THE recent surge in fuel prices across the country has impacted different economic sectors, particularly transport operators.
A group of such operators are drivers for Bolt, a ride-hailing company and the major rival in the business in Nigeria to Uber.
The Bolt and Uber drivers, whom The ICIR spoke with on the “all-time business low” they said they have been experiencing since the subsidy removal, would not want their full names mentioned in this report for fear of reprisal from their employers.
David is a Bolt driver in Abuja struggling to cope with the recent increment of the fuel price. He has seen his earnings decrease drastically due to the unwillingness of many riders to pay additional fees.
The hike in fuel price has resulted in a decline in ride demand, which is naturally the consequence, as said by potential riders.
David likened the situation to the fear and impact of the covid-19 lockdown, but noted that the current situation has a higher impact.
He said, “This case is quite equivalent to that of the covid-19 lockdown, but it has a higher impact in the sense that you are uncertain that you will have a job after a few weeks if this persists without a form of intervention to cushion the effects.”
While explaining the additional expenses like monthly vehicle servicing and repairs, and personal care that have been the results of the subsidy removal, he maintained that the profit margin would consequently be inconsequential.
“You could make a run of earnings of about N25,000, but after deduction from fuel and Bolt commissions, you’d probably be left with only N4,000, and you’d not be able to feed yourself.”
“As I said earlier, there’s no profit. Even if I’m to put only the fuel rate as the determinant, I won’t break even. Now add wear and tear of the vehicle, monthly car service and repairs, personal care and some other factors to mention, where would the profit come from when the profit margin is 20 per cent of every litre of petrol expended in the course of work? It’s not in any way realistic to make profit, not even enough to keep the business afloat,” he said.
Background
On May 29, the new President, Bola Tinubu, declared in his inaugural address that his administration would be removing the fuel subsidy.
The announcement immediately led to fuel queues as many retailers shut their filling stations, hoarding their stock, and creating scarcity with a view to hiking fares later.
Two days later, the Nigeria National Petroleum Company Limited (NNPCLtd) officially increased the pump price of petrol by about 200 per cent.
The NNPCL, in a template sent to marketers, confirmed the astronomical rise in pump price of the product, with the minimum being the N488 per litre obtainable in Lagos, while it will be selling as high as N557 per litre in Maiduguri.
Also, the NNPCLtd, in a statement signed by its chief corporate communications officer, Garba Deen Muhammed, explained it was adjusting price upward “in line with current market realities,” adding that “prices will continue to fluctuate to reflect market dynamics.”
The development has, however, led to a sharp rise in the cost of transportation on the different routes as commercial cab drivers transfer the additional cost of petrol on passengers.
A report by Nairametrics, the Nigeria Extractive Industries Transparency Initiative (NEITI) disclosed that Nigeria spent N13.69 trillion ($74.39 billion) on fuel subsidies between 2005 and 2021.
Business Day in another report, stated that Buhari spent N11 trillion on fuel subsidy during his tenure as the president.
Passing the burden to drivers, riders
Owing to the recent fuel price increment, E-hailing drivers are now charging extra fees to meet up with their expenses and to make profit.
This is despite the recent fare increment by the ride-e-hailing companies, with its drivers like David saying that the benefits primarily go to the ride-hailing companies themselves.
He added that the commissions that the platforms charge have only increased to put more financial pressure on drivers and riders.
“The Bolt & Uber fare increment seems to benefit them more as their commissions have only gone higher. So the pain is for drivers and riders, while Bolt and Uber smile to the bank,” David said.
Why we charge higher fare than what’s shown on app – Drivers
Speaking on why the drivers seek additional charges apart from the one displayed on the app, David explained that drivers can’t drive on those rates as they do not gain from the figures.
He said, “In most cases, we can’t drive on those rates so we discuss with riders who seem to understand the situation. But for others who insist on the official rate, we advise them to cancel and try again and maybe, they will get someone who is desperate enough to drive on a loss. So, yes, we ask for more to maintain an air of sustainability, not profit.”
Ayomide, another e-hailing driver on the bolt platform, said he charged additional fares before and after the Bolt increased the price, stressing that Bolt’s adjustment is not “speaking reality.”
Ayomide said, “Of course, I seek an additional fee, because when you look at the first and second day and even the third day of this fuel price increment, Bolt didn’t do anything. And you don’t expect me to buy fuel at N540 and start using the same fuel to be picking riders for the same charges Bolt has been charging when the fuel was N194 per litre.”
The driver corroborated David’s allegation that the fare adjustment favours only the company itself and not the drivers.
“Now that they have adjusted their fares, the adjustment does not really reflect what is happening in reality. It is still not obtainable and profitable. They just have to do better.
“The adjustment they made is not even up to 50 per cent. A trip of N1,000 before was adjusted to about N1,200 or N1,300,” he said.
Likely impact on the ride-hailing business
There have been legitimate concerns that the ride-hailing service may experience a significant decline if the companies do not increase the commission to boost workers’ productivity, according to some drivers who spoke to The ICIR.
