AN EVALUATION OF THE FACTORS HINDERING THE OPERATIONAL EFFICIENCY OF TAXI SERVICES IN NIGERIA: A CASE STUDY OF UBER IN LAGOS STATE

CHAPTER ONE INTRODUCTION 1.1 Background of the Study The taxi industry in Lagos, Nigeria, constitutes a vital segment of the city’s overall transportation infrastructure, playing a crucial role in providing mobility solutions for both residents and visitors. Despite its importance, the industry has witnessed heightened competition and increasing participation from private individuals and small-scale enterprises (Gilbert, Hitt, Ireland & Sirmon, 2019). These new entrants frequently leverage digital platforms and ride-hailing technologies as strategic tools for operational sustainability. According to Johnson, Dunn, and Sack (2020), Nigeria has rapidly emerged as one of the largest e-hailing markets in Africa, a development attributed to the expansive growth of platform-based ecosystems across the continent. The inception of e-hailing services in Nigeria began in 2014 when Uber, a globally recognized transportation network company, commenced operations in Lagos (Meagher, 2018). Founded in 2009, Uber has become synonymous with modern ride-hailing services and remains one of the most dominant players in the global market. In 2016, Uber extended its services to Nigeria’s Federal Capital Territory, Abuja (Johnson, Dunn & Sack, 2020). That same year, another prominent ride-hailing service, Taxify (now known as Bolt), also entered the Lagos market. Today, the industry consists of a few major international firms as well as numerous indigenous operators, such as Oga Taxi, which has expanded its reach to Abuja (The Africa Report, 2018; Johnson, Dunn & Sack, 2020; Meagher, 2018). A pressing issue facing these operators is their ability to consistently develop long-term strategic plans capable of sustaining their market dominance amidst escalating competition. In light of this, it is increasingly imperative for modern enterprises to engage in regular strategic realignment (Okechukwu, Ekwochi & Eze, 2018). To stay competitive within Nigeria’s saturated taxi market—dominated by local, low-cost providers—Uber Technologies Inc. has implemented a range of strategic innovations since its entry in 2014 (Martin, 2016). These strategies, adopted in both Lagos and Abuja, have provided Uber with a distinct competitive edge. Among them are shared economy practices, dynamic pricing models, and the use of celebrity brand ambassadors. However, Uber’s core strategic approach centers on disruptive innovation. Mutai (2017) highlights that Uber extensively utilizes digital transformation technologies to bring about structural shifts in the traditional taxi sector. Disruptive technology refers to the rapid introduction of innovations that fundamentally alter existing market operations (Chau & Witcher, 2016). Uber’s customer base largely comprises individuals accustomed to modern transportation services. The company differentiates itself through value-added features that emphasize comfort, convenience, safety, responsiveness, and reliability. According to Clayton, Dillon, Hall, and Duncan (2016), Uber has succeeded in expanding overall market demand by offering cost-effective, superior alternatives that address prevalent customer needs in an intensely competitive environment. Furthermore, the adoption of mobile ride-hailing apps has seen tremendous growth in both Lagos and Abuja (Uber Technologies, 2016). By entering a highly saturated market, Uber Nigeria has strategically utilized innovative and disruptive technological solutions to gain market share. Nevertheless, this development has sparked concern among traditional taxi operators who view the rise of such technologies as a threat to their livelihoods. Many conventional drivers struggle to compete effectively or resist adapting to evolving business models, thus jeopardizing their sustainability. In contrast, some newer transportation firms have begun adopting Uber's techniques, thereby intensifying competition. This trend underscores the importance of continuous innovation by Uber to maintain its market leadership (Gilbert, Hitt, Ireland & Sirmon, 2017). Consequently, this study aims to assess the challenges undermining the effectiveness of taxi businesses in Lagos State. 1.2 Statement of the Problem Although Uber has revolutionized transportation services in Nigeria by introducing technological innovation and user convenience, it continues to face unique and multifaceted challenges, particularly within the densely populated and dynamic urban environment of Lagos. Several critical issues hinder Uber’s operational effectiveness in the region. Among these are regulatory constraints, safety-related incidents, and competition from traditional transportation service providers. Uber drivers often encounter legal and bureaucratic challenges, including difficulties related to obtaining licenses, securing permits, and complying with evolving regulatory frameworks. Safety remains a major concern, as drivers occasionally face risks such as disputes with passengers or fraudulent activities. Additionally, the condition of Lagos’s road network and traffic congestion significantly hampers the efficiency and timeliness of rides. As noted by Ogbonna (2019), inaccuracies in digital mapping services can result in longer routes, increased delays, and overall inefficiency. Income stability is another concern, as driver earnings fluctuate based on factors such as consumer demand, time of day, seasonal trends, and broader market conditions. These inconsistencies often affect the financial wellbeing of drivers and, by extension, the effectiveness of ride-hailing operations. Moreover, high and unpredictable fuel prices present a substantial financial burden, further reducing profitability. In view of these ongoing challenges, this study seeks to critically examine the specific factors that affect the efficiency and sustainability of taxi businesses—particularly Uber—in Lagos State. 1.3  Objectives of the Study The main purpose of this study is on an evaluate the Factors Hindering the Operational Efficiency of Taxi Services in Nigeria: A Case Study of Uber in Lagos State. Specifically, the study will; 1.  Identify the environmental factors  affecting the effectiveness of taxi businesses in Nigeria. 2. Investigate on the customer related factors  affecting the effectiveness of taxi businesses in Nigeria. 3. Assess the organizational factors  affecting the effectiveness of taxi businesses in nigeria. 1.4 Research Questions The following questions have been prepared for the study: 1. What are the key challenges faced by taxi transportation services in Lagos state? 2. To what extent has the emergence of Uber enhanced the taxi transportation business in Lagos state? 3. What strategies have contributed to the improvement and maintenance of the competitive advantage of Uber's taxi transportation business in Lagos state? 1.5 Research Hypotheses H0: There are no challenges affecting the effectiveness of taxi businesses in Nigeria Ha: There are challenges affecting the effectiveness of taxi businesses in Nigeria 1.6  Significant of the Study An investigation on the strategies for enhancing the competitive advantage of Uber taxi business in Lagos state will be revealed to the government at various levels, stakeholders, business owners, Uber drivers, media houses, policy makers and people in Lagos in this study.  It will reveal to policy makers, researchers and the public about the various impacts, challenges, and opportunities associated with ride-sharing services. Additionally, it will help stakeholders and business owner  to contribute make more informed policy making, business strategies, and have a better understanding of the evolving landscape of transportation and the gig economy. Further more, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to an assessment of challenges affecting the effectiveness of taxi businesses in Nigeria. 1.7 Scope of the study The scope of this study is boarded on an assessment of challenges affecting the effectiveness of taxi businesses in Lagos state. Theoretically, this study will discuss the environmental factors affecting the effectiveness of taxi businesses in Nigeria, investigate on the customer related factors affecting the effectiveness of taxi businesses in Nigeria and  assess the organizational factors affecting the effectiveness of taxi businesses in Nigeria. Geographically, the study will be delimited to people in Eti- Osa local government, Lagos state. 1.8 Limitation of the study In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world. 1.9 Definition of Terms Competitive: as good as or better than others of a comparable nature. Taxi: a motor vehicle licensed to transport passengers in return for payment of a fare  Transportation: the movement of goods and persons from place to place by the means of a vehicle. Strategies:  plan of actions designed to achieve a long-term or overall aim.