Game of Cabs: Is Uber taking a hit from Nigeria's economic downturn?

August 12, 2016
4 min read

In commemoration of their second year anniversary in Lagos Uber Nigeria recently doubled their bonus for ride referrals.
For the uninitiated, Uber gives you a code that lets you invite friends to try the e-hailing service for free. Once they take a ride with your code, you are automatically rewarded with a free ride. Note that you can only use referral codes once on an account unless invites are given and translated to free rides for you when your friends use them.

This reward used to be worth ₦2,000, but the anniversary promo doubled the value to ₦4,000. With stats from the drivers as concrete basis, people have been ‘Ubering’ like crazy since then.

>According to one Uber driver:
“Work has been surplus this month (July). Even though most of my passengers have been students and never pay cash, work is work.”
The mention of "no cash" led me to a discovery; people -- especially students -- hacked the system and found a way to get codes to use over and over again with multiple accounts across different mobile numbers.

The drivers were ignorant of this fast play, as most of them did not know of the increment for referral bonuses. And even though they are in the know of the code, there is no way for a driver to know a code has been applied to a ride.


Then I tried  simple mathematics; if people were using plenty ‘referral codes” and cross referring themselves, then Uber was paying for this scam.

And is it possible they did not know? The probability of them being ignorant to this scheme is 1 in 10. They probably even anticipated that hitch.

So why aren't they doing anything about it?

Because maybe there is nothing to do about it. With the way the economy is looking, taxis generally may be on the decline as a choice mode of transportation for Nigerians.

According to stats and reports, Lagos is Uber’s biggest market in Africa; even potentially bigger than London on a global scale. With its one-millionth ride taking place on the 16th July 2016 from Yaba to Lekki and a cumulative distance travelled approximately 9,000,000 km since inception, Uber is looking very good, especially in Lagos.
The same perceptions and report would give you the impression that Uber has run the traditional cabs out of business.
However, from an economic perspective, Uber and other e-hailing platforms in Lagos are not looking like they are chasing the traditional "yellow cab" anywhere soon, or even nicking them like we all want to believe.

Suggested Read: These are the e-hailing services trying to kill the Yellow Cab in Nigeria

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That was the impression I got when I talked to Mr. Saliu,  a yellow cab driver.

“We are still in business, Uber and others are doing their own, we are doing ours. Drivers are still taking cars on hire purchase and that should be an indication that our business is not shaking. Income has even been on the rise lately“

Mr. Saliu plies the Lekki axis, and that is apparently where Uber is supposed to be predominant. He went ahead to tell me with different examples how they never feared Uber.
Another cab driver on the mainland chuckled when I mentioned Uber.

“What is Uber? Most of us do not know them and the ones that do don't care”

He later backtracked by saying that he was worried in the early stages that Uber would oust them. According to him, time continued to prove their markets differed.

While we are here thinking the other e-hailing platforms are Uber’s competition, maybe they are actually receiving stiff competition from the "yellow cabs" in Lagos than they are letting on.

And initiatives like an increased referral bonus are looking like strategies to bring more users on the platform. On whether they perceived the "yellow cabs" as any form of competition, a spokesperson for Uber Nigeria said:

We do not focus on competitors but rather spend our time thinking about how we can better the experience for riders and driver-partners. However, Uber loves competition as it offers more choice to customers, improves safety and service, and encourages innovation. We love choice. Uber offers riders a new option. In a basic sense, giving riders one more choice can only make them better off.

If Uber is not making any profit, then what?

I do not know. Uber has raised a lot of money in recent times -- over $8.5 billion and counting. And if they can budget $500 million into building a proprietary mapping system, it's pretty certain they can afford to sustain Uber Nigeria till the crunch is over. On profitability, the same spokesperson said:

We measure our success in terms of user satisfaction and improved efficiency in urban mobility.

Whatever their game is, Uber Nigeria' functionality adds to the efficiency of the local transport system. Now that the anniversary promo is over -- it ended on the 7th of August -- one can only wonder how Uber has been fairing. I hope the customer drive paid off.

What has been your experience with Uber Lagos?

tech. media. startups. africa. vc | Twitter: @victor_ekwealor
tech. media. startups. africa. vc | Twitter: @victor_ekwealor
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tech. media. startups. africa. vc | Twitter: @victor_ekwealor

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