Nigeria has spent years telling the world that its population is its greatest economic advantage. More than 200 million people, a huge and youthful consumer market, rapidly growing cities and an endless list of needs waiting to be met. It is the kind of pitch that makes Nigeria sound impossible for serious businesses to ignore.
Uber has just given us a reason to look at that story a little differently.
After 12 years in Nigeria, the ride-hailing company has shut down its operations in the country. For a business whose fortunes depended on Nigerians moving around Nigerian cities, that is not a small development. And it is certainly not because Nigerians suddenly stopped needing rides. Lagos is still Lagos. Abuja is still Abuja. The roads are still full, the traffic is still there and millions of people still need to get from one place to another every day.
The irony is that nothing about Nigeria’s demand for transportation has changed. Nigerians still need to move around their cities every day, what has changed is Uber’s assessment of whether serving that demand remains commercially worthwhile.
Uber arrived in Nigeria in 2014 and gradually became part of everyday urban life. It offered something that was still relatively novel at the time: the ability to order a car from a phone, know the destination before getting in, see the driver’s details and have a record of the transaction. For many people, particularly in Lagos and Abuja, it became a normal part of getting around.
Twelve years later, the company has decided that its money and attention can be better deployed elsewhere. Uber has described the decision in terms of changing business priorities and investment focus, and its withdrawal is part of a wider reassessment of some of its African operations. There is no need to manufacture a political conspiracy around a corporate decision that the company itself has presented as strategic.
But there is also no reason to pretend that the Nigerian economy is irrelevant to the story.
The economics of transporting Nigerians have changed dramatically since Uber arrived. The cost of fuel has risen sharply. Vehicles and spare parts are more expensive. Maintenance costs more. Inflation has eaten into incomes. The naira’s volatility makes imported inputs harder to price. A driver who once looked at a particular fare and saw a worthwhile trip may now calculate the fuel, traffic, vehicle wear and opportunity cost and arrive at a very different answer.
The passenger is doing his own calculation.
A ride that is technically affordable may no longer feel affordable when the same person’s income is also being stretched by food, rent, school fees, electricity and other necessities. The driver wants a higher fare because his costs have risen; the passenger wants a lower fare because his purchasing power has fallen. The platform has to keep both sides of the market functioning while running a business of its own.
That is a difficult triangle to sustain.
And it exposes something we do not always like to admit about the famous Nigerian “consumer market.”
We have millions of consumers. But having millions of people is not the same thing as having millions of people with money to spend.
Population is potential. Purchasing power is the reality.
For years, the number 200 million has been used almost as shorthand for Nigeria’s economic promise. Investors are told to look at the population and imagine the possibilities. But a company cannot pay its staff with population figures. It cannot buy fuel with demographic projections. It cannot maintain vehicles with the promise of a future middle class.
At some point, the people have to be able to afford the product.
That is where the Nigerian contradiction becomes particularly striking.
We have enormous demand, but much of that demand is being squeezed by the rising cost of simply staying alive. People still need transportation, but they have less room in their budgets to pay for it. Businesses still have customers, but those customers are increasingly sensitive to price. The business then has two choices,charge more and risk losing customers, or keep prices down and absorb costs that may eventually make the business unsustainable.
Uber is not unique in facing this problem. It is simply a particularly visible example because its business model puts the entire contradiction on display.
The driver feels the cost of the economy every time he buys fuel or repairs his car. The passenger feels it every time he opens the app and sees a fare he considers too high. The company feels it in the cost of operating in an economy where the value of money and the cost of inputs can change quickly.
Everyone is trying to make the same journey through an economy that has become more expensive.
And someone eventually has to pay for the difference.
This is also why it would be too convenient to reduce Uber’s departure to competition from Bolt or inDrive. Competition is normal. Uber competes in markets all over the world. The more important issue is whether the Nigerian market offers the combination of scale, purchasing power and operating conditions that makes the competition worth fighting over.
That is a different question.
It is possible to have a very large market that is not particularly profitable.
That may be one of the most important economic lessons in Uber’s departure.
Nigeria has often approached investment as though attracting companies were the main achievement. We celebrate announcements, ribbon-cuttings and market entries. We talk about the size of the opportunity and the number of jobs an investment could create.
But the harder question is what happens after the honeymoon.
Can the company still make money when inflation rises? Can it plan when the currency is unstable? Can it absorb higher energy and logistics costs? Can its customers continue to afford what it sells? Can it compete without constantly cutting prices? Can it see enough stability ahead to justify putting more capital into the country?
Those are the questions that determine whether an investor stays.
And governments have a role in answering them.
This does not mean blaming the Nigerian government for every company that leaves. Uber has not said that it was driven out by the government, and its decision should not be turned into evidence for an argument the company itself has not made.
But government policy shapes the environment in which businesses make their calculations. Fuel pricing, taxation, foreign exchange, infrastructure, regulation, security, energy and the broader cost of living all eventually find their way into the price of a product or service.
A government may not see itself in the fare displayed on a customer’s phone.
A government may not see itself in the fare displayed on a customer’s phone, but its policies can still be sitting inside that fare. When fuel becomes more expensive, the driver passes some of the increase into his calculation. When the naira weakens, imported parts and equipment become more expensive. When inflation erodes household income, the passenger becomes more reluctant to pay. Eventually, all of those pressures meet in the price of the service.
That is the part of economic policy that is sometimes missed when discussions become abstract. Inflation is not merely a percentage in a report. It is the difference between a trip that makes sense for a driver and one that does not. Currency instability is not merely a line in an economic briefing. It is part of the cost of replacing a vehicle component. Declining purchasing power is not merely a statistic. It is the customer looking at a fare and deciding to stay home.
That is how macroeconomics eventually becomes someone’s everyday life.
Uber’s exit should therefore not be treated as either a national disaster or a political victory. Nigerians will find other ways to move around. Other companies will take advantage of the space Uber has left behind. The market will continue.
But we should not miss what the departure tells us.
Nigeria’s population remains enormous. Our cities remain crowded. Our transportation needs remain massive. The opportunity has not disappeared.
What has become harder is converting that opportunity into a business that works.
That is a much more serious problem.
Because if our selling point to investors is always that Nigeria has more than 200 million people, we should also be asking what those 200 million people can afford, what it costs businesses to serve them and what kind of economic environment allows both sides of the transaction to prosper.
Otherwise, we are selling investors the size of the Nigerian market without telling them the price of reaching it.
Uber stayed for twelve years. That is not a trivial contribution, and its departure does not mean that Nigeria is somehow closed for business. But neither should we wave it away as just another multinational changing strategy.
A company that built a business around the daily movement of Nigerians has looked at the market, looked at the costs and made a decision about where its capital can do better.
That decision belongs to Uber.
The lesson belongs to Nigeria.
We have been very proud of having more than 200 million people. Perhaps it is time to become equally concerned about whether those people have enough purchasing power to make the market as attractive as our population figures suggest.
Because 200 million people may make Nigeria a big country. It does not, by itself, make Nigeria a big market.
And Uber’s departure has just made that distinction impossible to ignore.
Stephanie Shaakaa shaakaastephanie02@gmail.com
08034861434
