Rise in Fuel Prices in Nigeria and Its Effect on Struggling Driver Workers in the Gig Economy
In the bustling city of Lagos, a change is underway. With the recent increase in fuel prices by 40%, the pump price now stands at approximately ₦897 per liter. This significant hike, marking the second such increase since May 2023, is causing ripples throughout the gig economy, particularly among ride-hailing drivers.
One product designer based in Lagos has shared that they now rely on public transportation for shorter trips and use Uber for long distances. This shift is a response to the increased fuel costs, which have made driving for ride-hailing services less financially viable.
Gig drivers are facing rising maintenance costs due to record inflation-headline inflation accelerated to 34.19% in June 2024. To counteract these financial challenges, drivers are adopting various strategies. Some have stopped accepting rides that pay less than ₦1,500 or ₦2,000. Others are advocating for fare increases to meet their daily targets and qualify for bonuses from ride-hailing companies.
The drivers' strategies include warning strikes, discussions with ride-hailing companies, and conversations with government officials. However, an increase in tension between gig drivers and ride-hailing companies is likely over the coming months due to the unavoidable price increase.
Ride services, such as Bolt, Uber, and InDrive, are cautious about substantial price increases due to strained incomes in Nigeria. If ride-hailing companies fail to raise fares, drivers may become frustrated with the platform. Yet, the feasibility of lowering the commission margin to 10% for ride-hailing companies is uncertain.
In response to the financial losses due to rising fuel costs, gig companies have asked drivers to reduce their ride service fees from about 25% to 10%. However, the driver explained that ride-hailing companies cannot expect drivers to generate profits while maintaining low fares.
A similar scenario unfolded in Kenya, where drivers began to set their own ride prices. As the situation continues to evolve in Nigeria, it remains to be seen how both gig drivers and ride-hailing companies will navigate these challenging macroeconomic conditions.
Uber did not provide an immediate response to a request for comments. The future of the ride-hailing industry in Nigeria hangs in the balance, as both parties strive to find a solution that ensures the sustainability of the gig economy in the face of rising fuel prices.
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