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The exit of Uber from Nigeria’s ride-hailing market is expected to intensify competition among operators and put renewed pressure on companies to improve driver earnings and make the business more sustainable.
Uber, which began operations in Nigeria in 2014, recently announced plans to discontinue its ride-hailing operations in the country after 12 years. The development has triggered fresh debate among mobility operators and industry stakeholders over the future of the sector, particularly the rising cost of operating as a ride-hailing driver.
Drivers are grappling with higher fuel, vehicle maintenance, insurance and financing costs, raising concerns about how much they are able to retain after paying for the expenses of running their vehicles.
Reacting to Uber’s exit, Nigerian mobility company, SimpliRide, said the long-term sustainability of the sector would increasingly depend on drivers’ ability to make enough money from their operations. The company’s Country Manager, Alero Fregene, said drivers remained central to the industry because they bear most of the costs of providing ride-hailing services.
According to her, drivers are responsible for vehicle acquisition or financing, fuel, maintenance and insurance, making their earnings critical to the survival of the sector.
Fregene said Uber’s role in developing app-based transportation in Nigeria should be recognised, stressing that its departure did not signal the end of ride-hailing in the country.
“Uber was a pioneer of modern app-based mobility in Nigeria, and its contribution to the development of this industry cannot simply be erased because the company has decided to leave,” she said.
She, however, said changing economic conditions meant that operators would have to review their business models.
“Markets evolve. Economic realities evolve. And business models must evolve with them,” she added.
A major challenge facing drivers is the impact of operating costs on their take-home earnings. Although ride-hailing platforms generate revenue from trips completed by drivers, the drivers bear many of the costs required to keep their vehicles on the road.
Fregene therefore questioned whether the number of trips completed should remain the main measure of a platform’s success without considering the profitability of the drivers providing the service.
She disclosed that SimpliRide was expanding its Driver Transition Programme to onboard professional drivers seeking additional sources of ride demand following recent changes in the market.
The company said drivers would not be required to leave other ride-hailing platforms, allowing them to choose the services that offer the best economic value.
Fregene said SimpliRide operates a subscription-based model instead of deducting a percentage commission from every trip.
Under the model, drivers pay a platform subscription fee and retain their base trip fares. She said the approach was designed around the economics of drivers and their ability to remain profitable after meeting operating costs.
The company said it had recorded more than 23,000 app downloads and had started monetising the platform through its subscription model.
Fregene, however, acknowledged that the number of downloads alone would not determine the success of mobility companies in the post-Uber market.
“We are asking Nigerians to judge us by the economics, the technology, the reliability and the experience,” she said.
With Uber’s departure, competition among existing and emerging ride-hailing operators is expected to intensify as companies compete for drivers and passengers.
For the industry, however, Fregene said the bigger challenge would be determining whether ride-hailing can provide drivers with a sustainable livelihood while keeping transportation affordable and reliable for passengers.
