UBER AND THE COST OF OUR TRUST DEFICIT

After a dozen years, the ride-sharing company Uber has withdrawn from Nigeria, according to reports. The company cited a review of its investment strategy across Africa as the reason for its decision. It exited Uganda and Tanzania at the same time, and surrendered Abidjan to Yango in 2025. This marks a significant loss of the company's African presence in just two years.

Additionally, Uber announced the layoff of 3,300 employees, which is roughly one-tenth of its workforce, in order to redirect the savings towards driverless cars. This situation is not solely about the company; it raises questions about the breakdown of trust in the region.

Drivers in Nigeria have faced numerous challenges, including the removal of fuel subsidies in 2023, which increased their costs. They have also protested against the high commissions taken by Uber, which have been as high as 25%. In 2017, 2023, 2025, and even in July, drivers have taken to the streets to demand cash payments instead of app prices, viewing this as a way to avoid potential disputes with passengers.

This pricing dispute is a reflection of the broader economic culture in Nigeria, where trust is a scarce commodity.

Uber's main offering included a vetting process, traceability, a pool of cars, and a means for passengers to lodge complaints. However, the platform's most crucial element was a fixed price, which eliminated any need for trust between the driver and the passenger. Unfortunately, this foundational aspect of the service ceased to exist, leaving only the ability for passengers to negotiate fares with drivers.

As a result, the platform lost its edge, leading to intense price wars that ultimately led to Uber's exit from Nigeria.

In contrast, other services like InDrive have thrived by allowing passengers to set fares and drivers to accept or counter them. This model accommodates the Nigerian economic culture, where trust is often lacking. The inability to enforce contracts in many instances has led to the preference for family-owned businesses, where cousins can be held accountable to a degree.

The Central Bank of Nigeria has reported that a significant portion of the country's money remains in physical cash form, with N4.92 trillion sat outside the banking system as of June. This represents 89.1% of all physical cash in circulation, down from 91.3% in May. The bank credits the shift towards electronic payments for this decline, but it remains concerned that the figure is still too high.

Pew Research found that only 83% of Swedish adults believe most people can be trusted, while the median across sixteen high-income countries surveyed was 59%, and 27% in nine middle-income countries, including Nigeria, Kenya, and South Africa.

Kenneth Arrow, a Nobel Prize winner, noted that virtually every commercial transaction involves an element of trust. Societies with low levels of trust pay for this deficiency through various means, such as guarantees, upfront payments, and deals that never materialize. In Nigeria, the absence of trust has forced many enterprises to remain small, capped at the size of one person's eyes, thereby limiting their potential.

While the instant transfer of money works seamlessly and eliminates the need for trust, the decline in physical cash indicates that Nigerians are increasingly comfortable with electronic transactions. This transition occurred without a corresponding increase in honesty and reflects the confidence Nigerians have in their ability to build and maintain economic infrastructure without relying on trust at scale.