Lagos is the economic hub of Nigeria with over 20 million people with proximity to the Atlantic Ocean and attracting a huge surge of in human movement from various parts of the world to Lagos State. Lagos State has identified the need for ride-hailing car services as solution to the various problems confronting the operation of traditional taxi business ranging from violation of operational regulation introduced by the Ministry, increased road crashes and accidents, lack of proper training and education of the drivers, lack of maintenance of the vehicles by operators, disregards to the required capacity, disregard to the route restrictions in line with the Transport Sector Reform Law (2018) and lack of comprehensive data base of operators.
Ride-hailing businesses (also known as e-hailing businesses) are taxi-like businesses that utilize online platforms to connect passengers with local drivers. Ride-hailing drivers offer rides commercially using their personal or leased vehicles which passengers can book through a mobile App or website, which is fundamentally different from traditional taxi drivers that pick up multiple passengers along their route(s). On a ride-hailing mobile App, upon accepting a ride request, the driver’s details (i.e. name, photograph and vehicle details) become visible to the customer. Following the completion of the journey, both parties have the opportunity to rate each other whilst the App retains information of both the driver and passenger as well as their ride history.
The transportation sector in Lagos State is a regulated sector with existing laws and regulations, particularly on ride-hailing business. In fact, Lagos State has enacted guidelines on e-hailing business operations i.e. Guidelines for Online Hailing Business Operation of Taxi in Lagos State of 2020 which culminated in the licensing and regulation of popular ride-hailing transport companies like Uber, Taxify (or Bolt), inDrive, etc.
In order to guide prospective promoters of ride-hailing business in Lagos State, we have set out below some crucial questions, answers, and considerations for setting up a ride-hailing company in Lagos State.
What is the applicable cost and share requirement for setting up an E-hailing Company in Lagos State?
Just like in setting up any type of company in Nigeria, the first step in setting up an E-hailing company is by registering the company with the Corporate Affairs Commission (“CAC”). See the requirements for registering a company here.
The registration fee payable to the CAC varies based on the proposed company’s minimum issued share capital. While there is specifically no mandatory minimum share capital requirements for land transportation businesses, the general mandatory minimum for a limited liability company (LLC) registration in Nigeria is ₦1,000,000 (One Million Naira). Where, a foreigner is either a shareholder or director of the company, then the prospective e-hailing company must register with a minimum share capital of ₦10,000,000 (Ten Million Naira).
Are there licensing requirements for Ride-hailing Companies in Lagos State?
Yes, there are licensing requirements for Ride-hailing Companies in Lagos State known as Guidelines for Online Hailing Business Operation of Taxi in Lagos State of 2020. In August 2020, the Lagos State Government released guidelines detailing the necessary steps and criteria e-hailing operators must meet to obtain a provisional e-hailing license. Ride-hailing companies in Lagos State must adhere to specific licensing requirements contained in the 2020 Guidelines.
The 2020 Guidelines categorize e-hailing business operations into two main types:
- Service Entity
The service entities are mobile App owners or ride-hailing platform owners, such as Uber or Bolt, who do not own or operate the commercial vehicles but provide support services. In other words, service entities provide and manage the e-platform and facilitate connections between taxi owners and commuters through their mobile App or platform.
The licensing costs for the service entity category include:
| S/N | Categories/Particulars | Costs (N) |
| 1 | First Operator’s Provisional Licence for up to 1000 units of ride-hailing taxi or below | 10 Million |
| 2 | First Operator’s Provisional Licence for 1001 and above units of e-Hailing Taxi | 25 Million |
| 3 | Annual Renewal of Provisional Licence of 1000 unit of E-Hailing Taxi or below | 5 Million |
| 4 | Annual Renewal Fee for Operator’s Provisional Licence for 1001 and above units of e-Hailing Taxi | 10 Million |
| 5 | Transaction Fee payable to Lagos State Government on each ride | 10% |
Please note that:
- The Service Entity Permit must commence the renewal process 3 (Three) months before expiration of the existing licence.
- The Service Entity Permit must have a quarterly meeting with the Ministry of Transportation for Operational updates and feedback.
- The Service Entity Permit must operate under a particular franchise as no single operator/operation will be licensed.
- On payment of the permit fee, the Licensing Authority shall issue a Support Entity Permit to the applicant.
- All Operators of e-hailing taxi services must give the Ministry access to their database.
- All Operators of e-hailing taxi services must abide to the rules and regulations guiding the Lagos State Public Transportation System.
- Taxi and App Operators
This category includes individuals or organizations that own and operate both the vehicles and the app. This category may also involve third-party fleet (i.e. vehicles from third party owners) in its operations.
