Bolt cuts down its operations in Tanzania and caters to corporate entities alone

Bolt, the $8.4 billion ride-sharing company, was on the verge of shutting down its operations in Tanzania due to government regulations. For many African tech companies, harsh regulations spell the end of their operations. Bolt has limited its business activities to corporate clients only to avoid this.

In March this year, Tanzania’s Land Transport Regulatory Authority (LATRA) issued an order. This order required ride-hailing companies to charge their drivers a maximum of 15%. Bolt agreed, explaining that it was only doing so to buy time for stakeholders to negotiate and reconsider. It also stated that if LATRA’s order is upheld, the company’s future in Tanzania is bleak.

LATRA’s stance has remained unwavering four months after the order, and Bolt is fed up. The Estonian ride-hailing company has maintained that a 15% commission, as opposed to the previous 20%, is not sustainable for its operations in the country. “Bolt has no choice but to mitigate against market losses until it sees a considerable improvement in the regulatory ecosystem,” the company said in a statement shared with TechTrends.

Bolt has changed its business model to focus solely on corporate clients to remain in the East African country.

Earlier this year, Uber, a more prominent player in the ride-sharing industry that charged a 25% commission to its drivers, did not waste time hoping LATRA would change its mind. Uber suspended operations in Tanzania in April, the same month the new rates went into effect, stating that it would only return if regulatory issues were resolved.

While Uber’s decision is understandable, it’s difficult to understand why Bolt considers the 15% commission rate detrimental to its business model when it claims to offer that rate to drivers in other cities. One theory is that the issue is not with LATRA’s regulations but with Tanzania’s relatively weak currency, which would result in lower revenue for the company.

These business decisions by Uber and Bolt highlight the long-standing narrative that African regulations pose a challenge to technology companies and innovative startups on the continent.