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Ride-hailing apps takeover Lagos

Ride-hailing apps takeover Lagos

Ride-hailing apps are slowly taking over the motorcycle taxi market in Lagos, Nigeria.  

Smallholder farmer Mohammed Abubakar knew he had few chances of earning a decent living in Bida town in central Nigeria’s Niger state, so he decided to move to Lagos last year. Once there, Abubakar only got offers in lower paid jobs such as security work. “I realised that most people from my village were motorcycle taxi drivers and they were doing well,” says the father of two. He used his savings to buy a motor­cycle and now he is earning enough to allow his wife and children to join him in Lagos.

However, motorcycle taxi drivers like Abubakar cannot drive around Lagos freely. In late 2012, Lagos state authorities banned motorbike taxis from operating on several main roads as part of an effort to reduce the chaos that characterises this megacity with a population of more than 20m. Several other states have imposed similar bans, citing rising motorcycle-related accidents and fear that armed robbers are using motorcycles to carry out drive-by robberies. Commercial motorcyclists have gained notoriety for committing traffic offences and ignoring safety procedures such as wearing helmets.  

Despite the ban, motorcycle taxi drivers are ubiquitous in Lagos, though they operate with caution and try to keep away from main roads, bridges and wealthy neighbourhoods. They have to contend with security officials who often impound their bikes and demand payment of fines. With these problems in mind, two Nigerian entrepreneurs – Chinedu Azodoh and Adetayo Bamiduro – teamed up in June 2017 to launch MAXOkada, a motorcycle taxi-hailing app. Drawing on their experience in running Metro Africa Express, a logistics startup they founded in 2015, and from the expansion of ride-hailing services like Uber and Taxify into Lagos, they realised that there was a need for a motorbike service to relieve traffic congestion. In January, another app known as Gokada started operations in Lagos. The goal for both firms is to provide a motorbike taxi service that is safe, affordable and readily available.

Known as okada in Nigeria and boda boda in East Africa, motorcycle taxis thrive because of poor urban planning, lack of adequate public transport, unemployment and low car ownership. In addition, bikes can easily travel on bad roads and narrow streets and remote areas where cars cannot go. In Lagos, where the city’s legendary traffic congestion entraps commuters in noisy streets and sweltering heat for several hours, bikes are a handy alternative. With motorcycles, a commuter can return to a distant suburb within 40 minutes rather than getting caught up in gridlocked traffic for four hours.

Licensed bikes

Riders like Abubakar receive little or no training, but MAXOkada trains drivers, who use licensed motorbikes to operate in routes allowed by the state. Commuters who want to use the service simply have to download the app and sign up with details like their name, phone number and debit card information. MAXOkada works with Indian manufacturer Bajaj Auto to provide motorcycles. Motorbike owners, known as partners, can only put their motorcycles on MAXOKada’s network after meeting certain criteria such as proof of ownership, confirmation of local government registration, valid vehicle insurance and a current license. Gokada, which was started with a fleet of 100 bikes, works with partners who apply to be accepted on the network and are connected with trained drivers.

These drivers must have a verified profile, permit and valid identification and must provide two guarantors. The partner purchases a Gokada-branded motorbike and earns returns on a weekly basis. Individual partners on Gokada can own up to five bikes, while fleet partners can own six bikes and above. Drivers who own motorbikes can also join the platform.

Both apps prioritise safety. Drivers on MAXOkada and Gokada have one helmet for the customer and one for themselves. The firms use GPS tracking during the ride and two-way feedback at the end of the trip. Riders can pay by cash, debit card or mobile wallet. In May Chinedu Azodoh told CNBC Africa that the firm gets up to 3,000 orders per day and has employed over 300 drivers.

The rise of mobile phones and growing internet penetration present a clear advantage to tech startups, particularly in big cities like Lagos with relatively reliable 3G and 4G connectivity. In December last year, Uber’s West African general manager Lola Kassim said that the service has 267,000 riders who actively use the app or service and over 7,000 drivers. Lagos state authorities seem to be willing to support the e-hailing motorbike services. In June 2017, MAXOkada announced that it was partnering with the Lagos State Employment Trust Fund (LSETF) in a motorcycle financing scheme through which the startup will send vetted riders to the LSETF to get funding.

Not for everyone

But data charges and smartphone ownership remain beyond the reach of many in a country where over half the population live on less than $1.90 a day. Furthermore, many customers stick with riders like Abubakar for the convenience. Some balk at the time spent using an app and the several minutes that customers must wait for a Gokada or MAXOkada, given the immediate availability of unlicensed riders and the competitive nature of their negotiable fares. Meanwhile, the broader Nigerian tech industry has been hampered by uncertain regulation, poor infrastructure and financing problems.

But the target market for most e-hailing services is a rapidly expanding middle class, driven by a desire for comfort and convenience. The firms believe they can offer such customers clear advantages over unlicensed bikes, including the ability to drive on approved routes, protective gear, and easy linkage with customers. Abubakar is dismissive of the new competition. He insists that regular bike riders are no different from those on the taxi-hailing services – and says that his fellow riders will take some persuading to join the networks. “The only difference is that they wear helmet and have phones with apps,” he says.

Linus Unah

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Written by African Business Magazine

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