Uber, an American multinational online transportation network company, is currently facing a big licensing challenge that may threaten its continued existence in Africa’s most populous nation.
According to the Lagos state ministry of transportation, Uber is expected to pay as much as N100,000 for special taxi licenses to operate within the state.
A report by CNNMoney says the franchise is expected to pay an additional annual renewal fees of at least N30,000 after the first year’s N100,000 per car.
Anofiu Elegushi, a spokesman at the Lagos Ministry of Transportation, said these government taxi regulations had previously been in place but were not enforced.
By his estimate, the firm owes the Lagos government N600 million ($1.9 million) in penalties for failing to properly registered its business. He added that Uber was working with the authorities to try to arrange licensing for drivers.
“It is for the safety and security of our state and passengers. We have started clamping down on the vehicles that operate under the Uber app without registration,” Elegushi told CNNMoney.
Drivers must also have adequate insurance and up-to-date safety devices installed in their vehicles, he added, and they must come together in groups — called franchises — to register for licenses.
Uber told CNNMoney that it was “actively working with regulators” on the issue.
In Nigeria’s biting recession, the taxes would eat significantly into Uber’s profit in the nation’s commercial hub and ultimately affect drivers’ morale as it may hurt their pay.
Uber users in Lagos are expecting a hike in fares, which have been previously adjudged as fair.