Market News

Uber and Bolt drivers say the fuel subsidy removal has put them at risk of losing their livelihoods.

• President Bola Tinubu has initiated several significant policy changes since his inauguration on May 29.
• One change is the removal of the fuel subsidy, which has caused fuel prices to nearly triple.
• Institutions like the World Bank have hailed the policy as a great move for the country. Gig workers, however, are suffering under the new fuel price regime.

Michael Ayodeji, a 40-year-old ride-hailing driver in Lagos, is living his worst nightmare. On May 29, he filled his car’s fuel tank with 13,000 naira (about $17), but when he went to refuel three days later, the price had nearly tripled, thanks to a change in government policy.

On May 29, during his inaugural speech, Nigeria’s newly elected president, Bola Tinubu, announced an end to the country’s fuel subsidy, hoping to relieve some of its $108.3 billion debt burden. The subsidy removal led to a 163% increase in fuel prices across Nigeria. The World Bank has hailed this move as crucial to restoring economic stability in the country. But the decision has pushed several Nigerians into deeper poverty and hard times.

Ride-hailing drivers, in particular, are struggling to keep up with their daily expenses. “I almost cried that day,” Ayodeji told Rest of World. “Was 100 naira [13 cents] all I deserved to earn after driving for several hours on three trips? What could that money do for me? When did being a Bolt driver become a crime?”

Gbenga Adebayo, chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), believes that although the fuel price hike will shrink the ride-hailing industry’s growth, it won’t kill it. The industry had an estimated revenue of about $292 million in 2020, according to a report by South African think tank Cenfri. “In the long run, the market size will shrink,” Adebayo told Rest of World. “But the impact of the fuel price hike will not be strong enough to kill the entire industry because those who need the service will continue to order rides.”

Even with the fuel subsidy, being an Uber or Bolt driver in Nigeria was not lucrative. “Before the fuel subsidy removal and price hike, many of us were barely surviving due to the harsh economic condition of the country, but now the situation is worse,” Ayoade Ibrahim, general secretary of the Amalgamated Union of App-based Transport Workers of Nigeria, told Rest of World.

Following the fuel hike, Uber and Bolt have raised their base fares by 40% and 17%, respectively. But drivers are demanding an increase of 200% in base fares to match the 163% rise in fuel prices. Drivers have also called for a 50% reduction in the commission they pay to ride-hailing platforms. On June 7, Uber and Bolt drivers in Nigeria went on a nationwide strike — it was suspended two weeks later after the Ministry of Labour and Employment intervened.

“We adjusted our fares taking into account the issue of demand and supply,” Yahaya Mohammed, country manager for Bolt Nigeria, told Rest of World. “Excessively high prices will discourage passengers from ordering rides, thus negatively impacting drivers’ earnings. Therefore, our revised fares aim to strike a balance between better compensation for drivers and manageable prices for passengers.”

In a statement to Rest of World, Uber said it lowered its service fee from 25% to 20% a year ago to create better earning opportunities for drivers. The company said it had also updated its fares twice in June, following an in-depth review of the fuel subsidy removal. “As a global business that operates locally, we are constantly monitoring local dynamics to see what changes can be implemented and when,” said an Uber spokesperson. “The June 2023 fare increases are designed to help drivers cover the recent increase in fuel costs, not the entire cost of fuel.” The company did not confirm whether it would review the service fee again.

Meanwhile, some Nigerians have already stopped using ride-hailing apps due to the increase in fares. “Before [the] subsidy removal, I used to take a Bolt ride home from work every day of the week, but now I have reduced it to twice [a week],” Noimot Adesuyi, an event planner in Lagos, told Rest of World.

Ibrahim, from the transport workers’ union, believes ride-hailing drivers may soon opt to move their services offline to avoid paying commissions to apps, or jump ship to newer platforms like inDrive that allow them to negotiate prices with passengers.

“[The drivers’] problem is not unique from what every Nigerian is experiencing,” Adedeji Olowe, a startup founder in Lagos, told Rest of World. “This is not a game anybody can win. The drivers are demanding a 200% increase in fares, but should the ride-hailing companies do that, how many Nigerians will continue to ride? At the same time, if the ride-hailing companies reduce their service fees by 50% and are not making money again, they may close shop, and all the drivers will be out of jobs.”