E-hailing businesses, also known as ride-hailing businesses, represent a modern approach to the traditional taxi industry. These businesses leverage online platforms to connect passengers directly with local drivers offering private car services. Unlike traditional taxis, which may pick up multiple passengers along a designated route, ride-hailing drivers utilize their personal vehicles (or leased vehicles) to provide point-to-point transportation booked on-demand through mobile applications or websites.
These businesses have grown in recent times and are becoming a major part of the transport mediums in Nigeria.
Lagos State which serves as the de-facto Commercial and Financial Big Brother in the Nigerian Economic system has seen an influx of these businesses, for which it has gotten a good reputation and where it seems to be a thriving business sector. To be part of this new growing trend, there are criteria which must be met before an individual or corporation can be permitted to carry on such businesses.
These criteria are regulated formerly by Guidelines for Online Hailing Business Operation of Taxi in Lagos State of 2020 now governed by the Amended Regulation for On-Line Hailing Business and Taxi Cab Operation in Lagos State. 2023.
This law has provided a comprehensive list of the rules that must be followed and this is the binding force on this subject in Lagos.
The following are the most asked questions on the criteria for the establishment of such company
What type of business structure should I choose for my e-hailing company?
The best business structure that one should choose is to incorporate a limited liability Company with the Corporate Affairs Commission. Anyone can create their own company themselves, however it is advisable that an accredited agent of the CAC be consulted for seamless registration. Also, a Tax Identification Number is required and such should be registered with the Federal Inland Revenue Service (FIRS).
In which capacity can I establish an e-hailing business in Lagos?
According to the Amended Regulation For On-Line Hailing Business And Taxicab Operation In Lagos State. 2023, there are two categories under which an e-hailing business can be established in Lagos State. However before such businesses can be established, the intending company must get a taxicab license.
According to the Amended Regulation For On-Line Hailing Business And Taxicab Operation In Lagos State. 2023, it states that
“The Taxicab License shall be the Authority to operate a Taxi Services (for either of the two categories)”
In Lagos State, the two categories are:
a. Service Entity:
This is an App developer (i.e Uber, Bolt inDrive etc.) who does not operate or own any vehicle but manages and connects taxi owners and the commuters by using its App as an operational platform. The law states that no entity shall operate as a Support Entity in Lagos State without first having obtained a Support Entity Permit from the Licensing Authority.
The criteria to obtain a Support Entity Permit from the Licensing Authority are
- (a) The Service Entity Permit must apply for Operator’s Provisional License prior to operation and a payable fee of ₦8,000,000.00 (Eight Million Naira only) for 1000 (One Thousand) units of E-hailing Taxi.
(b) To renew this Operator’s Provisional License for 1000 (One Thousand) units of E-hailing Taxi the guidelines states that “the Service Entity Permit Provisional License is subject to annual renewal with a renewable fee of ₦4,000,000.00 (Four Million Naira only) for every 1000 (One Thousand) unit of E-Hailing Taxi”.
- (a) The Service Entity Permit must apply for Operator’s Provisional License prior to operation and a payable fee of ₦20,000,000.00 (Twenty Million Naira only) for 1001 and above (One Thousand and One above) units of e-Hailing Taxi.
(b) To renew this Operator’s Provisional License for 1001 (One Thousand and One) units of E-hailing Taxi the guidelines states that the “Service Entity Permit Provisional License is subject to annual renewal with a renewable fee of ₦10,000,000.00 (Ten Million Naira only) for every 1001 and above (One Thousand and One above) unit of E-Hailing Taxi”.
- All Operators of e-Hailing Business Services must pay the State Government 30 Naira Road Development Fund on each transaction (Trip) paid by the passengers to the operators.
- The Service Entity Permit must commence the renewal process 3 (Three) months before expiration of the existing license.
- The Service Entity Permit must have a quarterly meeting with the Ministry of Transportation for Operational updates and feedback.
- Operator(s) must be registered under a licensed Service Entity Permit as no single operator(s)/operation will be licensed.
- The license shall be issued to an individual, firm, partnership, corporation, cooperative and association with a franchise to operate under the Lagos State Taxi system.
- 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 Service Entities must have a “Ride Hailing Insurance package” that covers personal liabilities of drivers and passengers including loss of personal devices, injury protection, disabilities and medical expenses.
All Operators of e-hailing taxi services must abide to rules and regulation guiding Lagos State Public Transportation System
b. Taxi and App Operators:
This is an individual/organization who own and operate both the vehicle amp; the App. Such an individual/organization is the owner of the fleet as well as the owner of the App and might also have other third-party (vehicle from different owner) fleet in its operation.
The criteria to obtain a Operator’s (Taxi and App Operators) Provisional License from the Licensing Authority are
- (a) Operator’s must apply for Operator’s Provisional License prior to operation and a payable fees of ₦5,000,000.00 (Five Million Naira only) for 50 (Fifty) units of Cabs.
(b) The Operator’s Provisional License is subject to annual renewal with a renewable fees of ₦2,500,000.00 (Two Million, Five Hundred Thousand Naira) only for 50 (Fifty) units of Cabs.