“This is the crazy part; demand for our service will drop drastically unless there’s an increment in wages to allow spending power.
“The business will fail in the sense that those who invest in cars for the business will stop, basically cutting their losses and moving into other trades and thereby shortening the number of cars in the industry, which will all together weaken the business.” David lamented.
The ICIR had reported that Bolt and Uber drivers’ union embarked on strike to protest against what they described as “low fare increase” that the ride-hailing companies approved.
The development followed the failure of ride-hailing companies to agree with the drivers’ demand for a 200 per cent hike in fares and a 50 per cent reduction in commission to level up with the recent hike in petrol pump price.
The union noted that the rate increase implemented by the app-based companies represented only 25 to 30 per cent, which according to the union, was far less than the 200 per cent hike demanded by members, in addition to a 50 per cent reduction in commission.
Ayomide said though he is still getting requests from riders, he bemoaned how it is affecting the drivers’ earnings.
According to him, “We are still getting more requests because the fares that Bolt has set are something riders can afford because they are still cheap. Customers will even prefer to park their cars at home. But when you look at drivers’ earnings, it’s seriously affecting drivers as they can no longer make profits.
“When you buy a fuel of N10,000, you have to work hard to gross N15,000. From that money, by the time you remove N10,000 for fuel, you are left with N5,000, and from that amount, Bolt is still charging its 20 per cent. Many drivers have stopped because there’s no way they can cope.”
I now work for fuel – driver
Richard, another e-hailing driver in Abuja, lamenting his plight regarding the fuel price hike, disclosed that he now “works for fuel, not even for myself.”
According to him, the recent development has affected his business as customers find it difficult to pay the high fare.
He said, “It has impacted my business very poorly. Customers are finding it hard to request based on high demand. Now, the number of ride requests I get a day is about five a day.”
Speaking on how he is adjusting to the situation, he said, “I try as much as possible to explain the price to them to take them to their destinations.”
His problem, he explained, is ameliorated by the fact that his car is fuel-efficient.
Sarah, another driver, told The ICIR, that she had taken a proactive approach in mitigating the effects of the fuel price hike.
Sarah, who plies the airport axis, said she adopted fuel-efficient driving techniques and regularly maintains her vehicle to optimise fuel consumption.
AUATWON’s position
In an interview with The ICIR, the Association of Uber and Taxify Workers of Nigeria (AUATWON), called for app companies (ride-hailing) to increase their fares by 200 per cent and reduce their commission by 50 per cent.
Additionally, AUATWON is pushing for a flat commission rate of 10 per cent and the implementation of collective bargaining rights for drivers.
The Vice President, North Central, Amalgamated Union of App-based Transport Workers of Nigeria (AUATWON), Anthony Ayodele, expressed members’ frustration over dwindling earnings, which he regretted have gone abysmally low.
According to Ayodele, the reduction in income has severely affected the livelihoods of drivers, leaving them with limited means of survival.
He hoped that riders would understand the weight of the current situation and accept the necessity for an increase in fares.
He also argued that the drivers’ union resorted to the strike measure as a means of securing their livelihoods amid the challenging circumstances.
He advocated for the implementation of collective bargaining rights, allowing AUTOWON to negotiate on behalf of the drivers.
“We are calling on the ride-hailing companies to embrace and implement our right to collective bargaining as a union,” Ayodele said.
Uber reacts, Bolt declines comments
The Country Manager for Uber in Nigeria, Tope Akinwunmi, in a statement addressed to The ICIR on the matter, noted that the June 2023 fare increase by the company was designed to help drivers mitigate the recent increase in fuel costs and not cover the entire cost of fuel.
”Following an in-depth review of the current fuel subsidy removal, Uber updated fares on the 3rd and 9th of June on the app to reflect existing economic conditions. We believe these changes have helped to support drivers in increasing their earning opportunities. Furthermore, we lowered the service fee in February 2022 from 25 per cent to 20 per cent to enable better earning opportunities for drivers,” Akinwunmi stated.
He explained that the service fee ensures the running of the Uber App, which comes out of Uber’s service fee from each fare.
Uber noted that the service fee also helps to maintain and make continuous investments to enhance its technology designed to meet the needs of riders and drivers.
“Uber takes into consideration the economic climate in rolling out any price reviews. We believe this fare increase will have a positive impact on driver earnings while maintaining an affordable service for riders. Where price options are made too high, there could be a risk of fewer or no requests from riders – meaning fewer or no earning opportunities for drivers,” Akinwunmi said.
The Bolt management in Nigeria failed to respond to The ICIR enquiry sent via email and also via social media messaging. Furthermore, calls were made to the phone number provided on the website, but it was not reachable. This is not the first time Bolt will decline to speak. In 2022 when The ICIR reached out to the company concerning drivers’ safety, they still did not respond. This was at a point when the mobility company was facing criticism concerning the security of drivers and riders. In a thread archived here, many commenters faulted Bolt for falling short – in terms of security compared to similar services.
