Ride-Hailing Vehicle Financing Platforms Are Facing A Bumpy Road In Nigeria

A shadow looms over the promise of vehicle financing initiatives designed to empower drivers in Nigeria's bustling ride-hailing industry. The rent-to-own model, spearheaded by companies like Moove and LagRide, heralded as a beacon of empowerment, now faces scrutiny and criticism.

It emerged recently that LagRide, an e-hailing platform backed by the Lagos State Government that is wholly based on vehicles distributed to drivers/partners on hire-purchase agreements that some perceive as repressive, was mired in a debacle involving the repossession of 21 vehicles from a partner.

LagRide, heralded as a state-backed venture empowering drivers through asset financing, encountered problems with drivers and partners, ostensibly due to lacklustre profitability amid steep terms and headwinds in Nigeria. Additionally, its attempt at an empowerment scheme through enforced vehicle ownership contracts led to a clash with drivers and the Amalgamated Union of App-Based Transporters of Nigeria, which criticised it as exploitative.

The rigidity of LagRide's asset financing, wherein drivers are obliged to pay daily instalments of NGN 8.9 K (~USD 11.27) for four years to claim ownership, clashed with the drivers' expectations. This friction, compounded by a lack of autonomy in choosing their vehicles and enduring unfavourable returns, sparked dissent within the driver community.

Cracks have also emerged elsewhere. Earlier this year, Moove, envisioned as a solution for drivers to own vehicles through daily remittances from their earnings, drew ire that went as far as drivers going on strike.

Since its inception in 2020, Moove has raised over USD 300 M from notable investors like British International Investment and the International Financial Corporation’s venture capital arm to execute an ambitious drive-to-own initiative for drivers across multiple countries seeking access to vehicles without upfront payments. However, there have been reports of discontent. Drivers, burdened by steep repayment terms and demanding work conditions, say they find themselves entangled in a web of financial strain.