Uber, the global ride-sharing platform has announced a partnership with the Lagos State Employment Trust Fund (LSETF) to provide access to finance for budding transport entrepreneurs at just 5% per annum. This is 15% lower than any other financial institution.
The company noted that access to affordable finance is critical to the success of any entrepreneur, as it frees up the cash flow for them to focus on growing their business. The introduction of finance at a lower interest rate for driver-partners will help them thrive as they run their business on the Uber platform.
“Uber has particular relevance in a city such as Lagos, where traffic congestion is an ongoing challenge. Nigeria is a booming African economy. With rapid urbanisation comes more people using the country’s roads. Lagos is an economic hub, which makes this challenge increasingly acute for those using the city’s roads. If more people take advantage of ride-sharing services like Uber, there will be less cars on the road and less overall congestion. For this reason, the platform has been welcomed and supported by the Lagos State,” the company said in a statement.
Commenting on the development, Ebi Atawodi, General Manager for Uber in West Africa said: “We are encouraged by the Lagos State’s commitment to ridesharing platforms like Uber. Their support of local entrepreneurs not only fosters the growth of sustainable businesses, but strengthens a highly-viable transport industry in Lagos.”
Uber driver-partners in Lagos will also find it easier to buy their own vehicle. Driver-partners can now buy new cars that are locally-assembled in Nigeria by Stallion Motors (Hyundai i10 and Hyundai Grand Xcent). The partnership between Uber and LSETF has made this process simple. If they qualify for the financing provided by LSETF, Uber entrepreneurs can buy any new locally-assembled car up to a value of N3 million and only need to contribute 5% of the vehicle purchase price when they buy the car.
According to Akintunde Oyebode, the Executive Secretary of LSETF, partnerships like this provide a platform for sustainable job and wealth creation, and demonstrate a seamless collaboration between private capital and Government. “The partnership with Uber is proof of Lagos State Government’s willingness to support innovative solutions that solve social problems, in this case, transport, and also provide jobs to its residents.”
The option to purchase locally made vehicles gives entrepreneurs the opportunity to obtain the assets required to grow their business and contributes to the growth of the local economy. Local automotive production is a priority across the country, which has been emphasised in the Nigeria Automotive Industry Development Plan (NAIDP). Nigeria is a promising automotive hub, given its large economy, growing urban population and a targeted drive by government to grow the industry.
Ridesharing trends and a refined automotive industry go hand in hand. Dr. Andrew S. Nevin, Advisory Partner and Chief Economist, PwC Nigeria says, “Already Uber driver-partners have made over a million trips in Nigeria in the last two years. This trend could fast-track Nigeria’s path to becoming an automotive hub potentially boosting sales of new and used vehicles as individuals take advantage of partnering with these companies to gain extra income.” These new cars on the road are likely to replace thousands of personal cars in Lagos, as more people use Uber to move across the city. Over time as people get used to the idea that you can always push a button and get a ride — the need to own a car, or buy a second family car, goes down.
The total offering to Uber Lagos entrepreneurs includes finance at a fixed interest rate of 5% per annum, with a loan period of 36 months. Lagos driver-partners will be afforded the opportunity to purchase a vehicle to the value of up to N3 million, with a 5% deposit required. Stallion motors are offering both the Hyundai Grand Xcent (N3m) and Hyundai i10 (N2.7m) for this deal – both cars are locally assembled and are in line with the NAIDP.
In order to qualify Lagos entrepreneurs will be required to have been operating on the Uber platform and their Uber rating should be 4.5 or higher. The Uber and LSETF partnership begins in December with the hopes of expanding it to more Uber partners in the near future.