Ride-hailing company Uber will begin winding down its Nigerian business today, ending a 12-year operation in the country. The decision is connected to broader layoffs affecting 3,300 people, approximately 10% of its global headcount. The ride-sharing giant is reducing teams, cutting remote roles and letting go staff “more than seven layers down from the CEO,” according to Bloomberg.
Uber launched in Nigeria in 2014 as one of the first foreign ride-hailing operations, adapting its model to accommodate cash payments. For a while, it set the pace for ride-hailing, holding specific standards for cars, drivers and passengers. Yet, the e-hailing space soon became a race to the bottom.
Bolt launched in 2016 and began a brutal price war with Uber, relaxing standards for cars and drivers. While Uber initially treated ride-hailing as a semi-luxurious service, Bolt viewed it as a commodity for Nigeria’s thin middle class. This difference in thinking allowed Bolt to capture about 60% of the market share, with some 20,000 active cars.
Other entrants like In-Drive hastened the race to the bottom, allowing passengers and drivers to haggle over prices and relaxing car specifications. Uber responded with Uber Go, a cheaper alternative using Suzuki cars financed by Uber. However, naira devaluation meant that drivers would need to pay more, and inflation narrowed the pool of people who could pay for private rides.
The leading ride-hailing services remained reluctant to lower their commission from 15-20% per ride, forcing riders to forego loyalty to any one platform. Drivers became experts at choosing which platforms would pay the most. Uber and Bolt eventually increased base fares after fuel subsidies ended and fuel prices tripled.
Uber had driver loyalty when it began operations but drivers felt disenfranchised as the business went on, often protesting that they were no longer at the decision-making table.
The winners: Bolt and other local ride-hailing platforms, which will likely gain market share. The losers: Uber’s Nigerian employees, who will lose their jobs; and Nigerian consumers, who may face higher prices as competition decreases.
Bottom Line: Uber is leaving Nigeria after 12 years. The ride-hailing market is now in the hands of its competitors. The question is whether Nigerian consumers will benefit or pay the price.