Following the removal of fuel subsidies, fuel prices nationwide have skyrocketed, triggering a struggle for profits and cost savings among riders, drivers, and ride-hailing platforms.
In his inaugural speech as President of Nigeria, Bola Tinubu announced the removal of fuel subsidies. This announcement has had an instant impact on the transport sector, with prices rising rapidly, particularly in the ride-hailing space. “I paid 4k from Obalende to Victoria Island!” Tobi, a content manager living in Lagos told TechCabal, sharing that the usual fare for this trip was around 1,500 Naira before this week. Tobi has now switched to public transportation to manage costs.
Some observers say that this rise in prices may convince ride-hailing companies to offer ride-sharing services to riders. But there are some trust and safety concerns to consider. Illy, who uses Uber and Bolt, told TechCabal, “I won’t share a ride because I don’t trust people. Instead, I use Rida and inDriver too when prices on Bolt are too high.” On the other hand, Tobi said, “I can use the ridesharing feature only with people I know. Otherwise I will opt for public transport, even public bus fares are even high.”
A different tale
While customers say the prices for rides have increased, drivers say the prices still do not cover their operating expenses. “Due to this fuel subsidy issue, I don’t go out, the prices they (Uber) give are ridiculous,” he said. “I just bought N1000 fuel worth 2 litres, where will 2 litres lead you? Now they will give a trip of 1500-1700 which would last up to 45 minutes, and I will spend nothing less than 5 litres on that trip, so tell me how much profit I’m going to make?” said Finbar, an Uber driver in Lagos.
Finbar has stopped working for now, until Uber reevaluates its pricing. According to him, Uber hasn’t significantly raised prices despite the fuel price hike and it is affecting drivers’ earnings. “We have not seen any mail from Uber that indicates change of prices due to the fuel subsidy removal,” he noted.
Tope Akinwunmi, Uber’s country manager, told TechCabal that Uber is staying on top of the situation. He said, “we are aware that the news of the recent fuel hikes and fuel subsidy removal is affecting drivers on our platform, and we are taking an indepth look into this. Drivers are at the heart of everything we do, and we are currently reviewing the situation, and gathering feedback from drivers and riders to inform future changes. Once we understand the implications, we will share an update.,”
While several drivers who spoke to TechCabal are dissatisfied with the current prices on the ride-hailing app, Uber is wary of decreased patronage if prices are too high. “We recognise the pressures drivers are under, including the increasing cost of living. It’s important to understand that fares do fluctuate as a normal part of any business based on various factors such as seasonality and the macroeconomic environment,” Uber concluded.
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