recent months, putting consumers under pressure from rising food, rent, education, and utility expenses.
In such an environment, doubling the minimum fare could force many passengers to reduce their use of ride-hailing services.
Lessons From Tanzania
Both Kemibaro and Njihia used Tanzania as an example of how well-intentioned regulation can produce unintended consequences.
Tanzania introduced fare controls and commission caps in 2022 to support drivers, but the changes posed challenges, prompting some companies to scale back and regulators to review the rules.
The analysts noted that Kenya should avoid repeating that experience by relying on detailed economic modeling rather than politically attractive fare figures.
Drivers Need Relief, But Not at the Expense of Demand
While acknowledging the economic hardship facing drivers, they argue that raising fares alone may not address the underlying problem.
Instead, they propose measures such as stricter enforcement of existing commission caps, greater transparency on driver earnings, affordable vehicle financing, insurance reforms, fuel-discount programmes, and targeted support for drivers who rent vehicles.
There are concerns that rapid fare increases could drive passengers away from digital platforms, reducing trips and weakening the formal transport system.
For a sector that supports more than 1.5 million Kenyans and generates over KSh130 billion annually, the stakes are high.
Policymakers face the challenge of balancing higher pay for drivers with the need to maintain passenger demand, a decision that is likely to shape the future of Kenya’s digital transport sector.
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