Bike-hailing Firms May Resume Operation In Lagos As Negotiations With The Government Is Ongoing

April 10, 2020
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ORide, Gokada and MaxNG may soon resume operations on major Lagos roads as the bike-hailing firms are in talks with the state government to negotiate the ban imposed on them.

In February, the Lagos state government included bike-hailing startups in the policy restricting bikes from major local government areas of Lagos state. However, the bike-hailing startups are now in talks with the state government to lift the ban, according to Nairametrics.

Hope for bike-hailing start-ups

Following the ban, the bike-hailing startups in Lagos were faced with a dilemma on how to save their company. Gokada was forced to lay off about 70% of its workforce and pivot into last-mile delivery services.

Another bike hailing startup, MaxNG relocated its business to Ibadan, the largest city in West Africa and one of the largest business districts in Western Nigeria.

However, there might still be hope for bike hailing startup in the state as the government and other stakeholders are on the negotiations table.

There are no strong indications that the Government will change its policy but Osagie Alonge, the Director of Growth at ORide has told Nairametrics that they are in negotiation with the government.

“We never stopped discussions, we never stopped engaging as regards the government even before the ban came. We’ve always been hopeful, we’ve never told ourselves it’s not going to happen, I guess that’s why those conversations are still going down because we are hopeful, that one time or one day the government will actually give room for an alternative means of transportation within the city.”
Osagie Alonge, the Direct of Growth at ORide

The media liaison for Gokada, Odion Aleobua speaking on the reported negotiations, didn’t deny it but said he could not confirm due to the lockdown.

“We are still in lockdown, so I can’t give you confirmation on that information.”Odion Aleobua, Media Liaison for Gokada

Why Lagos government may lift its ban on bike-hailing Startups

When the Lagos State Government imposed the bike ban in February it cited safety and security as major reasons. It insisted that accidents caused by bikes and tricycles which have risen inexplicably necessitated the ban.

The government also lamented security threats posed by bikes as they are reportedly used to perpetrate criminal operations.

However, bike-hailing startups like Gokada have come out to debunk the government’s concerns saying that it has a 99.8% safety record since it started in 2017.

The CEO of MaxNG also said all its bikes and operations complied with the safety regulations put in place by the government. He added that they have also provided comprehensive insurance that covers their passenger to ensure safety.

On the point of security, the government could reach an agreement with the bike-hailing firms to use Digital trackers to account for the movement and activity of every of their registered riders. This measure can easily forestall the use of any bike for criminal activities.

Lagos Traffic laws

Another factor that helps the bike-hailing startups case with the government is the fact that their bikes fall within the provisions in the Lagos traffic laws.

Lagos State Road Traffic Law of 2012 forbid bikes from plying major roads. The law however, exempted bikes with 200 cubic centimetres (cc) engine capacity and above from the highway ban. This law allowed private power-bike owners and dispatch riders to operate.

Gokada, Max and ORide bikes are all above 200cc engine capacity. This means that their bikes can legally ply Lagos highways. With all the stakeholders open to negotiations, an understanding could be met that see them resume operations.

N25 million Licencing fee

Before the Lagos government decided to impose a ban on bike-hailing startups there were reports that it planned to regulate the sector and introduce a N25 million license fee on operators.

Last year, when asked about the reported licence fee, Opay Country Manager, Iniabasi Akpan responded that nothing has been finalised and discussions are ongoing about it. He added that there was definitely going to be a license fee.

With all the stakeholders on the negotiation table, it is possible that the initial plan may be revisited.

Although, the CEO and co-founder of MAX, Adetayo Bamiduro revealed that the licence was frowned upon when it was initially proposed by the government, after more than a month’s ban, the startups would likely welcome any alternative instead of an outright ban.

Revenue Opportunity

The revenue opportunity that bike hailing could create is a propelling factor that could make the Lagos State Government reconsider its policy. According to Ayodeji Adewunmi, co-CEO of Gokada, bike-hailing could rake in about in $5 billion in revenue.

Lagos has a large market for bike-hailing. Before the ban, Lagos recorded about 4 to 5 million rides a day.

Although the Bike-hailing startups have good grounds for negotiation, we have to wait to see if the Sanwo-Olu led-administration will lift the ban. The negotiation has, however, been delayed due to the current coronavirus outbreak.

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