Ride-hailing: Uber says industry guidelines are inconsistent, unclear

Few days after the Lagos State Government announced a new guideline designed for ride-hailing operations in the state, one of the major operators, Uber, has picked holes in the guideline.

While the ride-hailing firm admitted that it is the responsibility of the government to regulate the industry and ensure operational allignment, it stated that such regulations are expected to support innovative technology ideas that fit the 21st-century businesses.

This was disclosed by a spokesperson for Uber, who replied Nairametrics’ emailed enquiry but pleaded anonymity.

The Backstory: Under the new regulatory framework by the state which will take effect from August 20, 2020, ride-sharing companies would be required to pay the Lagos State Government a 10% service tax on each transaction. Part of the framework said:

“Operators must also pay a provisional license of N10,000,000.00 for every 1000 cars in their unit and N25,000,000.00 for every unit above 1000 cars.

“Annual renewal of the license would cost N5,000,000.00 for every unit of 1000 cars and N10,000,000.00 for units with over a thousand cars in operations.”

The Lagos State Government also demands access to operational database for any ride-sharing company operating in the state.

Under section 3.11 of the guidelines, Lagos State also proposes that vehicle owners must, amongst other things:

State of Vehicles to use: Where the vehicle is not new, the vehicle must be within the first three (3) years of its manufacture as specified by the manufacturer.

In their response, Uber’s spokesperson said:

“We have always been willing to engage with governments on regulations to ensure our operations align with best practices locally and internationally, as we believe regulations need to support innovative technology ideas that fit 21st-century businesses.

“The current proposed regulations are inconsistent and unclear. We are working to better understand how they will impact the future of our business and network of driver-partners. We will give an update in due course.”

What it means: If the guideline is implemented, riders may have to pay more for services rendered by the ride-hailing firms, as the companies may increase the fares to keep their heads above water.

On the type of vehicles allowed to operate by the guideline, several drivers and car owners may be frustrated out of business, a development that may push up the unemployment rate in the state.

Note that most of the operators currently allow vehicles manufactured as late as 2004 in their fleets. But with the new directive, any vehicle manufactured earlier than 2017 would not be allowed to operate in the state.

This means drivers that would be frustrated out of business will join the teeming unemployed residents in the state at a time the nation’s economy is expected to contract in 2020.

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