Taxi-hailing giant Uber has entered into a partnership with FBN Holdings Plc’s First Bank Nigeria to provide low interest loans to its top-rated drivers for used vehicles cars.
This means that Uber's driver-partners in Nigeria will be able to apply for finance for used vehicles based on their driver performance records for the first time.
"A lot of drivers on the platform have to find somebody who can afford to buy the vehicle for them, and the economic situation is making it difficult", Ebi Atawodi, general manager for Uber’s Nigeria unit, said in an interview in Lagos. "Usually they are working for a partner who has bought the vehicle.’’
In order to qualify for this preferential used-vehicle finance from FirstBank, Uber driver-partners will need to be able to demonstrate an average driver performance rating of higher than 4.5 and have earned more than N2,400,000 (US$7,505) in the preceding six months.
The deal is similar to one entered by Uber and Kenya's Sidian Bank that will see drivers qualify for loans based on their ratings. Already, 100 Kenyan Uber drivers have taken loans towards buying their own vehicles in this arrangement.
First Bank will extend a 2.5 million-naira loan (US$7,930) to each qualified driver for the purchase of a second-hand car at an interest rate of 20 percent, repayable after two years.
With the Nigerian economy in decline due in part to the fall in crude oil prices, which have halved since 2014, growth is expected to contract by 1.7 percent in 2016. This represents Nigeria's first full-year recession in a quarter of a century.
However, the country's GDP is forecast to grow year-on-year, meaning that although the naira is not as strong as it used to be, the country's fundamentals remain stable.
First Bank will fund the Uber program with its 10 billion naira auto credit facility, and will start out with 90 drivers for its pilot stage.
Uber is currently available in more than 450 cities around the world, including Nigeria’s capital, Abuja, and commercial hub of Lagos, where it launched in 2014. There are more than 2,000 drivers currently on the service, with plans to grow the roster to 4,000 by the end of this year.