PROBLEMS AND PROSPECTS OF E-HAILING BUSINESS IN NIGERIA: A CASE STUDY OF UBER

CHAPTER ONE

INTRODUCTION

1.1       Background of the study

The advent of globalization and rapid technological advancements have resulted in significant global transformations including the transport industry. Consequently, business entities are compelled to develop ongoing strategies and innovative concepts to gain a competitive advantage over rivals. Moreover, these strategies must align with international best practices in order to ensure long-term sustainability (Joan & Ramon, 2019). Contemporary organizations are currently facing several environmental consequences, including rapid technology disruptions, heightened demands for privatization, and increasing hazards associated with globalization (Osseini; Mehdizadeh & Soltani, 2018).

Evidently, the urban public transport systems in Nigerian cities have seen significant transformation from 1900 to 2020. In Nigerian cities, the prevalent modes of public transportation have historically included commercial buses, commonly referred to as "danfo," and automobiles known as "taxis," both of which are characterised by their distinctive yellow colour. Additionally, the ramshackle "molue" has also been a prominent fixture in the urban transportation landscape. Prior to the emergence of ride-hailing applications, accessing transportation was often a challenging task. In order to get transportation, passengers were required to either signal for taxis on the roadside or proceed to the nearest designated taxi station (Omilana, 2020a). According to Dickenson (2018), the advent of e-hailing services has begun to assume a significant role in facilitating the transportation of products and individuals throughout various Nigerian urban areas.  By definition, E-hailing pertains to the act of requesting a vehicle, such as a car, taxi, or any other means of transportation, through the use of a computer or mobile device. The term 'E' in this context denotes 'electronic', while 'hail' signifies the conventional practise of notifying a taxi cab to halt. In order to reserve an electronic ride, it is necessary for the client to specify their pick-up location. This information may be supplied by either inputting their address manually or by utilising GPS connection to determine their present position. These applications are jointly developed by automobile service providers and application start-up companies. Several widely used electronic cab hailing services include Ola, Uber, Taxi For Sure, and Meru Cabs, among others. The proliferation of smart phones and improved internet access has facilitated the Cab Aggregators in expanding their market reach, resulting in an expansion of their client base.  The e-hailing services encompass many modes of transportation, including cars, tricycles, and motorcycles, with each mode being operated by separate fleet owners. The primary function of the e-hailing platform is to facilitate the connection between individual drivers and prospective passengers ( Dickenson 2018).

Notably, the exponential growth of e-hailing services in Nigeria's main cities may be attributed to the country's inadequate public transit infrastructure, large population, and increasing urbanization. Since 2014, the number of e-hailing operators has increased from two (2) to twenty-six (26). According to Statisca (2029), it is projected that the digital ridehailing or e-hailing industry in the nation would create around USD 292 million in revenue by the conclusion of 2020. Furthermore, this market is anticipated to include 15% of the African continent's e-hailing user base, which amounts to 48.6 million individuals. Since its inception in 2014, ride-sharing platforms have significantly enhanced the comfort and convenience of urban transportation for Nigerian citizens. Currently, Nigeria possesses a demographic dividend characterised by individuals who possess a high capacity for adapting to modern technologies. In order to fully exploit this market, it is imperative that more participants enter with a mindset focused on fostering healthy competition while also review the problems that hinder the successful implementation of the e-hailing business model.

1.2       Statement of the problem

In recent years, the e-hailing ride-sharing industry in Nigeria has faced significant challenges due to government regulations that pose a substantial risk to the survival and even elimination of market participants. According to Uber, there has been a consistent growth in total demand in Nigeria. This growth may be attributed to the implementation of effective and cost-efficient tactics by the company to address the prevalent needs of customers in a highly competitive sector (Clayton; Dillon; Hall & Duncan, 2016). The company utilizes mobile taxi applications, which have shown a significant growth in Lagos State and Federal Capital Territory Abuja (Uber Technology, 2016a).

