When Uber, a ride-hailing company, arrived in Lagos in 2014, booking a car with a phone was still a novelty. The company was selling more than a ride. It was selling convenience in a city where getting from one part of Lagos to another could be an exhausting exercise in negotiation, traffic and uncertainty.

Two years later, Uber had expanded to Abuja, and its service gradually became part of everyday life in Nigeria’s major cities. It helped establish a new way of moving around the country, where a passenger could request a car, see the fare and track the driver without standing by the roadside looking for a taxi.

But over the years, another side of the business emerged. Drivers and passengers discovered that once an app had introduced them to each other, they did not necessarily need the app for their next journey. In 2021, drivers told Nairametrics that high commissions were encouraging some of them to build relationships with passengers outside Uber and Bolt, allowing them to avoid platform fees.

Uber has not said this was the reason it left Nigeria. On September 2, 2026, the company announced that it was winding down its Nigerian operations after a review of its business, citing evolving priorities and its investment focus across Africa. It also exited Uganda.

The ride-hailing is not the whole business

The economics of ride-hailing are more complicated than putting passengers in cars.

Platforms have to recruit drivers, attract riders, maintain technology, process payments, provide customer support and invest in safety and other infrastructure. Drivers, meanwhile, carry the biggest physical costs of the business: the car, fuel, maintenance, tyres, insurance and their time. The platform takes a percentage of the fare for bringing both sides together. That commission is where the relationship can become uncomfortable.

For a driver struggling with fuel and maintenance costs, giving a portion of every fare to an app can feel expensive. Going offline with a passenger he already knows eliminates that deduction. For the passenger, a direct arrangement can also mean a cheaper journey.

The incentive is therefore obvious: once trust has been established between driver and passenger, both sides have a reason to ask whether they still need the middleman.

Nigeria’s answer has been to change the ride-hailing model

The companies that remain in the market have taken different approaches to the problem. inDrive has perhaps made the most interesting adjustment by recognising one of the most familiar features of Nigerian commerce: negotiation.

Instead of presenting the fare as a largely fixed price, inDrive allows passengers to propose a price and drivers to accept, reject or counter the offer. The negotiation takes place inside the platform, meaning the driver does not necessarily have to take the passenger offline simply because the original fare does not work for him.

That model has helped distinguish inDrive from competitors such as Uber and Bolt. The company has also positioned its relatively low commission as an advantage for drivers, arguing that they retain more of their earnings while having greater control over fares.

There is an important commercial idea behind this. Nigeria already has a culture of bargaining. By putting that bargaining inside the app, inDrive turns something that could undermine the platform into part of the platform’s product.

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The company still has to deal with drivers and passengers attempting to circumvent the system, but the basic incentive is different. The driver has room to negotiate without necessarily abandoning the marketplace that brought the passenger to him.

LagRide has taken almost the opposite approach. The Lagos-backed platform has sought to keep transactions within its system through strict enforcement. Drivers who take passengers offline can face serious sanctions, including the possibility of having their vehicles impounded. Management has repeatedly warned drivers against collecting cash directly from passengers or encouraging them to bypass the app.

The approach reflects a different understanding of the problem. If the platform is going to work, the transaction has to remain on the platform. But enforcement alone cannot eliminate the underlying incentive.

Drivers who believe they can earn more by taking passengers offline will continue to have a reason to try. That means platforms ultimately have to balance enforcement with fares and commissions that make staying inside the system worthwhile.

The market Uber leaves behind

That is what makes Uber’s exit particularly interesting. Nigeria’s ride-hailing market has not disappeared. Nigerians still need to move around Lagos, Abuja, Port Harcourt, Ibadan and other cities. The demand that Uber spent 12 years building has not gone with it.

Its competitors now have an opportunity to absorb some of those riders and drivers. But they are also inheriting the same difficult economics.

The companies must keep fares affordable enough for passengers while ensuring that drivers earn enough to remain active. They must prevent offline transactions without making drivers feel excessively restricted. And they must convince passengers that the security, convenience and accountability of staying on the platform are worth whatever premium they pay.

That last point may become increasingly important.

A direct arrangement between a driver and passenger can appear cheaper, but it also removes many of the protections and conveniences that platforms provide. There is no app record of the trip, no formal mechanism for resolving a dispute and potentially no platform accountability if something goes wrong.

For the companies, keeping the transaction online is therefore not simply about collecting commission. It is about preserving the entire business model. Uber’s 12 years in Nigeria helped prove that Nigerians would embrace app-based transportation. Its departure does not change that. What it does change is the competitive landscape.

Cynthia Nwanonyiri