A week ago, Uber unexpectedly announced its departure from the Nigerian market after spending more than a decade building up its presence in Africa's most populous country.
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Uber → announce → country
The ride-hailing platform also said it would be winding up its operations in Uganda — also with immediate effect.
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it → hail → effect
With the exit from both Nigeria and Uganda, Uber now remains operational only in a handful of African countries — Egypt, Ghana, Kenya, and South Africa.
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Uber → remain → countries
"This decision is limited strictly to these two markets and does not impact our operations across the rest of the continent," Uber said in a statement, adding that their "immediate priority is supporting drivers, riders, and local team members throughout this transition," without sharing details on what this assistance would entail.
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assistance → limit → what
In the last year, the multinational company also closed shop in Ivory Coast and Tanzania, while also cutting its global workforce by 10%.
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company → close → %
Africa a difficult market to crack
Uber has not managed to grow across much of the African market despite its massive global scale.
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Uber → crack → scale
The profit-driven ride-hailing app faces stiff competition from rival platforms, including Bolt, inDrive and SafeBoda, which operate in the Nigerian and Ugandan markets and beyond.
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which → drive → markets
However, it's not only Uber that is having to deal with its frustration over the current situation: Many of its drivers across Africa have been raising complaints about shrinking profit margins amid rising fuel costs, inflation and currency volatility, especially in markets like Nigeria.
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Many → have → Nigeria
In their view, Uber's business model of pocketing around 20% — 25% of any trip fare in commissions is no longer tenable.
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model → pocket → commissions
Discontent, discombobulated and disregarded drivers
Abbas Olamide, an Uber driver in the Nigerian capital Abuja, said the company's overall service was "good," while firmly stressing that the high commission rates were adding greatly to his existing woes.
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rates → discombobulate → woes
He told DW that a ride of 30,000 Naira (€20) "to the airport means the ride-hailing app would deduct 6,000 Naira as commission," still leaving him to "then pay a gate fee at the airport."
"Probably because you do not want to go back to town empty-handed, we also pay to park at the airport [to pick up another client]," he explained.
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he → tell → client
"At the end of the day, what's left is no longer enough."
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left → leave → day
Samuel Olatunji, an Uber-driver in the megacity Lagos, also shared his concerns with DW following the abrupt announcement of Uber's exit, saying he will now have to recalibrate his own business model.
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he → share → model
The 43-year-old driver says he'll have to join hundreds of other drivers who "have to depend on other [ride-hailing] apps now" to ensure any steady stream of income.
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who → say → income
"But the amount I take home won't add up like before again."
In recent years, drivers like Olamide and Olatunji have staged several strikes and protests over soaring operating costs, low fares and working conditions, as well as Nigeria's fuel hikes, which this year have also been worsened
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which → take → costs
Their pleas and concerns, however, remain largely unheard, as they find themselves having to prepare for a bumpy ride ahead.
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themselves → remain → ride
Dollars versus naira
Uber meanwhile did not provide a detailed explanation for its decision; however, it comes against the backdrop of double-digit inflation in many places across Africa, which has eroded the purchasing power of millions of people while pushing them deeper and deeper into poverty.
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which → provide → poverty
This also makes consumers less likely to use the transport company.
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consumers → make → company
Ikemesit Effiong, partner at SBM Intelligence, a consulting firm based in Lagos, explained that "[r]ising costs for such things as fuel, vehicle maintenance, insurance, coupled with a currency that is less valuable now than in 2014 means that fares were climbing faster than the average Lagos or Abuja rider's willingness or ability to pay for the convenience."
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fares → consult → convenience
Effiong added that while Uber's cost base is dollar-linked, the drivers' revenue is the shrinking naira, leading to the overall maths not working anymore, and forcing Uber to operate under unsustainably thin profit margins.
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maths → add → margins
This is despite the fact that Nigeria's ride-hailing market alone is estimated to be worth around $450 million per year.
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market → estimate → year
"These platforms are trying to hold fares low enough to retain price-sensitive riders, while the driver take-home shrinks in real terms.
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fares → try → terms
This pushes drivers toward multi-apping, off-platform negotiation, or exit altogether," he noted.
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he → push → negotiation
Effiong further highlighted that one of Uber's local competitors, InDrive, does actually operate under a negotiated-fare approach, resulting in "less reliance on the capital-heavy, standardized-fare template that works in wealthier markets."
The complex economics of ride-hailing
There are some striking similarities between the Nigerian and Ugandan markets: Both countries have huge populations and a growing demand for more transport solution.
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countries → highlight → solution
But both across both Kampala and Lagos, Uber's exit also creates a loss of a service many users had considered a safe and reliable option — more so than some of the other options.
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users → create → options
Mary-Esther Anele, a Lagos resident, told DW that she knows that she is "going to start looking for alternatives.
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she → tell → alternatives
"
"But most importantly, I'm going to travel less anyway now because transportation costs are going to increase," she added.
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she → go → ?
There also are questions about any knock-on effects beyond the current decision by Uber:
Will the California-based multinational leave its remaining African markets?
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multinational → base → markets
Will its pricing dynamics change in order to bring in more money from the continent?
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dynamics → change → continent
And how will competitors respond?
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competitors → respond → ?
In some other African countries like South Africa, ride-hailing apps like Uber have also long been a thorn in the side of taxi companies and minibuses, whose operators say they don't want to compete against those drivers, even resorting to violence at times as part of ongoing local taxi wars.
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they → say → wars
Will Uber's shrinking footprint in Africa impact these kinds of developments in other markets?
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footprint → shrink → markets
As countless drivers prepare for an unknown future, the end of their partnership with Uber might — for many — spell their journey's end.
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end → prepare → end
Frank Yiga from Kampala contributed to this report.
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Yiga → contribute → report
