Governments make various regulations and policies to guide commerce. Some regulations like minimum wage and requirement for permits or licenses are mandatory, while other policies influence business indirectly. Businesses need to be flexible enough to respond to change, but what happens when start-ups like Gokada and Opay decide to do business in a metropolis like Lagos, and the government threatens an okada ban, or changes the rules halfway into the game?
This week was quite eventful for commercial motorcycle (Okada) and tricycle owners. It started with the announcement of a ban of the above-mentioned vehicles on 15 LGAs and LCDAs in the state, citing overcrowding, accidents and security as reasons. The announcement of an okada ban garnered a lot of outrage from Lagosians, although it was debunked 24hours later.
Mr Gbenga Omotosho, the state commissioner for information and strategy, said this on Tuesday to debunk his earlier announcement. “So many people have made representations to the government concerning commercial motorcycles and tricycles, including human rights groups, unionists and traders. They came up with many reasonable observations, all their views have been collated and are being considered. We feel it will not be good enough for the government to take a final decision on the matter without considering the opinions of the stakeholders.”
But what are possible effects of an okada ban on bike hailing services which have become an almost indispensable mode of transport in Lagos?
The Bike-hailing Miracle in Lagos:
The on-demand motorcycle idea is like greener grass on the other side for millions of Lagosians tired of hours-long traffic jams and arriving at work and appointments late. Compared to cab-hailing services such as Uber and Taxify, bike-hailing is also cheaper and faster, especially in the light of unnerving traffic congestions.
As conventional Okadas (motorcycles) are often reckless, these companies are proving to be the safer option in a city with many traffic rigours. Emphasizing on safety as well as comfort, the bikes carry only one passenger at a time, use helmets and integrate first aid boxes into their on-the-go- service packages.
Then there are the mouth-watering packages of these companies. ORide, for instance, offers users the choice to use the app (OPay) for cash transactions. ORide’s market entry promo included gifts such as power banks, as well as 95% off 10 rides after downloading the app. As long as riders use OPay, they are allowed to pay a ₦100 ($0.27) flat rate for trips costing less than ₦2000 ($5.5). This amount later increased to ₦200 ($0.55).
But all may not be rosy for ride-hailing outfits in Lagos.
Mr. Gbenga Omotosho, the state commissioner for information and strategy on Wednesday, spoke on Channels Television’s Sunrise Daily about the government’s plan to regulate the activities of commercial motorcyclists.
“You are talking about registration; as far as I am concerned, the government has not registered any company to come and be running Okada. In fact, what the government was trying to look at is how to regulate these people so that their excesses can be curtailed,” he said. The commissioner further stated on the breakfast show: “The guys who are doing courier services, for example, they don’t carry passengers and they don’t constitute so much danger. So, those ones are allowed.”
We learnt that Gokada, OPay, Max.ng riders have to pay N100 to NURTW (Nigerian Union of Road Transport Workers) daily, but that’s not all. The ride-hailing start-ups in Lagos also have an impending license fee which the State Government is planning to roll out soon. The License fee is reportedly fixed around N25 million annually per 1,000 bikes. This will definitely amount to “double ticketing” from the government and the NURTW.
What do the Bike- hailing Companies Say?
While talks are still ongoing concerning the license fee, OPay’s Country Manager for Nigeria, Iniabasi Akpan, and the founder and Co- Chief Executive Officer of Gokada, Fahim Saleh, said they are open to government regulation, as it will improve the services of the ride-hailing companies. This means they are not licensed yet, but only registered as a company under the Corporate Affairs Commission (CAC) but will however welcome government regulations.
The 2012 Lagos State Road Traffic Law (PDF), introduced by the administration of former governor Babatunde Fashola, restricted motorcycles or tricycles with engine capacities below 200cc from operating on major expressways and highways. It also stipulated that motorcycles used for mail distribution or courier services should have a minimum engine capacity of 200cc. Oride, Gokada and even Max.ng obviously operate with motorcycles that fit these specifications.
On Funding and Investors
In May 2019 Lagos based on-demand motorcycle taxi app Gokada secured US$5.3 million in Series A funding, to expand its driver fleet, increase its daily ride numbers and grow its team. In July of the same year, OPay, an Africa-focused mobile payments start-up founded by Norwegian browser company Opera, raised $50 million in funding. Part of the $50 million investment includes diversifying country and product offerings.
These platforms (Oride, Gokada, and Max.ng) since their start of operations in 2018 have created jobs for more than 50,000 graduates and more than 10,000 riders for their operations. A ban on them will leave so many youths unemployed and will lead to the closure of related businesses in the country. A ban will also discourage foreign investors from investing directly in the Nigerian economy.
Government regulations and policies need to be less strict on SMEs and other growing establishments. Policies also need to be constant, as a sudden change midway will chase investors off to climes with more considerate regulations.
In the event of an okada ban, what will happen to the thousands of riders who will be left jobless? Your guess is as good as mine. In the end, the state will be worse off for it.