NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, September 3, 2015

Uber Technologies Inc. is negotiating cheaper deals for new vehicles with Kia Motors Corp. to boost its number of drivers fivefold in the Nigerian city of Lagos, Africa’s biggest, to 3,000 by the end of next year.

The U.S. car-booking company has signed agreements with the South Korean carmaker and Lagos-based Access Bank Plc to reduce the down payment required for new vehicles to 95,000 naira ($477) from almost 200,000 naira, with the balance payable over four years, Alon Lits, Uber’s general manager for sub-Saharan Africa, said in an interview in Lagos on Aug. 28.

“Since we launched in Lagos just over a year ago, more than 600 job opportunities have been created using the application,” Lits said. “That’s really just the beginning. We feel that the number can be well over 3,000 by the end of 2016.”

Uber, which connects drivers with passengers via its smartphone application in more than 300 cities, is seeking partnerships that will reduce costs for new drivers as the San Francisco-based company expands in Africa, Lits said. Founded in 2009, Uber doesn’t own vehicles or employ drivers, and existing taxi companies in cities including Paris, Moscow and Johannesburg have protested at what they consider to be unfair competition.

Poor Mapping

Challenges facing Uber in Lagos, the first sub-Saharan African city to have the service outside South Africa, include congested traffic and poor mapping quality, according to Lits. Another is that a relatively small proportion of Nigerians know how to operate a smartphone well enough to manage the trips, Ebi Atawodi, general manager for Uber Lagos, said in the same interview.