Nigeria recently increased fuel prices by 40%, bringing the pump price to around ₦897 per litre, up from ₦610. This marks the second significant fuel price hike since the government ended fuel subsidies in May 2023, which saw prices triple from ₦200 per litre. The national petroleum corporation, facing financial strain, has been adjusting prices to reflect rising operational costs.
The latest increase has severe implications for last-mile delivery and food delivery businesses, which will inevitably pass on higher costs to their customers. However, gig drivers—those working for ride-hailing services like Uber, Bolt, and InDrive—are among the worst affected. Unlike delivery services, these drivers cannot adjust prices themselves, making it difficult to cope with escalating fuel costs and maintenance expenses in an economy where inflation has skyrocketed to 34.19% as of June 2024.
Drivers Under Pressure
Gig drivers have voiced their frustrations over the situation, many of whom now reject low-paying trips, stating that it’s not worth the fuel and effort. One driver shared that rides paying ₦1,500 to ₦2,000 no longer cover fuel expenses. These challenges are compounded by ride-hailing companies’ commission structure, which takes up to 25% of drivers’ earnings. Drivers have been advocating for reduced commissions (down to 10%) and fare increases.
Ride-Hailing Companies at a Crossroads
Ride-hailing companies are cautious about adjusting prices too drastically, fearing that steep fare increases might discourage users, especially in an economy where disposable incomes are already squeezed. Uber has not yet issued a comment on how it will respond to these mounting challenges, while Bolt and InDrive continue to rely on algorithms to set fares, adding more tension to the already fraught relationship with their drivers.
In other markets, such as Kenya, drivers have taken more drastic measures by setting their own ride prices, an action that has disrupted the balance between drivers and companies. In Nigeria, drivers are demanding similar changes. The risk is that without fare adjustments, drivers could take actions that frustrate platforms, leading to operational challenges for the ride-hailing companies.
Inevitable Price Increases, But No Easy Solutions
Although price hikes for ride services seem inevitable, they are unlikely to fully resolve the growing discontent among gig drivers. Rising operational costs, inflation, and the ongoing struggle between drivers and ride-hailing platforms will likely lead to further friction over the coming months.
The future remains uncertain for Nigeria’s gig economy, as both drivers and ride-hailing companies navigate the economic pressures imposed by the country’s ongoing fuel crisis.