According to Johnson, Dunn, and Sack (2020), e-hailing mobility services in Nigerian cities,  has distinct problems, particularly because to the ongoing uncertainty surrounding the legal environment. The initial endeavours to establish regulations for the ride-hailing business have engendered significant controversy, resulting in strained relationships between service providers and regulatory bodies within urban areas of Nigeria. Moreover, Benjamin (2020) highlighted that instances have been documented were authorities affiliated with the National Union of Road Transport Workers (NURTW) obstructed some e-hailing mobility service providers from halting for passenger pickups at specific bus terminals situated along their designated routes. In contrast, Omilana (2020b) has observed that discrepancies in regulatory measures for traditional taxi cabs and e-hailing operators have led to increased tensions. The government's suggested licencing prerequisites and the proposed imposition of a 10% tax on e-hailing trip transactions are anticipated to exert substantial strain on the viability of e-hailing business models and the economic well-being of riders. Instances of automobile theft, kidnapping, and fatalities involving drivers and passengers have been documented. Oseni (2021) has identified other problems, such as the problem of unreliable internet access during the initiation and effective completion of an e-hailing transaction. The prevalence of internet fraud has resulted in a reluctance among a majority of drivers to utilise their online mobile banking applications for making payments for e-hailing services. Instead, they choose for cash payments, so undermining the potential of e-hailing services to contribute to the advancement of smart city initiatives.

While there is existing literature on the influence of online technology on transportation services, there is a lack of research specifically focused on the issues and opportunities of e-hailing company in Nigeria, utilizing Uber as a case study.

1.3       Objective of the Study

The  objectives of  this is focused on problems and prospects of e-hailing business in Nigeria: a case study of Uber.  The specific objectives is focused on:

i.          To investigate the mode of operation of e-hailing mobility platforms in Nigeria's cities?

ii.        To ascertain the issues with e-hailing mobility services in Nigerian cities

iii.      To determine the opportunities for sustaining e-hailing mobility services in Nigerian cities

1.4       Research Questions

iv.      What is the mode of operation of e-hailing mobility platforms in Nigeria's cities?

v.        What the problems with e-hailing mobility services in Nigerian cities?

vi.      What are the opportunities for sustaining e-hailing mobility services in Nigerian cities?

1.5 Research Hypotheses

Ho: There are no problems associated with e-hailing business in Nigeria: a case study of Uber.

Hi: There are problems associated with e-hailing business in Nigeria: a case study of Uber.

1.6       Significance of the study

There is requirement of sound and futuristic regulatory framework which would lead to better development of the cab hiring economy. Presently, there are no clear guidelines for consumers as whom to approach in case of any fraud happening to them. If there are proper rules and regulations in place, it will encourage more people to use e-hailing applications. Findings of this study will advocates the development of a comprehensive policy to address all of these issues because they are shared by each state government in Nigeria. Cab aggregators by the findings of this study can collaborate with insurance companies so as to take care of the security concerns of the riders. Both life insurance and general insurance can be offered as per the need and choice of the consumers.

 Empirically the study will add to the general body of knowledge and serve as a reference material to scholars and student who wishes to conduct further studies on related field.

1.7 Scope of the Study

The scope of this study borders on problems and prospects of e-hailing business in Nigeria: a case study of Uber.  The study further discussed  the mode of operation of e-hailing mobility platforms in Nigeria's cities, ascertain the issues with e-hailing mobility services in Nigerian cities and determine the opportunities for sustaining e-hailing mobility services in Nigerian cities. The study is however delimited to Uber, Lagos State.

1.8 Limitation of the Study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing that it is a new discourse thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. Additionally, the researcher will simultaneously engage in this study with other academic work. However in spite of the constraint all these constraint were downplayed to give the best.

1.9       Definition of terms

E-hailing: E-hailing refers to the process of ordering a car, taxi or any other mode of transportation by way of computer or mobile device.

Uber: Uber Technology Inc is a ride-sharing transportation firm that was introduced in Nigeria in the year 2014.