A deep dive into the proposed guidelines for e-hailing companies in Lagos

On August 20, the guidelines for e-hailing companies in Lagos will come into effect. But the new regulations are inconsistent and fraught with privacy issues.

Before technology, it was easy for governments to get a piece of the pie in every sector through taxes and fees. Businesses used office buildings as a hub to organise activities and the bigger they were, the more physical touchpoints they had. 

Technology has changed that. 

Today, ride-hailing companies like Bolt can operate in Nigeria, with thousands of taxi-cabs as partners without offices. For states like Lagos, it presents a problem: how do you collect your “share” from companies like this? 

The last few years have provided answers; for every industry where technology is making rent-collection difficult, the industry is hit with regulations that only have a place in the old world. The pretext for these regulations is usually concern about the safety of citizens.

Although data shows (PDF) that motorcycles are not the leading vehicle involved in road crashes, commercial motorcycles were banned in Lagos. This move  ended the mobility sector. 

This time, the government’s concern is in a new direction, the safety of Lagosians who use ride-hailing services like Uber and Bolt. 

“In view of the above statement, there is an urgent need to upgrade the existing guidelines for the operation of Taxi Business in Lagos State based on the reality of insecurity and safety confronting the sector as people of questionable characters have hijacked the process which has resulted into increased road crashes, kidnapping, robbery, pollution and insecurity, thereby eroding the confidence of the general public in Taxi business.”

-Guidelines for online hailing business operation of taxi in Lagos state (2020).

Safety concerns drive new regulations for online taxi hailing services 

TechCabal spoke to the commissioner of transportation in Lagos state Dr. Frederick Oladeinde who said he was busy trying to “crystalize the new regulations.” He asked that we speak to Toriola Hafeez, the head of the vehicle inspection office in Lagos. 

“The regulation has been approved by the governor. We have called the operators and other intending companies to cooperate with the new guidelines which are in line with global best practices,” Hafeez told TechCabal. 

He added: “We created these guidelines with the operators. What we have done is to look at developed countries and how they maintain their infrastructure and we’re applying that here.” 

But when we asked for a copy of the regulations, Hafeez said he would need the permission of the commissioner to share the new regulations. At the time of this report we haven’t received the draft from the ministry of transportation.

Despite Hafeez claims that e-hailing companies participated in drafting the guidelines, several of our sources painted a different picture. 

A source privy to the regulation discussions said that Uber, Bolt and other operators were invited to the ministry of transportation last week Wednesday. But that the meeting was postponed without notice to Thursday, and Uber and Bolt were not present at the new meeting. 

The meeting, chaired by the Special Assistant to the Governor on transportation was to discuss licencing, data collection and a service charge: the same issues which had come up in previous meetings with stakeholders. 

In the end, those present at the meeting said that the SA read out from the draft document of the new regulations. Despite protests about many aspects of the guidelines, the ministry of transportation says it will begin implementation on August 20. 

The new guidelines for e-hailing companies in Lagos

Regulations for e-hailing companies in Lagos have come a long way. At the beginning of regulatory engagement with the government, the initial plan was for the drivers on these platforms to pay a licence fee on each vehicle. 

It was a position that did not suit Uber or Bolt, whose drivers often have full time jobs and drive as a side-gig.

So, one minor improvement is that the government has now changed its position, with a blanket licence fee for operators. Under new regulations, that fee now stands at ₦10 million ($25,814) for every 1,000 e-hailing taxis. There’s also an annual renewal fee of ₦5 million ($12,907).

The licencing fee will not present a problem for the larger e-hailing operators, but it will raise the barrier for entry for newcomers. The bone of contention for all the operators is a provision that stipulates “all operators of e-hailing taxi service must pay the state government 10% service tax on each transaction paid by passengers to the operators.” 

The provision means that the Lagos state government will collect taxes, licencing fees and then a percentage from every trip completed on these platforms. While operators kick against this provision, if it goes ahead to be implemented on August 20, the real losers will be the customers. Uber and Bolt will pass this 10% cost along to end users, making cab fares more expensive. 

This throws up an interesting question: how will the government collect a percentage of every transaction without access to data from Uber or Bolt?

Lagos state wants access to all the data of e-hailing companies 

In Section 4.2 of the Lagos e-hailing guidelines: “the ministry and her agencies shall have access to the database of the operators/companies operating e-hailing taxi business in Lagos.”

This broad based section allows the government to access the database of Bolt or Uber and the section contains no clauses or restrictions.

Should the government have access to your data and are there no provisions to prevent this sort of thing?

The go-to data privacy regulation in Nigeria is NITDA’s National Data Protection Regulation(2019) (PDF).

But the NDPR is not enough here, because it deals with the rights of an individual and how to ensure data privacy.

However, the guidelines for the application of NDPR by public institutions in Nigeria (2020) shows how public institutions can gain access to your data from companies like Uber. 

First, the consent of the people whose data is collected is not necessary. 

As long as the public institution and the data controller follow the guidelines, then your data is fair game. 

The only caveat is that the public institution must show that their request for this data is in the public interest. It bears asking how collecting the details of accidents or having access to the entirety of the database of e-hailing companies is of public interest.

But here’s the catch: the NDPR guidelines are silent on access to an entire database. 

Legal questions like this mean that if this section is retained in the approved guidelines,  litigation will likely follow. It is hard to imagine that these companies will give up access to their database without a legal fight. Litigation might also be useful in helping to shape Nigeria’s data privacy regulations. 

Under these existing regulations, it is all too easy for governments to justify wanting access to company’s data. TechCabal reached out to Bolt for comments, but the company declined to comment. 

At Uber, a spokesperson at Uber told TechCabal via email: “we have always been willing to engage with governments on regulations to ensure our operations align with best practices locally and internationally, as we believe regulations need to support innovative technology ideas that fit 21st-century businesses.”

“The current proposed regulations are inconsistent and unclear. We are working to better understand how they will impact the future of our business and network of driver-partners. We will give an update in due course.”