Uber revealed in an email to drivers on Monday, October 3, 2022, that it was raising fares for the UberX and UberX Share in Lagos in an email seen by Battabox.
The price increase takes effect today, October 3, 2022, and is the result of “changing economic conditions, including increased fuel costs,” according to the email.
The base fare will rise from 340 to 450 due to the changes. In addition, the minimum fare will rise from 600 to 650, while the per-minute fare will rise from 14 to 16.
Fuel prices in Nigeria have increased by 90.54% between December 2015 and December 2021, according to the Central Bank of Nigeria. The PUNCH reported in June 2022 that petrol would now cost between $170 and 190. Users can, however, still purchase gasoline at lower prices depending on their location.
Users may be surprised by Uber’s decision to raise its fares, but it is consistent with its activities in other countries. For example, Bloomberg reported in August 2022 that Uber was raising its fares in London by 5%, with plans to do the same in other cities across the United Kingdom.
This price increase was required because the company needed to recruit more drivers, many of whom had left during the pandemic.
Because of the COVID-19 pandemic, fewer people were moving around. But, conversely, as more people ordered food online, the demand for drivers at food delivery startups increased.
Doing less work for more or similar pay was a no-brainer for many drivers, hence the departure. While Uber’s ride-hailing revenue fell by 43% between 2019 and 2020, its food delivery revenue increased by 179%.
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Uber is not the only ride-hailing company that has raised its prices. According to Rakuten Intelligence, the cost of a ride on ride-hailing apps increased 98% between 2018 and 2021, partly due to a driver shortage.
While the driver shortage helps to explain Uber’s decision, it does not provide the entire picture. Like many other VC-funded startups, Uber subsidized user fares in its quest for growth.
However, in recent years, the company has begun to focus on profitability. CEO Dara Khosrowshahi stated in an email to employees in May 2022, “we have to make sure our unit economics work before we go big.” Fares have increased as a result of this.
