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Bike Hailing Business Review: Upsurge in bike hailing business speaks to a failed govt

Why the recent upsurge in bike hailing business in Lagos speaks to a failed government

Without getting too carried away by merits of a development, it is crucial for us as experts not only to consider but equally analyse its demerits to ascertain whether it is a safe one to go by. In a system where there is a variety of options, settling for less, thus, indicates mediocrity and by extension suggests lack of foresight by people involved.

Today, with new players in the bike business, the rate at which motorcycles are deployed into the country, given its poor network of roads which daily leads to heavy gridlocks especially during rush hours, is quite alarming.

Observations

Without any attempt to deny a good side of the on-demand bike hailing business, we see how it is helping a percent of commuters, who can afford to pay through their nose, beat traffic and reach their destinations pretty faster. However, considering the implications, we observed that this sort of solution is built upon an opportunity that existed on the count of a failed transport sector, where the citizenry is left to fend for itself.

The business vision, model

With an ultimate vision to help people shuttle between places easier and faster, the business makes income charging its clients per ride. In a city like Lagos with millions plying the road daily, navigating through its usual traffic with these bikes can be a lot more spontaneous. With a standing record that an average Lagos resident spends about 3-7 hours daily in the traffic, it is not surprising seeing tens of thousands of people opt for the service.

Projections

In the long term, what we might experience is a road littered with motorbikes with bike-gridlocks chocking the whole landscape. This is because this solution isn’t an ideal solution in the first place. It is a solution riding on an opportunity that is negative if critically examined. In understanding this, we need to see how India (another highly populated country) is struggling with a similar challenge of bikes over flooding its roads. Owing to its high population, its roads are nothing different from a typical Lagos rush hour gridlock. It’s a complete mess in Mumbai, Patna and environs.

The downside

At the end, our roads will no longer be motor-able and the businesses will fail to thrive as transportation is an integral part of business both locally and internationally. Before we get to that point, we need to start asking questions and calling the government to look into factors double-downing its efforts in delivering efficient and reliable transport systems (to include good roads) to its masses.

Possible solutions

  • Embracing the remote job culture
  • Constructing alternative routes
  • Introducing alternative means of transportation
  • Increased distribution Shift work

Is the business sustainable?

Factoring a lot of things, the business is dead on arrival if Nigeria were to be an ideal country. Dead on arrival because the capital invested in it is huge, and for it scale means staying for a longer time when the revenue can begin to meet up expenditure and eventually exceed it for profit to be accrued.

We must bear in mind that this isn’t the local motorbike, where one purchases a ride and gets started as a bike man on the street. Here is a completely different model: investors united, capital raised to the tune of millions of dollars, large purchase made, facilities bought, safety training conducted, etc.

Read also: AMCON Dilemma: How businessmen have joined to milk Nigeria dry

To buttress this argument, ORide Director of Product, Ridwan Olalere, disclosed during the launch of the service in June that bike riders under the company had been trained on safety by safety professionals. In understanding this, imagine how much in terms of finance such training would have gulped. Mind you, he further added that as part of the company’s culture, it tries to hold a monthly training to keep its riders up to date.

The point is, if the Nigerian government solves its transport challenges, the business will suffer and investment might be lost, unrecovered. It is only unpatriotic for anyone to pray for this business to scale. It is just as negating the national anthem and national prayers.

Figures you should know

  • OPay raised $50 million from investors
  • 25 million naira is expected to be paid to Lagos annually for licensing.
  • Undisclosed amount (millions, who knows?) go into training of riders
  • In May 2019, Gokada reportedly raised $5.3 million purposefully to scale
  • In June 2019, MaxNG raised $7 million and attempted to introduce electric bikes

Who are behind this business?

  • The MaxNG $7 million capital was reportedly backed by Yamaha
  • Gokada is leaning on the support of investors like Right Side Capital Management, Shell Foundation and Techstar
  • Lead investor for OPay includes: Opera, Sequoia China, IDG Capital and Source Code Capital

The problem with the transport sector

Largely, the problem is a problem of infrastructure. Aside this, the reality is that we have been boxed into a corner where choices cannot be negotiated. Our transport challenge can no longer be met by the few existing options of bikes, tricycles, cars, vans and buses. Lagos, or generally stating: Nigeria, needs more robust solutions and strategies outside road transportation. Road alone, at this stage, is not only limiting but also grossly unreliable.

What should the government do?

In improving traffic congestion and creating a space for business to succeed, government must rise up to introduce alternatives. Policies must be made to regulate the use of the road. Companies must cut down on staff migration to and fro by adopting remote working where possible. Reasonable slash in the number of staff working during the day should be considered where night shifts can work to meet company’s output

Aside policy reform and internal measures to decongest the road, government should invest in infrastructure: more train routes, intercity trams, subways, safer ferries etc. The government must be responsible enough to know that merely pocketing 25 million naira on annual licensing fee is not the way to go. If anything, it should be considered as a bribe –not good for business.

By Ridwan Adelaja…

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About the author

Ridwan Adelaja

Ridwan Adelaja is a multimedia journalist with a special interest in business news analysis.

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