How the Naira devaluation and CBN policy on forex are affecting Uber in Nigeria
Uber, a global taxi-hailing app, launched services in Nigeria in 2014 in order to provide low cost taxi options for Nigerians. While the app has been growing in popularity throughout select cities in the country, they were hit by the fluctuating rate of the Naira towards the end of last year. Customers complained that they were charged in US Dollars as opposed to the Naira. So in order to retain their customers Uber, which is a cashless taxi operator, changed its policy to accept cash. The company also signed a deal with a Nigerian payment company, Paga, in order to make payment easier for customers. But here’s what happened before the deal was announced:
Central Bank of Nigeria or Uber?
Before Uber’s announcement of the new policy, Nigerians blamed the company for extorting ridiculous amount from their banks account while others blamed the Central Bank of Nigeria (CBN) for confusing monetary policies.
Then take your sorry ass outta Nigeria we dont pay our local cabs in dollars. http://t.co/lmdLAQMmTD
— Mz tonie (@candyhusler) January 5, 2016
Uber: N 3,998 GTB: N 5,697 @gtbank you think you’re doing me?
— Tobi (@MrLong_) January 4, 2016
Uber is an international company based in the U.S. (California) and their merchants are not based in Nigeria. Since the government put stringent currency restrictions, Uber users were being charged hidden international fees on rides without being informed. People paid as high as 20 percent extra on their rides.
Uber says bank restrictions are to blame
In response to these complaints, Uber sent a message to its subscribers informing them that the bank restrictions might be the reason for the issue.
“Cards issued by Stanbic IBTC, Diamond Bank, Skye Bank, UBA, amongst others are still accepting Uber transactions so feel free to include these as payment methods if you currently hold a card with one of these banks. Otherwise, Cash was launched today as an experiment in Lagos and so you may be able to pay cash for your Uber trips,” reported Techcity.
Ventures Africa spoke with a source from Guaranty Trust Bank (GTB) who said that the bank is indeed blocking Uber transactions in the country in line with the CBN circular on the dollarisation of goods and services within Nigeria. As the source noted, the CBN has said forex should not be used to settle goods and services enjoyed in Nigeria, and Uber’s practice of charging their customers in dollars did not adhere to the CBN directive. However, GTB cards still work on Uber usage outside of the country, since Uber rides outside the country do not constitute goods and services enjoyed in Nigeria.
Time will tell whether Uber’s new deal with Paga and cash option will be a lasting solution to its payment issues, or come with a slew of different issues to address.
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