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The News Uber was paying Nigerian drivers more than it charged passengers for some short trips, an unsustainable subsidy that played a leading role in the US ride-hailing giant’s abrupt exit this month, according to a new report based on thousands of Uber trips. The company quit Nigeria and Uganda on Sept. 2, the same day it announced a global restructuring decision that cut 10% of its staff globally. It still operates in four African countries including South Africa and Kenya. Even after 12 years of operating in Nigeria, Uber did not have a large enough number of active passengers there and high inflation and currency depreciation made passengers increasingly price sensitive, according to a report by Obi, a California-based price and trip data aggregator that tracks more than half-dozen ride hailing platforms. “It’s obvious that demand [in Nigeria] was low and that the political and economic climate wasn’t helping,” Ashwini Anburajan, CEO of Obi, told Semafor. “Pay had to be subsidized to make drivers willing to take rides. There was just no way for Uber to dig itself out of this pattern,” Anburajan said. Her firm’s data suggests that Uber paid Nigerian drivers more than it charged passengers on trips shorter than 12 miles (20 km). In some cases, the company paid drivers 23% more than the passenger was actually charged. Though the company adjusted this pattern above the 12-mile threshold, it amounted to an “over-generous” subsidy scheme for short rides that drivers would not have otherwise accepted, an approach that Uber’s in-country rivals like InDrive did not resort to, Obi said. A typical Uber driver in Nigeria averaged 130 rides over the first seven months of 2026, but that was just over a tenth of the volume of rides the company’s drivers in South Africa fulfilled over the same period, the report first shared with Semafor showed. Yet, Nigerian drivers kept a larger share of the fare paid by passengers compared to their counterparts in South Africa, the firm said. Its report is based on data from more than 20,000 rides completed by more than 300 drivers within the period on Uber and InDrive, a Russian-founded US company that also operates in Nigeria. In this article: Step Back Uber’s arrival in Nigeria in 2014 heralded a taxi revolution after a couple handful of startups attempted ride-hailing services in Lagos with little success. The company rode in aggressively with more than a billion dollars in investor capital to upstage the city’s often rickety yellow cabs, promising technology-aided transport efficiency to passengers and dependable income to drivers. This month’s decision to pull out came after several attempts to stay relevant, from floating courier services and boat taxis, to multiple fare rises implemented to reflect higher costs of doing business following economic policy changes that have been rolled out since 2023. Fuel prices have risen more than five-fold in Nigeria since the end of a government fuel subsidy scheme, and the naira currency has depreciated by more than 70% in that period, a combination that depresses net incomes both for drivers and transport companies. Some Nigeria analysts have cited a “challenging macroeconomic environment” as the root cause of Uber’s exit as more expensive taxis became less preferred to relatively cheaper alternatives like buses, tricycles and motorcycles. Know More InDrive and Estonian company Bolt were Uber’s main Nigeria competitors and are now the main beneficiaries of the latter’s exit. Their ability to tweak parts of their operations to local sensibilities — like InDrive’s bargaining feature, and Bolt’s flexibility with trip cancellation, car models and payment options — diminished the advantages Uber had gained from a two-year headstart, some analysts have argued. Bolt, which pushed into offering three-wheeled taxis outside of Lagos, had won 60% of Nigeria market share by the time of Uber’s exit, Obi said. Active Nigerian users reached 3.3 million last December, more than six times that of Uber, according to Sensor Tower, a California-based app usage tracker. Anburajan agrees with the view that localization may have helped Uber. “Keeping your business model and experience for users and drivers relatively uniform across markets can work if your target riders are international travelers who will place value on an experience that’s the same from one country to the next,” she said. Ride-hailing will remain compelling and competitive in Africa for companies with “an approach that works for locals,” she said. Ultimately, though, size does not equal a large opportunity. The upshot of Obi’s report is that there is simply no scale for Uber to absorb losses that must inevitably result from “a bad combination” of low per-driver volume and a per-ride subsidy. “A platform that has to raise prices by 71% and still needs to subsidize a large share of its rides is in a structural hole it can’t price its way out of.” Room for Disagreement Some analysis of Uber’s exit blames the company for undercutting Nigerian drivers through unilateral fare cuts, prompting the drivers to revolt and port to rivals like Bolt. On the other hand, the exit may be due to a shift in long-term priorities. CEO Dara Khosrowshahi said the 10% cut to the company’s global staff was about “focusing our people and investments against the biggest opportunities ahead of us.” That has been widely interpreted as reflecting Uber’s increasing shift towards self-driving taxis, evidenced by the company’s rollout of 15 robotaxis in London after the headcount cut. It is a line of business that is not yet viable in most African cities due to under-developed road networks and other factors. Notable - Uber’s Nigeria exit and overall experience in Africa “undercuts the assumption that U.S. technology companies will inevitably dominate every market they enter,” Onyeka Aralu, a competition fellow at the International Center for Law & Economics in Oregon, argues.
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