Digital taxi-hailing firms are now offering new benefits to their drivers to attract and retain them on their platforms. This move came after a series of strikes by drivers demanding better working conditions in recent months.
One such company, Yego Global, which recently launched in Kenya, is taking this a step further by establishing a Sacco for its drivers, paying for their medical insurance and offering personal accident coverage. Other companies in the market, such as Little, Uber, Bolt, and Farasi Cabs, have adopted similar strategies as competition for market share intensifies.
In 2019, Little joined forces with APA Insurance to offer third-party insurance to its drivers. Additionally, the company partnered with Britam Insurance to safeguard riders from financial losses when accidents occure while using their service. As part of this, drivers will pay a minimal fee of Sh4.5 per ride for the trip insurance.
Justine Nyaga, Chairman of the Organization of Online Drivers, stated that drivers will pay for the premiums under these partnerships as they are considered independent contractors in agreement with the operators.
Yego Global plans to allocate 10% of its annual profits to the Sacco, where drivers will also make their contributions. Additionally, the company will offer a minimum accident coverage of Sh250,000 which will cover disability or death, a move that is expected to incentivize drivers and increase its market share.
This announcement comes amid a global debate over whether drivers should be classified as employees and therefore entitled to benefits such as overtime pay, social security, unemployment insurance, and workers’ compensation.
Yego Global’s CEO and founder, Karanvir Singh, stated that the Sacco will provide drivers with payouts after their retirement, much like a pension fund, as the average age of taxi drivers in Kenya is in their mid-40s.
“The Sacco has been registered and will be run by drivers however, the company will provide office space and technology and pay salaries of those who manage the Sacco,” said Mr. Singh in an interview with Business Daily. “10% of the company’s profit will be transferred to the driver Sacco on an annual basis in perpetuity. We wanted to create a fund that will provide for drivers once they have retired, just like NSSF.”
The criteria for lifelong benefits like pensions, will be determined by the group and the number of contributions will also be decided by the management. Yego will only oversee the Sacco, according to Mr. Singh.
Yego, which charges a 12% commission per ride, is currently working with two insurance companies to create insurance coverage for drivers.
The classification of drivers in the online taxi industry has been a topic of ongoing debate. Some argue that they should be considered part of the gig economy, while others argue they should be classified as employees. Recently, in the United States, President Joe Biden proposed a new rule that would categorize drivers as independent contractors, which would exclude them from receiving minimum wage protection, overtime pay, or pay when they are working but don’t have a passenger in their vehicle.
In the UK, courts ruled in 2021 that Uber must classify 70,000 drivers as “workers,” allowing them to receive a minimum wage, vacation time, and access to a pension plan. However, recent digital ride-hailing regulations in Kenya have not specified such benefits.
Yego Global has been operating cabs and motorbikes in Rwanda before establishing itself in Kenya in 2019, where the company plans to replicate its model. As of 2020, the company had over 12,000 drivers on its app and aims to increase its market share by offering these benefits to its drivers.