Uber Is Dying In Lagos (By Extension Nigeria) And There’s Little Uber Can Do About It At The Moment

I used Uber in Lagos this week and it was quite difficult. It started at the airport which is located in Ikeja when I tried to call for cab using the Uber app and it showed me that I had to wait for over 20 minutes to get the car to another destination in the Ikeja area of Lagos. It used to be almost immediate but when I called the driver, he said he was in the Lekki area of Lagos and if you live in Lagos, you’ll understand the distance but for those who aren’t familiar with Nigeria’s commercial city, Lekki is almost 50Km away from Ikeja (ie one is on the Island while the other is on the mainland). But how did it come to this? Well I went on a fact finding mission which is what you’re about to read below.

It’s been a little under two years since Uber celebrated its one year existence in Nigeria and as you might expect, it was well celebrated with announcements of bigger expansion plans into other cities across Africa’s most populous market. But the celebration was called for at least based on the figures. They announced partnerships with Kia in 2015 to boost the number of drivers in Lagos to 3,000 by the end of 2016 and this represented a fivefold increase with the help of Access Bank, down payments on new cars were expected to  cut the cost on new cars to 95k Naira from 200k Naira. But it made sense because compared to other major cities in Nigeria, Lagos has one of the highest taxi fares in the country so you can understand why Uber didn’t lack customers and wanted to expand in a city that is home to 15 million people from all walks of life. It wasn’t longer after this that they launched in Abuja the capital on Nigeria making it the 400^th city where Uber operates.

It was all roses until a few weeks ago when Uber announced that it wanted to make its customers more happy at the expense of the drivers and by this I mean that Uber announced that it was going to cut the cost of fares by 40 percent while keeping the 25 percent it charges each driver per fare unchanged. In other words, we Uber keeps its 25 percent while customers celebrate lower fares but the main actors (the drivers) the losers. I would assume that Uber was trying to build up more volumes by keeping fares lower while increasing its network. Now the drivers I spoke to agree that customers should pay a lower fare in order to encourage more people to use the service but that Uber should reduce its commission to something in the region of 15 percent but as you might expect, Uber refused and then the problem begins.

Strike of the drivers

As more drivers disagreed with Uber, they stayed away from work which is why I was told to wait for 20 minutes to get a car which should have cost me less than three minutes all things being equal. Driver said they have stayed off the app with some going as far as saying they deleted the Uber apps.

As the popular saying in Nigeria goes, “Monkey dey work, baboon dey chop” which means, the Monkey basically works to fill the pocket of the baboon in this case being Uber. So why is it difficult for Uber to shift grounds or why won’t the drivers just accept this and let everyone live happily ever after. Well it’s not that easy and I highlight that next.

Conditions generally not favourable

As one driver told me, a passenger once said to him, whenever I want to go to a place I don’t want to use my car to, I would rather call an Uber but why? It’s because roads to most of the suburbs (where most people live) are in a bad condition and if you own a car, you know what this means for monthly maintenance. Simply put the cost of car maintenance in Nigeria cannot be compared to what it is in developed nations and by cutting further the fares without incentives to drivers, they’ll only be left with very little to take care of themselves and their families at the end of the month.

A 2015 survey by Carmudi (a website where you can buy cars) says Nigeria is still one of the most expensive countries to buy a car even in West Africa. The study said the average price of buying a good car was $19,547 which was 3.9m Naira at the time but about 7.4m Naira today compared to $18,923 In Senegal and $17,654 in Ghana.  I noted earlier the cost of acquiring a car of acquiring a car has more than doubled since 2015 due to the instability of the Naira which has affected the cost of nearly every consumer item seeing as we don’t produce most of the things we consumer and frankly it will be hard to take care of 200 million people on just local production but that’s a story for another day. It even gets more difficult to buy the kind of cars Uber wants partners to use as financing opportunities continue to dwindle.

But to add to all of these, the Uber office is not helping matters.

Uber staff in Lagos not available to address the drivers

One driver in particular told me, on hearing the news of the new decision, they went to the Uber office in Lekki and couldn’t find anyone to address them. But how can this be if this is one of Uber’s biggest markets? Well as one of them puts it, this is just another example of a foreign company that’s just here for the money and not very much interested in developing the market and Uber is not alone in this. He went as far as describing the Lekki as a money collection point whatever that means. The point here is that the Uber team on ground is doing little to save Uber in Nigeria because from what I hear, many car owners are beginning to pull their cars from the Uber business due to fall in profits but Uber is not solely responsible for this.

Dishonesty of drivers

A friend of mine bought cars for Uber and discovered that her returns continued to fall with each month that passed and this was before the announcement by Uber to cut fares in Nigeria and it’s not as if the number of Uber users dropped significantly over time which then leaves room for just one thing and that’s the dishonesty of some drivers. When some drivers pick up passengers, they go on to agree to take them on other trips that are not recorded by the Uber app and go as far taking their phone numbers to keep picking them up without officially recording this in the app. Now if you’re the employer of that driver and don’t know that they are doing this, you can imagine how many other passengers your may have lost in the day and the direct effect of this on your business.

This is making more and more people pull their cars off the road from drivers and you see most of these driver don’t have the money to buy the Uber standard cars and that means there will be no cars and drivers to sustain the Uber business in Nigeria.

This happens and lets not pretend as if doesn’t but when you ask the drivers, they blame it on not being paid well by Uber. But I’ll leave that to car owners and Uber to figure out.

Other services ready to step in

Point fingers anyway you want, the truth is that the impasse is costing Uber some serious business in Nigeria. So here’s what one of the drivers told me.

The same day that Uber decided to announce this, competitor “Taxify” announced that it would only take a 15 percent commission on successfully trips made by drivers and even promised them more if they pledge not to go back to Uber again and yes that’s how aggressive this is. Uber is facing serious competitions across Africa and the number of such startups keeps rising and so I can’t still understand why Uber would be making such a gamble. 

Taxify is not alone in trying to woo these drivers. They mentioned other apps that have been doing this and to cap it up, one driver told me clearly that he doesn’t think he would go back to Uber after this week and that maybe one driver lost by Uber but don’t rule out Uber just yet in the Nigerian market.

Don’t rule out Uber just yet  

By infrastructure standards, Uber still has one of the best infrastructure with respect to technology. Uber has invested a lot in mapping technology over the years and has a more accurate way of guiding drivers through the best way to destinations thereby keeping fares considerably low for drivers and giving more time to drivers to pick up more passengers. They can easily change all of these by meeting with driver and agreeing on favourable wages for drivers seeing as the terrain differs greatly in Nigeria with respect to cost of doing business.