Regularly, Nigeria sends entourage abroad, to market its economy and attract more private investments but the few it has are being squeezed by tight regulations from governments.
A clear example is the case of motorcycle hailing firms that have been raising investments to tap into the increasing population in the country’s commercial city, Lagos, but their operations are being disturbed by hoodlums under the auspices of the National Union of Road Transport Workers (NURTW).
In most instances, their activities are being disrupted as they are forced to pay numerous levies- both official and unofficial- by road associations who claim to have the backing of Lagos State Government, BusinessDay has learnt.
BDSUNDAY investigation has shows that transportation unions in the state extort from motorcycle as much as N500- in excess of N400 they collect from regular bike riders- in the form of ticket fee daily on each of their riders, a situation analysts say could deter new investments into the space at a time when the economy is in dire need of private investments to reduce the high unemployment rate currently around 23 percent, according to data from the National Bureau of Statistics data.
“Nigeria is fond of making the business environment unfavourable for investors,” said Pascal Odibo, group country director, Jeff & O’Brien Knowledge. “At times, I wonder whether they consider their actions before they are ever taken,” Odibo said.
Motorcycle hailing firms in Africa’s biggest economy have been keen to see a much working environment where they could better be regulated by the government to enable their effective operations.
In an interview with BDSUNDAY, the Country’s manager for Opay, Iniabasi Akpan said: “The firm is looking out for a situation where there would be synergy between the firm and law enforcement agencies to guarantee the safety of its riders by tackling the challenges it faces daily with the transport unions”.
The Lagos State government plans to introduce a new licence agreement for bike hailing start-ups so as to allow them operate within the state.
The licence will see hailing firms pay a licence fee of N25 million (about $70,000) annually for every 1,000 bikes and thereafter pay N30, 000 for each registered bike rider after the 1,000 mark.
“I think it is a good thing and we have anticipated this. If you are going to get serious players into the market then you have to get people who are willing to pay for the cost to run the business. It is a means to identify those who are serious and those who are not,” Akpan noted.
While this regulatory framework seems plausible, there are fears that the proposed amount would be a hard nut for these firms to crack, considering the fact that many of them have over 1,000 bikes at their services. With that, they will be expected to pay over N25.5 million annually or risk being harassed by government officials.
This could also limit the expansion plan of firms in the industry as they have raised funds to expand to other parts of the country. It would also create a barrier for new entrants wishing to enter into the market, according to analysts who spoke to BDSUNDAY.
Lagos, Nigeria commercial hub and fifth biggest economy in Africa, is home to over 21 million residents, who go about trying to meet up with the basic necessity of life.
With an increasing population, the state is still challenged with inadequate transport system that makes the populace seek quicker means to get to their various destinations.
The trend of hailing business in the country started with the coming of Max.Ng biking services which started operations in August 2015 followed by the Gokada which started operations in February 2018. Recently added to the league is the ORide biking service which began operations in June 2019 and started by offering 90 percent discount to its riders.
Since inception, the three firms combined have raised a total of $65 million and employed thousands of the working population, based on data tracked by BDSUNDAY. The funding raised, according to these firms, was for expansion purpose into other West African countries as well as other states in Nigeria.
As advanced transport operators, these firms have distinguished themselves through the use of technology and driving financial inclusion.
They have also strictly adhered to traffic regulations, safety compliance for both passengers and riders by having a corporate branded identity and also with the use of helmet which has been warmly welcomed by Nigerian commuters, especially Lagosians.
American multinational transport firm, Uber is eying to establish its motor cycle-hailing business, Brooks Entwistle, head of Global Business Development for the firm, earlier said. However, the numerous outcries by already existing firms could make the transport firm take a pause on its decision.
Adetayo Bamiduro, co-founder for Max.N, said: “As long as the firm continues to demonstrate value to Lagosians, political leaders should do the right thing so as not to frustrate progress of the players in the sector”.
MICHAEL ANI & GBEMI FAMINU
