After two months of persistent fuel scarcity and a recent acknowledgement by the national petroleum corporation that its finances are under strain, Nigeria has adjusted fuel prices by 40%. Across several fuel stations in Lagos, the pump price was around ₦897 per litre, up from ₦610 on Monday.
It is the second major fuel increase for a country that tried to end costly fuel subsidies in May 2023 when prices tripled from around ₦200 per litre. A second fuel hike in over a year will raise operating costs for last-mile delivery companies and food delivery businesses. Gig drivers, who have endured a tough year, will be among the worst hit.
Unlike last-mile and food delivery companies that pass on costs to customers, gig drivers do not set their prices. And cabs, still largely considered a luxury for most Nigerians, may experience softer demand if price increases are passed on to customers.
Ride-hailing companies like Bolt, Uber, and InDrive, which use algorithms to set prices, are wary of steep price increases in a country where incomes are already under pressure.
Uber did not immediately respond to a request for comments.
“I now use public transportation and Uber when I am going on long distances and public transportation when I am going on short distances,” a product designer in Lagos told TechCabal.
As customers adjust, gig drivers who face increasing maintenance costs because of record inflation—headline inflation quickened to 34.19% in June 2024—are also becoming pragmatic.
“It got to a stage when any ride that comes in for ₦1,500 or ₦2,000, I don’t attend to them because I know what I go through to get fuel,” a gig driver who asked not to be named told TechCabal.
Beyond pragmatism, gig drivers, who often have to meet daily targets to earn bonuses from ride-hailing companies, have asked for fare increases. Warning strikes, dialogues with ride-hailing companies and conversations with the government have been part of their strategies to force fare increases.
They also want these companies to reduce their commission on driver earnings from around 25% to 10%. It is unclear if that margin works for the companies. A similar situation happened in Kenya, where drivers began to impose their ride prices.
“They have to adjust their prices because they cannot expect drivers to make money for them and expect them to make low prices. If they don’t increase fares, the drivers will frustrate the platform”, a gig driver told TechCabal.
The drivers and their partner companies are locked in this delicate balance, with each weakened by Nigeria’s poor macroeconomic condition. While a price increase looks inevitable, it is unlikely to improve the drivers’ fortunes. If anything, the most likely outcome is more friction between gig drivers and ride-hailing companies for the next few months.
*Additional reporting by Muktar Oladunmade
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