Uber, Bolt and a Government Committed to Creating Unemployment Opportunities

Photo by Eric Nopanen on Unsplash

Work with your own schedule. No minimum hours and no boss. We’ll pay your earnings into your bank account every week.

The above was Bolt’s brand promise on their website. It is not clickbait, their drivers earn more, because of lower commission rates. This is simple enough to get people jumping on board. Uber also promises drivers they will make money while driving.

However, as Lagos state announced new regulations for Uber, Bolt and ride-hailing companies.

Before now the two major players have struggled to keep their drivers happy, now with the policies about to take effect, working as an Uber or bolt driver may not provide the quick ‘survival’ alternative we know it for. In the document, tagged “Guidelines For On-line Hailing Business Operation Of Taxi In Lagos State”, now categorises the taxi business operation as follows:

a. Service Entity: An app developer like Uber/Bolt that does not operate or own any vehicle, but connects car owners and commuters with their App.

b. Taxi and app operators: These are companies like Ekocab that operate their vehicles and the App. These companies might have their fleet and also have third party car/fleet owners on their platform.

From August 20, 2020, service entities in the city with less than 1,000 drivers are expected to pay a ₦10 million ($27,341) licence fee, while those with over 1,000 drivers are to pay ₦25 million ($54,682).

Subsequent renewals are pegged at ₦10 million ($27,341) for those with over 1,000 drivers and ₦5 million ($13,670) for those with less.

We expect taxi and App Operators with 50 cabs or fewer to pay a ₦5 million ($13,670) licence fee, while those with over 50 cabs are to pay ₦10 million ($27,341). The former will pay an annual renewal of ₦1.5 million (~$3,870), while the latter will renew at ₦3 million ($7,700).

Other provisions include:

  • All Operators of e-Hailing Taxi Services must pay the State Government 10% service tax on each transaction paid by the passengers to the operators.
  • They must commence the renewal process 3 (three) months before the expiration of the existing licence
  • They must have a quarterly meeting with the Ministry of Transportation for operational updates and feedback
  • All operators of e-hailing taxi services must give the Ministry access to their database

According to government sources, the new guidelines are in line with global best practices. As the government is usually quick to reference other advanced economies when and how they copy them for our (Nigerian citizens) own good. This is obviously a joke as we still grapple with serious corruption, unemployment and poverty.

Why?

From the outside, it appears the government is plain anti-progress and insensitive to plight of the man on the street.

But I wish it is that simple.

It’s not.

According to a source close to the ongoing negotiations, the government plans to integrate two APIs once operators pay for the licence: one for the drivers, and the other for a 10% service tax collection.

“Apparently, there is a technology company that has engaged the Government to help regulate drivers and collect their data, and also a service charge,”

All over the world, governments get it wrong from time to time with policies. However, we are in a pandemic and it's not the best time for a government to be undertaking revenue-generating experiments.

Who will this affect?

The licencing fee will not present a problem for the larger e-hailing operators, but it will raise the barrier for entry for newcomers. The bone of contention for all the operators is a provision that stipulates “all operators of e-hailing taxi service must pay the state government 10% service tax on each transaction paid by passengers to the operators.”

The provision means that the Lagos state government will collect taxes, licencing fees and then a percentage from every trip completed on these platforms. While operators have a problem with this provision, if they implement it on August 20, the real losers will be the customers. Uber and Bolt will pass this 10% cost along to end-users, making cab fares more expensive. Another set of losers will be drivers are yet to recover from the effects of the lockdown on their business.

Kene who rides for both Uber and Taxify said, ‘ I just saved enough and also got help from family to buy my vehicle in December last year. I had plans to work hard and increase my earnings. Then there was a pandemic, now this.

Taofik another driver, ‘ I lost my job in April and started using my car for Uber. Now the government instead of alleviating our suffering is using policies like this to increase poverty and unemployment.

Earlier in the year, On Tuesday, January 27, 2020, the Lagos state government announced a restriction on okada, tricycles, and, by extension, bike hailing services. Okada and tricycles had helped to offset the worst of the Lagos traffic. So when the government ban went into effect in February, it disrupted the entire transportation system of the state. From having multiple transportation options, commuters now have only four: drive their own cars, wait for the bus, take the accident-prone boats or order an Uber/Bolt.

Apart from the potential loss of a viable means of transport, this regulation opens the city that is being touted as a megacity up to more unemployment and loss of investor confidence. Who would want to invest in a state fraught with inconsistencies and anti-profit and people policies that surprise businesses and make it difficult to forecast growth?

e-Ride-hailing startups Opay, MaxNG and Gokada employed over 14000 staff and the ban consequently resulted in a loss of jobs.

According to the Nigerian Bureau of Statistics, Lagos already has an unemployment rate of 23.1% and with the new regulations for taxi-hailing companies, this could rise further. But our elitist government always explains these punishing policies and regulations as what is best for the people of Lagos state even though it does not result in a better quality of life for the citizens, but as expected, Lagosians will adjust and after a few weeks continue to suffer in silence.

Uber Nigeria has 9,000 active driver-partners and 267,000 monthly riders, and the average salary for a driver is 3,060,720 NGN. In a country where the average annual income is less than N2 million the pandemic causing the gradual obliteration of the middle class, being an Uber or Bolt driver was a good job.

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