Here is Why Uber, Taxify May Jerk Up Ride Fares in Lagos

Lagos State Governor Babatunde Sanwo-Olu has approved new regulations that will guide the activities of online hailing companies in the state.

The big e-hailing companies like Uber and Bolt (formerly Taxify) has reportedly faulted the new guidelines that could compel them to jerk up the fares of rides and may completely edge out newcomer operators.

Under the new regulations, which is expected to be in effect from August 20, the licence fee for new operators is now N10 million ($25,814) for every 1,000 e-hailing taxis while they are expected to pay an annual renewal fee of N5 million ($12,907).

The established firms are now mandated to pay  N25 million yearly to the state government per 1,000 vehicles for an operational licence while they will pay N10m yearly for renewal on every 1, 000 cars in their pool.

It is believed that the new license fee would not be a problem for the big players but may suffocate the small and new operators. However, the part of the regulations that is raising concern for all operators is a provision that stipulates that “all operators of e-hailing taxi service must pay the state government 10% service tax on each transaction paid by passengers to the operators.”

Justifying the new guidelines, the state government said it became necessary to tinker with the old regulations to cub insecurity and safeguard the lives of Lagosians who use ride-hailing services.

“There is an urgent need to upgrade the existing guidelines for the operation of Taxi Business in Lagos State based on the reality of insecurity and safety confronting the sector as people of questionable characters have hijacked the process which has resulted into increased road crashes, kidnapping, robbery, pollution and insecurity, thereby eroding the confidence of the general public in Taxi business,” a government statement said.

On whether the government consulted the stakeholders before finalising the regulations, the head of the vehicle inspection office in Lagos, Toriola Hafeez, said the operators were carried along in the process.

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He told TechCabal that, “The regulation has been approved by the governor. We have called the operators and other intending companies to cooperate with the new guidelines which are in line with global best practices. We created these guidelines with the operators. What we have done is to look at developed countries and how they maintain their infrastructure and we’re applying that here.”

Contrary to the government’s claims, inside sources familiar with the matter said that Uber, Bolt and other operators were not involved in the final talks.

Business Elites Africa (BEA) gathered that the operators were invited for a meeting at the ministry of transportation last week Wednesday, but the meeting was postponed to Thursday without notifying the operators. So Uber and Bolt were said to be absent at the new meeting.

The purpose of the meeting, which was chaired by the Special Assistant to the Governor on transportation, was to discuss the licensing, data collection and the service charge – the same issues were said to have been raised in previous meetings with the stakeholders.

Those present at the meeting claimed that the SA just read out the content of the new regulations document and asserted that implementation would begin on August 20.

In Section 4.2 of the Lagos e-hailing guidelines, the companies are mandated to give the ministry access to their database for the sake of transparency.

This comes barely two months after the Sanwo-Olu government banned motorcycle-hailing services in Lagos, forcing the players – Gokada, MaxNG and O’Ride – out of the business. With millions of dollars of investment lost, some of the companies pivoted to logistics business while others completely phased out their operations.