Uber is pulling out of Nigeria and Uganda, closing operations in two African markets where ride-hailing companies have faced a difficult combination of rising operating costs, pressure on fares and growing competition.The exits took effect on September 2, ending Uber’s 12-year run in Nigeria and roughly a decade in Uganda. The company said it reached the “difficult decision” after a “thorough review” of its business priorities, while stressing that the move applies only to the two countries.“This decision is limited strictly to these two markets and does not impact our operations across the rest of the continent,” Uber told BBC.“We remain committed to sub-Saharan Africa, where we continue to see strong growth and opportunity.”
Nigeria’s ride-hailing economics under pressure
For Uber, Nigeria had been more than just a conventional ride-hailing market. The company entered the country in 2014 and expanded its services over the following years, including launching a boat service in Lagos in 2019 to help commuters avoid the city’s notorious traffic.But the economics of driving for ride-hailing platforms have become increasingly difficult. Uber drivers in Nigeria have complained that fares on the app are too low as fuel and other operating costs rise, while commissions charged by platforms are too high.The wider industry has faced similar pressure. Drivers working for Uber, Bolt and inDrive staged a three-day strike in Lagos and Ogun in March over what they described as unsustainable fares and poor working conditions.The cost pressures have intensified following economic changes in Nigeria. The removal of the fuel subsidy after President Bola Tinubu’s election in 2023 pushed up the cost of living, while petrol prices rose again this year following the US’s war with Iran.For drivers, the pressure extends beyond fuel. Petrol, imported spare parts and vehicle maintenance have all become more expensive, squeezing incomes while fares remain under pressure.
Competition gives drivers more options
Uber has also had to operate in a market where passengers and drivers have an expanding choice of platforms.Bolt and inDrive are major competitors in Nigeria, while local services include Rida and LagRide. inDrive allows passengers and drivers to negotiate fares, and its global model has generally involved a service fee of about 10%.The ability of drivers to move between platforms, or leave ride-hailing altogether, provides an alternative when commissions or fares become unattractive.That creates a difficult equation for platforms as operating costs increase. A large customer base may generate plenty of rides without necessarily producing enough margin.
Uganda had its own fight
The pressures were different in Uganda but centred on a similar issue: the ability of drivers and platforms to make the business work.Uber entered Uganda in 2016 and later introduced UberBODA. But its commission structure had already faced resistance from drivers.In 2019, the Smart Online Drivers Association petitioned parliament over what it described as exploitative practices. Drivers were particularly concerned about Uber’s 25% commission while fares remained low.By the time Uber announced its departure, Kampala already had established alternatives. Bolt and SafeBoda were competing with Uber, while smaller platforms including Faras, Yango and Tinka had added to the competition.Uganda’s Daily Monitor said Uber’s departure would bring a major change for commuters in Kampala, but that other taxi apps such as Faras, Bolt and SafeBoda were likely to fill the gap.
Uber becomes selective in Africa
Nigeria and Uganda are not the first African markets Uber has left.The company exited Ivory Coast last year after six years of operations and ended its Tanzania service in January this year after nearly a decade. The latest departures leave Egypt, Ghana, Kenya and South Africa as the only African countries where Uber operates, BBC reported.The company has pledged to support employees and drivers affected by the closures. Its help centre will remain available to users in Nigeria and Uganda until September 23 to resolve outstanding issues.The departures also come as Uber chief executive Dara Khosrowshahi announced a 10% cut to the company’s global workforce, with more than 3,000 jobs affected in a major restructuring.For the ride-hailing business in Nigeria and Uganda, the issue is not simply whether passengers are available. Platforms have to contend with the competing demands of keeping fares affordable, ensuring drivers can earn enough and maintaining commissions that make the business worthwhile.Uber’s latest exits leave it with a smaller footprint in Africa, even as the company says it continues to see strong growth and opportunity in sub-Saharan Africa.
