Permit me to start with a confession – I was a late adopter of Uber. The reason is simple – I am not a techy person and I have always been a late adopter of any new technological developments. More so, I rarely require taxi services, but on the few occasions that I have (before Uber), I have found the Nigerian taxi set up and environment frustrating.
So, for a little while, I have been enjoying Uber services, whenever I use them. But last week, I had a very interesting discussion with one of their drivers. The discussion started with my frustration at what I call our refusal to seek to make the right changes until they are forced on us. I have often been frustrated by the sheer scale of the informal sector in the Nigerian economy. I believe the scale of that sector does not serve the Nigerian economy, nor the Nigerian people, including those engaged in it, well. I believe the scale of the informal sector means that millions of talented people, and their labour are being wasted. I also believe that it provides little room for growth in productivity. So, on our journey to the Island, from the Mainland in Lagos, I expressed my frustration that, neither the state government, nor the federal government, have been able to direct Nigeria’s vast economic activities away from the informal sector. While this time, the point was made in relation to the litter of small shops everywhere in Lagos, mind you, it is worse in Ibadan, where I grew up, it triggered one of the most basic economics discussion with a non economist.
In response, he said that its impossible and difficult because that is what the people have always known. Then I started with my arguments. First, the statement “its what people have always known, always done” is a resistant statement. It is said everyday in every circumstance to justify a refusal to make progress. However, I argued that there is nowhere that changes have come easy, and that I blame successive government for refusing to show Nigerians a better way. Foreign businesses, such as Uber, have been able to bring about positive changes that Nigerian government has failed to implement.
After my initial arguments on the process of real change (not the one advocated by APC), he agreed that I was right and then went on to describe how he joined Uber. Now, follow how technology and its adoption disrupts established economic dynamics, lowers costs, improves productivity, create jobs, and better lives.
According to him, a few years ago, he was a “car hire” service man, operating from Lekki, but lives in Orile, a distance of about 30 kilometres. He said he would normally leave Orile early on a Monday morning for Lekki, would work for about five days and return to Orile during the weekends. During the week, while working in Lekki, he would sleep in the vehicle every night and wake up as early as 4am to freshen up for the day. But what I found very interesting is that, because it was a hire service, he and his colleagues would take turns and were rarely busy. Also, as would be expected the fares were relatively high, targeting only the well-off people in the Lekki axis. He and his colleagues maintained this routine for many years until Uber came.
When Uber came, he told me, their economic activities started to decline, but it took a while for them to notice it, and then trace the cause. But eventually they did. Initially, they were very dismissive of Uber. They argued that it would close and leave Lagos within six months, since it was not sustainable. They also argued that Uber was all about the hype, and would soon realise that Nigeria is not ready for them. But few weeks after continuous condemnation of Uber, one of them joined. They called him to ask why he was no longer coming to the park, and he told them he had joined Uber. Few weeks after, he (my Uber driver) was convinced to make enquiries and, as they often say, the rest is history.
Now, there is resistance to Uber everywhere, even in developed countries, but I will like to focus on Nigeria. Prior to Uber, there were serious issues with Nigeria’s taxi business that made it easy for Uber to quickly assume a major role.
First, Uber removes the haggling side of Nigeria’s taxi business. I have always found this bit very frustrating. Indeed, it usually gets so bad because in a place like Lagos, the driver will want to change fares midway, perhaps thinking he had originally been short changed. This creates uncertainty for the passenger. Tied to this is that Uber allows you to pay with your card and therefore in most cases, reduces the need to hold cash. But most importantly, the platform, by providing connection between drivers and passengers, reduces what we economists call “search costs”, in this case, the time both spend looking for each other.
More importantly, before Uber, taxi drivers were idle most of the time. This drives the economics of the taxi industry. In order to pay for their long periods of idleness, taxi drivers often charged the few customers that they were able to get higher prices, even though their vehicles are without air-conditioning, sometimes dirty, and passengers often feel uncomfortable. Uber has made it possible for drivers to utilize their time more efficiently, which allows them to charge passengers less by providing scale. Of course, there is still significant resistance, especially at the Abuja airport, where it is not unusual for the drivers to make one trip in two days. The model is weak.
In conclusion, we can change things in this country, we can change our environment, and we can certainly change our approaches to business and technology. This will bring benefits to the country and its people. Just ask my Uber driver, who now goes home everyday to see his family, while making more money than he did few years ago.
I thank you.