What is the net effect of taxi apps like Uber and Taxify for a country like Nigeria that has a high illiteracy rate and unemployment?
Will these apps create more losers or gainers in the long term, compared to the traditional cab model?
What are the effects of the taxi app model on the labor dynamics?
Clearly, people who drive for services like Uber tend to be more educated than the traditional cab drivers in Nigeria. So, could Uber be a curse in disguise; i.e. working for the initial benefit of the commuter by lowering costs, but pushing traditional cab drivers out of jobs and replacing them with people with higher skills, only to also push them out someday?
To put it simply, if we agree that:
Traditional cab drivers typically have less education and other transferable skills, relative to the Uber drivers, that they can lean on outside driving taxis.
Today's Uber drivers are mostly people with enough education to navigate the app and with transferable skills that could be used in other settings, perhaps with a little upgrade. But that these drivers have somewhat dumbed themselves down and may settle permanently as chauffeurs.
We can conclude therefore that a major shift is happening in the labour dynamics.
Eventually, as services like Uber find that they have to reduce prices in response to the growing competition, drivers may find their fares being squeezed far below their earning potential. Most drivers may leave to other jobs.
With the Uber model, lower skilled people are pushed out of jobs within their skill grade and replaced by more skilled people who will eventually also be made redundant. This sort of distortion might be difficult to correct.
Is the current momentum the taxi apps have gained enough compensation for such a distortion?
Moreover, given Nigeria's shabby transport infrastructure, there is the potential for services like Uber to someday cannibalize the traditional cabs and establish themselves as an oligopoly or near monopolies that can hike prices in ways that hurt commuters. So the short term cost savings commuters enjoy from using the apps may be reversed in the longterm.