Ride-hailing company Uber will begin winding down its Nigerian business today, ending a 12-year operation in the country. The decision to wind down Nigerian operations is connected to broader layoffs in the business, which affected 3,300 people, approximately 10% of its headcount.
The ride-sharing giant is reducing the number of teams with one or two members by 50%, and letting go staff who are “more than seven layers down from the CEO,” per Bloomberg.
It will also drastically reduce remote roles, allowing less than 1% of its staff to work remotely.
“We are writing to share some difficult news. After a thorough review of the business, we have made the tough decision to wind down our operations in Nigeria.”
Uber launched in Nigeria in 2014 as one of the first foreign ride-hailing operations in the country, adapting its model to accomodate cash payment, bucking the usual trend of its card payment in other geographies.
For a while, it set the pace for ride-hailing, holding a specific standard for cars, drivers, and even passengers. Yet, the e-hailing space soon became a race to the bottom.
The Estonian firm Bolt (formerly Taxify) launched in 2016 and was keen to win market share. As part of the process, it began a brutal price war with Uber, and even relaxed standards for cars and drivers in the space.
While Uber initially treated ride-hailing as some semi-luxurious service, Bolt rightly viewed it as a commodity for Nigeria’s thin middle class. This difference in thinking would eventually allow Bolt to have some 20,000 active cars in Nigeria, some 60% of the market share.
Other entrants like In-Drive hastened a race to the bottom for the ride-hailing space, with an interesting model that allowed passengers and drivers to haggle over prices. They also relaxed car specifications, essentially recognising that many users didn’t care too much about the make of the cars.
To be fair, Uber also realised the commodification of the space and responded with Uber Go, a cheaper alternative that used tiny Suzuki cars financed by Uber. As a solution to a car supply problem, it was brilliant.
In reality, a naira devaluation meant that Moove, which raised dollar financing to buy those Suzukis, would need drivers to pay more money if it was not to end up holding the wrong end of the deal. Inflation also narrowed the pool of people who could pay for private rides.
Perhaps more importantly, 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 teasing out what platforms would pay the most for trips and simply went with the best offering. Uber and Bolt eventually increased base fares after Nigeria ended fuel subsidies and fuel prices tripled.
Ironically, Uber had driver loyalty in Nigeria when it began operations and used community as a way to earn loyalty. Yet, drivers felt disenfranchised as the business went on and often protested that they were no longer at the decision-making table at Uber and Bolt.
*See you on Friday!