How to start a cab taxi business in Nigeria

cab taxi business in Nigeria

Do you know that cab taxi business in Nigeria is huge?

Don’t worry, I will show you how you too can set up the business and tab from the opportunities.

Taxi is an essential service in most cities, providing easy and affordable access to transportation from one location to another especially for those who are incapable of getting from one place to another by themselves.

Transporting people to their working place, school, airports and safely back home have made the cabs a great service to communities.

Even though the cab business might seem to be easy, you still need to know the nitty-gritty of the business in other to be successful.

The mode of operation of the taxi business may vary depending on the location of the business. For instance, cab taxi business in Abuja may vary from that of Lagos. Some may operate both doors to door within the designed picking location, while in some places, you have to pick and drop customers in the designated location.

Some may operate both doors to door within the designed picking location, while in some places, you have to pick and drop customers in the designated location.

Ways to start a cab taxi business

There are basically two ways you can start the business. You can either buy an existing taxi business or start from scratch.

Buying an existing taxi business

Buying an existing taxi business will require some huge investment. In other words, it can be capital intensive.

Start from scratch

If you want to start from the scratch, then these are what this article will seek to show you.

Before going into that, let’s look at some of the reasons why you should  start a taxi business.

Why start cab taxi business in Nigeria?

There is a high influx of people to the urban areas, the demand for a commercial taxi is on the increase.

  • Most cities are banning the use of commercial motorcyclists and thus increasing the taxi business opportunities
  • It’s one of the cheapest modes of transportation and more people are using it for that
  • It’s convenient to passengers
  • It can be used as car hire service when the need arises
  • Profit can be on a regular basis when properly managed
  • Taxis are always needed.
  • You can start this business with one car and add to your fleet as you can.
  • You can hire drivers to do the work for you.
  • You are likely to get repeat and referral business.
  • How to start taxi business in Nigeria

If you are looking to start a business that provides an essential service to your community you may want to start a taxi business. Here are the steps to take that will ensure you’re successful.

How much does it cost to start a cab taxi business

Well, this will largely depend on your business location and the task the business will do. However, it’s during the planning stage you’ll be able to evaluate to know the future expenses.

There are four necessary things that will actually determine the startup cost of the taxi business.



The number of vehicles and the customer you intend to target will depend on the type and cost of the taxi to use.

If your cab taxi business  will target airport passengers, the vehicle will differ from the one you can target normal passengers.

Sometimes it can also depend on your location. Certain cities have the specification on the type of type you’ll use for different taxi business service.

Finally, the number of the vehicle you’ll use will also add to the cost of the business. The expenses of starting with 5 cars are different with starting with 2.

It’s important to look and see the most used car in your area, that will give you the idea of the type of car to use.

But in general, most cities use Toyota cars, which are durable and has fuel economy. The price may vary depending on the location.


The equipment you’ll use will depend on the number of vehicles you’ll use. Buying painting materials for rebranding will depend on the vehicle number.


Business licensing will depend on the state you’re located. In one of the states recently, to obtain licensing to start a taxi business service, you’ll have to pay 15, 000 naira. So it will entirely depend on the location.

Business registration

Business registration will depend on the type you want. A lawyer will charge you between 48, 000 to 150, 000.

The cost of starting a cab taxi business will all depend on the services you want to render and the customers you want a target on a daily basis.

Now that you know the reasons, let’s dive into the ways to starting the business.

How to start a cab taxi business in Nigeria

Decide on the type of taxi business you can do

There are several types of taxi business you can do. You’ll have to make the decision. But that will largely depend on the type of customers you’ll want to target. For instance, if you decide to target airport passengers, you can start an airport taxi business.

What you need in cab taxi business in Nigeria

You’ll have to know the type of car you’ll need to use. Not all cars will be suitable for this business. It also will depend on the customer as well. But are some tips that will help you when selecting a car:

  • It must be a car that is rugged
  • It must have good fuel economy
  • It must have available spare parts with your location
  • It must have mechanics available to repair the car always

When you’re still not convinced, ask the services of an expert or ask one or two taxi drivers the reason they use the car they use in their taxi business.

Then when you’re through, you’ll need to know the route you need to cover daily and how many times you’ll be serving the car each week.

Start with a taxi business plan

It might be a business opportunity you may think you know it all. But having a business plan will help you to avoid unnecessary errors in the business startup.

Your taxi business plan should contain the executive summary, proposed capital for the startup, organizational chart, and financial statements. This plan is the projected business in its entirety.

