Popular online taxi-hailing service Uber is said to have agreed a 200 million rand ($14 million) deal with South African vehicle finance provider WesBank to rent cars to drivers who can’t afford to buy them, according to reports from Reuters. According to Reuters;
WesBank, which is an arm of a leading SA bank, FirstRand, will rent cars to Uber drivers who do not qualify for traditional car loans due to a lack of credit history.
WesBank will recoup the loan from the fares Uber drivers collect from passengers, lowering default risk, de Kock said. The amount drivers repay will depend on the level of business they are doing.
This deal holds significant implications for Nigeria considering its status as the largest economy in Nigeria and a market that Uber takes quite seriously. Uber is still fairly new in Nigeria having commenced operations in Lagos a year ago. Lagos has a population of about 15 million people and is a potential major market for the company. The Nigerian government has also been pushing an auto policy that it hopes will revive local car market.
The South African deal suggest something similar could be in the offing for Nigeria as they look at bolster their pool of drivers in the country. Uber can still not be easily accessed in a lot of locations in Lagos as not a lot of drivers are available to even serve small but growing customer base. If Uber can replicate this same deal in Nigeria, then it has a massive window of opportunity to create massive employment for a lot of Nigerians. The Lagos State Government should be very much interested in such a scheme considering the massive economic boost it could bring to the state.
Uber’s model more importantly could also be very attractive to Nigerian banks as the revenue cycle of the Uber cab business protects the banks from the risk of cash hoarding by drivers. With Uber, the banks have a reliable partner that can ensure payments are ring fenced for principal and interest repayments as customers do not pay the drivers but pay directly to Uber. Nairametrics expects Nigerian banks will be watching developments closely and could have just found a perfect model for financing vehicle loan schemes on a commercial basis.