Customers of cab-hailing firms Uber and Taxify may witness a hike in fares in the coming months as the country introduces a new national minimum wage.
Last April, Nigeria’s President Buhari signed into law the new minimum wage act that compels employers in the private and public sectors of the country to pay a minimum of N30,000 per month in wages. Nairametrics Research believes the new minimum wage could have an impact on the cost of riding a cab or bike on any of the ride-sharing apps in Nigeria, Nairametrics reported.
The reported added that ride-sharing apps have been a major source of commuting in Nigeria since Uber debuted in the country about 4 years ago. The business model, which allows car owners to participate either as a side hustle or full-time business, relies on drivers to transport passengers (riders) in exchange for a salary/fees at the end of the month from trips.
“Uber recently lost a case in the UK where it wanted to classify its drivers as self-employed. The implication is that the drivers could demand minimum wage in the computation of their fees. This model is not currently in operation in Nigeria as the regulations or law governing ride-sharing businesses are not clear. It is however not inconceivable that the government or labour could someday demand a higher share of amount riders pay,” the report explained.
“A 30km ride (from Ikoyi to the local airport) can cost anywhere between N2000 to N3000 using any of the ride-sharing apps in Nigeria. The same cost in the US is about N10,000. In the US for example, a 30 km ride (18.6 miles) will cost about $20.4 (N7, 300) assuming just $1.1 per mile. Ride-sharing apps like Uber also add to the cost per mile, the base cost, cost per minute and booking fee. So a ride that cost just N3,000 in Nigeria could cost as much as N15,000 in the US. Labour cost is understandably far cheaper in Nigeria than in most western societies however, there might be a call to bridge the disparity,” it explained further.