A good plan will send investors or funding required to start the business.

Register your business

Now you’ll need to register your business to get a name. This name makes you unique and people can identify you with it. It also helps you to brand your business.

Find a location

Find a location that will be where your office is. Your location should be easily accessible to both cars, motorcycles, young and old, preferably in a major place where people can easily locate the business.

Buy the necessary cars

At this point, you’re working with a plan. The most important here is to start small and scale it up with time. Buy high-quality cars that will last and gives you the efficiency that you need.

If you’re buying a fairly used car make sure it is of great quality. The services of a professional might be required when buying these cars, to avoid choosing the wrong one.

Register to get other licenses/permits

You need to find out what types of permits and licenses are necessary. These licenses will differ from federal to state. Also, licenses for states will differ from one state to another.

You’ll need to ask to know which one you’ll need before you start a taxi business. These licenses will ensure that you have to adhere to the rules and will follow the rules.


Not many see insurance as something important. Losses may arise as a result of accident, theft or breakdown of the car. With insurance, such losses will be taken care of.

Insurance provides the needed liability insurance for your cars and your drivers. This is very important because you’re insuring the business against future loss.

Include advertisement in your cars

Use the car to include logo and phone numbers on it. This will make people easily find your contact and to eventually lead to using your services.

Use taxi business cards

Without customers, there will not be a steady stream of business. That’s why you need a taxi business card which keeps you at the forefront of your customer’s mind everywhere they need a ride.

The taxi business card makes it easier for riders to contact you anytime.

The business card can include the company name, your name, contact address, and the services you offer.

Hire the drivers

Hire those with experience and are willing to obey the rules. Going into knowing their background and the reason they left their previous job. Knowing all that will help in hiring the drivers that will drive with safety.

To know the total distance covered, you can use technology and install tracker that will tell the route the car have ply on a daily basis.

These help you track the distance and be able to estimate the daily income.

Launch the business

Launching your business can be done by offering a free service the first day, to create a first good impression and to build confidence.

Using that method will make people begin to tell their family and friends about your business, making them eager to want to use the taxi and that alone is another form of advertising.

Begin to advertise your business. Tell people why your taxi is better than any other. To advertise, you can use word of mouth, distribute flyers and banners and don’t forget to include the advertisement on your taxi cab.

Tips to be successful

Be unique: Make your car color unique, these will make people recognize the taxi easily. This is one of the easy ways to build your brand. Make uniforms for your drivers with their ID cards place across their shoulders.

Also, introduce new things like new payment method (payment with POS) and possibly an app that will make people easy to for riders find and use the service easily.

Be neat: they say, cleanliness is next to godliness is true. A clean car makes it inviting. Make your car need always. If possible use car freshener to make the environment inviting always.

Customer feedback: Get to know how your customers feel about your services. They may tell you where you need to improve. Feedbacks, there is no way you can know how your customer feels.

Unique selling proposition: there may be competitors, but you can use your price to build more customers by offering an unbeaten prize.

Make it easy for people to hire you: Use whatever technology you can use to make it pretty simple for customers to find you.

Risk involve in starting a taxi business


The accident might occur at any given time. This is why it’s important to ensure the business to take care of the loss when the need arises.

Bad drivers

A bad driver can do more harm than good. A bad driver can cause an accident, fight with customers and can drive recklessly.

Such drivers can send a bad name to your business and people will shy away from using your taxi.

One way to know how your driver behaves is by putting a number where customers will report such issue easily.

Hike in fuel prices

This can occur from time to time and can be beyond your power. The only solution here is to form an alliance with an existing filling station to become the official filling station for your taxi business.

Such a move will enable the filling station to reserve the fuel (whether PMS or diesel).
final thoughts

To start a cab taxi business in Nigeria, you’ll need to take it one step at a time. Many are into the business, but to be successful, you’ll need to be different from the rest and create something that will meet your customer’s expectation.

Movement of people will not slow down. As more people move into the cities, the need for taxi business service will continue.

Your turn

What do you think about the steps in starting a taxi business in Nigeria? Feel free to make your contribution.

Feel free to share



See also  21 awesome small business ideas for MBA graduates

Bako Yila

Bako Yila is an entrepreneur and loves working with aspiring entrepreneurs the right way. His blog offers business idea and resources to build a successful business.

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3 Responses

  1. Yogaraj S says:

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  3. Oladele says:

    Wow, this is really amazing, thanks for sharing this amazing information

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