Many drivers report that the current fare structure is inadequate to cover their expenses, with over ten operators reporting unstable income. 

They stress that an increase in fares is needed for the sustainability of the ride-hailing model, affirming the issues faced by gig drivers across Africa.

With fuel costs on the rise, drivers assert that the low base fares offered by inDrive are no longer viable. They shared instances of fare reductions, with one driver noting that a trip from the airport to Gaborone’s CBD, which used to cost P100 ($7.50), is now priced at only P50 ($3.70) on the app. 

Many drivers feel compelled to accept fares that are below their preferred levels, often negotiating minimal increases yet still feeling the impact of the low rates.

The situation has been worsened by inDrive’s recent implementation of a 10% commission fee on driver earnings, a departure from the no-commission model that had initially attracted many operators to the platform since its launch in Botswana in 2019. 

Drivers had anticipated that the introduction of this fee would be balanced by fare increases for passengers, but no adjustments have been made, leaving them to absorb the additional financial burden without any apparent support from the platform.

While inDrive defends its new commission structure as necessary for operational sustainability and further investment in Botswana, it claims not to have received formal complaints from drivers regarding the change. 

Nevertheless, operators believe their financial difficulties are evident. An inDrive representative stated, “We have made it clear to drivers that monetisation is essential for business sustainability.”

A distinctive feature of inDrive’s business model is the ability for riders and drivers to negotiate fares. While this provides some flexibility, drivers report that it frequently leads to lower earnings, especially when riders initiate negotiations with low offers. 

Many drivers find that riders are often unwilling to negotiate beyond the app’s suggested fare, forcing them to choose between accepting lower-paying rides or potentially losing business. 

Efforts to request additional payments beyond the quoted fare have sometimes resulted in negative ratings from riders.

Despite these challenges, inDrive recently announced plans to expand its services to Francistown, Botswana’s second-largest city, aiming to enhance its presence in the market. This expansion is expected to increase competition with Bolt, which has gained popularity since its launch.

The rivalry between these two platforms is likely to exert further pressure on fare structures as they compete for market share, a situation that may benefit riders while leaving drivers with even tighter margins.

The issues faced by inDrive drivers in Botswana affect other countries too, challenges encountered by ride-hailing operators across the continent, where high operational costs and platform fees continue to strain gig workers. 

In light of these circumstances, drivers are urging inDrive to reconsider its fare policies to facilitate a fairer environment, recognizing their important role in the success of the service.

With operating costs surging, delivery companies are left with the challenge of balancing price hikes while retaining price-sensitive customers. As businesses struggle to adapt, a number of logistics companies are beginning to adjust their pricing models.

Remedial Health, a health-tech startup supplying medications to pharmacies, has been among the first to respond to these economic changes. In an email to its customers, the company highlighted the necessity of revising its delivery processes due to costly fuel prices. 

Similar changes are occurring across the industry, with several logistics companies adjusting their rates or preparing to do so. Fez Delivery, for example, has announced a 23% price increase, with the cost of deliveries between 0 and 5kg rising from ₦2,500 to ₦3,075. This change, while essential for business survival, is a tough pill to swallow for both the company and its customers.

Seun Alley, CEO of Fez Delivery, acknowledged the difficulty in implementing these changes: “Our prices definitely have to change. But what we want to do is to ease our clients into that phase. At the moment, we are taking serious blows to keep operations running.”

The rising cost of logistics is squeezing last-mile delivery services, many of which operate on thin margins. However, navigating these changes is a delicate balancing act. 

On one hand, companies must raise prices to remain operational, while on the other, they risk losing customers who are highly sensitive to cost fluctuations. According to Seun Omotosho, COO of Gokada, customers often opt for cheaper delivery options when urgency isn’t a factor, adding another layer of complexity to pricing decisions.

For smaller businesses, the situation is even worse. Olawale, an online phone and gadgets vendor, described how he has shifted to using public transport to deliver his goods after delivery services like DHL increased their prices significantly—from ₦12,000 to ₦14,000 for phones, and for laptops, from ₦12,000 to ₦21,000. 

This sharp rise has pushed many entrepreneurs to explore alternative, cost-effective ways of ensuring their products reach customers.

In response to these pressures, some delivery companies are exploring incentives and discounts to retain their customer base. In offering riders bonuses based on the number of completed orders or providing discounts to frequent customers, companies aim to mitigate the impact of rising costs. 

Others are looking further ahead, with a focus on electric vehicles (EVs) as a prospective long-term solution to the fuel price dilemma. While the adoption of EVs in Nigeria may still be a few years away, companies are optimistic that they could help reduce operating costs and stabilise delivery pricing in the future.

The issue of fuel price increases has also prompted discussions about how businesses in Nigeria can innovate to remain viable in an increasingly challenging economic climate. 

Across various sectors, companies are experimenting with new strategies to absorb costs without losing customers. For example, some industries are leveraging digital platforms to simplify operations and reduce overhead costs, while others are shifting to more sustainable business models.

Similar challenges are being faced globally. In other African countries, last-mile delivery companies are dealing with rising costs due to fuel price hikes and inflation. In Kenya, for instance, logistics companies are looking into expanding their fleets with electric motorcycles to cut down on fuel expenses. 

The move towards electric vehicles is gaining traction in other regions too, as companies strive to reduce their reliance on fossil fuels and explore greener, more cost-effective alternatives.

Ultimately, the ability of Nigerian last-mile delivery companies to weather the storm will depend on their flexibility in adjusting to these economic issues. 

Whether through gradual price increases, customer incentives, or long-term investments in sustainable technologies, the industry will need to adapt if it hopes to remain competitive.