The licensing requirements for the Taxi and App Operators category are as follows:
| S/N | Categories/Particulars | Costs (N) |
| 1 | First Operator’s Provisional Licence for up to 50 units of cabs or below | 5 Million |
| 2 | First Operator’s Provisional Licence for 51 and above units of cabs | 10 Million |
| 3 | Annual Renewal of Provisional Licence of 50 unit of cabs or below | 1.5 Million |
| 4 | Annual Renewal Fee for Operator’s Provisional Licence for 51 and above units of cabs | 3 Million |
| 5 | Transaction Fee payable to Lagos State Government on each ride | 10% |
Please note that:
- The operator must commence the renewal process three (3) months before the expiration of the existing licence.
- Operators must have a quarterly meeting with the Ministry of Transportation for Operational updates and feedback.
- Taxi Operators must operate under a particular franchise as no single operator/operation will be licensed.
Are there additional requirements for Ride-hailing Companies in Lagos State?
Yes, ride-hailing companies must ensure that all affiliated drivers complete and possess the necessary documents and licenses, such as a valid driver’s license and Lagos State Residents Registration Agency (LASRRA) cards, which are essential for the ride operation.
According to the guidelines, ride-hailing companies must verify that their drivers have acquired the following documents before registration:
- Title of vehicle or manufacturer’s certificate of origin;
- A Bill of Vehicle Sale or Vehicle Lease;
- Taxicab licence (hard card) card;
- Special Plate number;
- Allocation of plate number form;
- Proof of ownership;
- Pre-registration Inspection Certificate;
- Roadworthiness Certificate;
- Insurance policy (Comprehensive);
- Vehicle license;
- Hackney Permit;
- Approved Route Document (Body Tag);
- Drivers’ Barge
DRIVER’S KYC DOCUMENTATION
a. Literacy Requirement: All drivers registered with any operator must be literate.
b. A valid and authentic driver’s license.
c. An original annual certificate of competence from the Lagos State Drivers’ Institute (LASDRI) to assess their skill and proficiency, along with the LASDRI Card.
d. A Lagos State Residents Registration Agency (LASRRA) Card.
What is Lagos State’s current policy on acquiring data of ride-hailing operators?
In light of the need to protect commuters and significantly diminish the risk posed by unauthorized or unqualified individuals driving for various e-hailing platforms, the Lagos State Government has recently entered into a data-sharing agreement with the licensed ride-hailing platforms to bolster security and safety measures. Each company has independently pledged to adhere to this agreement’s implementation.
Furthermore, the Lagos State Government has introduced API integration for e-hailing services. This integration aims to fortify the security and safety of both drivers and passengers. It establishes a dependable verification system for drivers and passengers, ensuring adherence to background checks, vehicle inspections, and driver licensing protocols. Through this integration, the government can monitor and guarantee that only authorized and competent individuals are at the helm, thus enhancing the overall integrity of e-hailing platforms.
The Lagos State government’s recent initiatives are designed to curtail the risk of unauthorized or unqualified individuals serving as drivers, thereby elevating the overall safety and reliability of e-hailing services.
What is the enforcement procedure for compliance with Ride-Hailing Guidelines in Lagos State?
The Vehicle Inspection Service (VIC), the Nigeria Police, the Lagos State Traffic Management Authority (LASTMA) and the Federal Road Safety Corps (FRSC) shall ensure that all transport companies and ride-hailing businesses comply with the Guidelines and regulations of the Lagos State Government. Please note that non-compliance by either the Taxi Operators or App deployment company with the provisions of the Regulations and Guidelines of Lagos State will attract the following penalties and fines as contained in Section 68, Schedule 1, Section 326 (40, 48 & 49) as well as the various schedules outlining Offences and Penalties of the Transport Sector Reform Law, 2018, namely:
- Any Taxi Operators or the Service Entity who fails, or whose Driver fails, neglect or refuses to comply with the provision of these guidelines shall have their operating licence queried upon the 1st non-compliance. Subsequent non-compliance with relevant requirement shall result in the suspension of same for 14 (fourteen) days pending compliance, and a fine of ₦100,000.00 (One Hundred Thousand Naira only) to be paid during this period.
- If after 14 days, the Taxi Operators or the Service Entity does not comply, the licence of such Operators is liable to be revoked.
- Any Driver who flouts any provision of Lagos State Transport Sector Reform Law, 2018 shall be punished in line with the penalties indicated in the law.
- Taxi Operators or the Service Entity whose Driver fails to comply with the provision of Lagos State Transport Sector Reform Law, 2018 or the Guidelines, and such Operator fails, neglects or refuses to call such Driver to order, is liable to have their licence queried and/or suspended.
- The penalties for offences under the Lagos Government Regulations, where no other penalties are provided, shall be as prescribed under Section 323 of the Transport Sector Reform Law, 2018, namely:
(i) First offender is liable to a fine of N20,000;
(ii) subsequent offender is liable to a fine of N30,000 or to a term of imprisonment for three (3) months or both.
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