Ridesharing is one of the most lucrative businesses in Nigeria currently. Most young men/women are opting out of white-collar jobs to start their ride-sharing businesses. The average ride-sharer in Nigeria earns (N250,000/$357) monthly which when compared with the supposed minimum (N35,000/$50), is significant, especially for most middle-class homes.
However, there is also a large exit away from the ridesharing business. Most riders opt out barely a year after starting. There are so many reasons for this mass exit and I will be exploring some of them in this post.
The first and major reason is the high cost of entry. A decent vehicle for ridesharing will cost an average of N2,500,00/$ 3750. There are cheaper options but most will make your visit to your mechanic more frequent. Most individuals in Nigeria cannot afford this amount so they opt for car loans which double the starting capital. There are numerous stories of people taking 4 years car loans of up to N5,000,000/$7500. Many such individuals never repay the car loan in full, hence cars were taken away from them with no compensation.
There is also the cost of doing business. This includes (daily) operational and maintenance costs. Most ride-sharing platforms (like Uber and Bolt) charge about 25% on each ride (which is unreasonable in my opinion). If you also factor in the cost of petrol, most riders are usually left with less than 50% of their daily generated revenue. The remaining 50% is shared between maintenance costs (which in most cases takes up the entire 50%), saving, and miscellaneous costs.
Another major bottleneck to the ride-share business in Nigeria is the road safety officials and the police. They extort and harass drivers daily, which adds to the cost of doing business. To avoid these officials have your complete car documents and be watchful of the roads. As a new driver, it is almost impossible to avoid these individuals, however, your daily interactions with them will give you a better understanding of how things work.
The final and possibly the least irritating aspect of the ride-sharing business is the customers. The ridesharing business is structured in a way that prioritizes the riders over the drivers, and many riders exploit this loophole. There are instances where riders abuse drivers and little is do compensate the driver. To manage difficult situations with customers, you need to work on your interpersonal skills. Also, keep your ego aside, you are in the business of serving people.
Driving in Lagos or anywhere in Nigeria is an extreme sport. Those who can do it long-term have a high threshold for pain/frustration because it takes a toll on your physical and mental health. This is why many opt out after a few months in the business.
However, despite the many bottlenecks, the rideshare business is still very much lucrative and fun. Drivers get to make decent money working at their convenience. There is also the opportunity of meeting new people and discover new places. To have a successful business you have to formulate strategies that help you mitigate some of these bottlenecks
In my next posts, I will discuss some of the DOs and DONTs in the ridesharing business.