- (a)Operator’s must apply for Operator’s Provisional License prior to operation and a payable fees of ₦10,000,000.00 (Ten Million Naira only) for 51 and above (Fifty-One and above) units of Cabs.
(b) The Operator’s Provisional License is subject to annual renewal with a renewable fee of ₦5,000,000.00 (Five Million Naira) only for 51 and above (Fifty-One and above) units of Cabs.
- The Operator’s must commence the renewal process 3 (Three) months before expiration of the existing license.
- 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-In this area, taxi operators cannot operate independently. They must be part of a specific franchise that is licensed to provide taxi services
Steps for creating a taxicab business under these two main Models
According to Rules 3.1 Application for Taxicab Operator License, of the The Amended Regulation For On-Line Hailing Business And Taxicab Operation In Lagos State. 2023, the following must be done;
- An application for the grant of a taxi franchise under the provisions of this regulation shall be made in the prescribed form and manner and shall be filed with the Ministry.
- The date and time of the receipt of each application shall be noted and recorded by the Ministry.
The Taxicab Requirements
The vehicles to be deployed as e-Hailing Business and taxicab must meet the following conditions:
I. Be brand new (for corporate taxi);
Ii. Where the vehicle is not new, the vehicle must be within the first three (3) years of its manufacture as specified by the manufacturer (for corporate taxi)
Iii. The capacity of the vehicle must not be less than 1.3cc.
Iv. A completed, signed and dated safety features compliance form prescribed by the Ministry;
Taxicab License Instrument and License Card Fees
- N5,000:00 the fee to reaffix a taxicab license instrument.
- N5,000:00 the fee to reorder and replace a taxicab license instrument.
- .N5,000:00 the fee to replace a taxicab license (hard card) card.
Required Documents for Taxicab Registration and Change of Equipment (COE)
The franchisee, at franchisee’s expense, shall provide the following documents when requesting to register or change an equipment (or replacement of the taxicab):
- A completed, signed and dated COE request form on a form prescribed by the Ministry;
- Title of vehicle or manufacturer’s certificate of origin;
- A Bill of Vehicle Sale or Vehicle Lease;
- Taxicab license (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’ Badge
Criteria for Intending Drivers in an E-Hailing Business in Lagos State
To be a qualified driver under the company, such individual must have the following include:
- Be at least twenty-one (21) years of age, and a citizen of Nigeria.
- Possess a valid National Driver’s License
- Driver’s Literacy: All registered drivers with any Operator must be a literate.
- Original Annual certificate of competence from Lagos State Drivers’ Institute (LASDRI) in order to determine their competence and fullness (LASDRI) Card.
- Lagos State Residents Registration Agency (LASRRA) Card.
Is there a current Lagos State policy requiring ride-hailing companies to share their operational data with the government?
According to Rules 4..2.1 of The Amended Regulation For On-Line Hailing Business And Taxi Cab Operation In Lagos State. 2023, it gives the Ministry of Transportation access to the e-Hailing Companies’ Database. This however seems to conflict with the provisions of Nigeria Data Protection Regulation 2019 and the provisions of Nigeria Data Protection Act 2023 which guarantees that a data subject must give his consent to the data controller before his data can be obtained. The laws also provide for a caveat which states that when the database is collected legally which overrides the fundamental human right which is provided by the constitution, such consent may be waived. One would then begin to ponder if a law could circumvent the provisions of the Constitution?.
How does Lagos State enforce compliance with its ride-hailing guidelines?
Various Agencies such as The Vehicle Inspection Service (VIC), the Nigeria Police, the Lagos State Traffic Management Authority (LASTMA) and the Federal Road Safety Corps (FRSC) have been empowered to be the check against and also enforce contracts. The law governing this sector is governed by Lagos State Transport Sector Reform Law 2018
Penalties
The penalties for flouting the guidelines as stated are as follows
- Any Taxi Operators or the Service Entity Permit who fails, or whose Driver fails, neglects or refuses to comply with the provision of these guidelines shall have their operating license queried upon the 1st non-compliance. Subsequent non- compliance with relevant requirements shall result in the suspension of the 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 (fourteen) days, the Taxi Operators or the Service Entity Permit does not comply, the license of such Operators is liable to be revoked.
- Taxi Operators or the Service Entity Permit whose Driver fails to comply with the provision of Lagos State Transport Sector Reform Law, 2018 as well as the provisions of these Guidelines, and such Operator fails, neglect or refuses to call such Driver to order, is liable to have their license queried and/or suspended as stated in 5A above.
- Any driver caught driving without a valid driver’s license is liable to a fine. He shall pay as a 1st offender the sum of N20,000.00 and as a subsequent offender, he is liable to pay N20,000.00. Additional punishment includes having his vehicle impounded.
- Any driver caught driving a commercial vehicle without Certificate of Roadworthiness will have his car impounded.
- Any driver caught driving a commercial vehicle without a valid hackney permit will have his car impounded.
For more enquiries on penalties please check the Lagos State Transport Sector Reform Law, 2018
REFERENCES
- Amended Regulation For On-Line Hailing Business And Taxi Cab Operation In Lagos State. 2023
- How to Set Up Ride-Hailing (Transport) Company in Lagos State, koriat Law & Co