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Lagos motorcycle ban hits digital ride firms, chills investor climate

By Oluwatosin Adeshokan
Posted on Monday, 3 February 2020 13:04

There is confusion in the wider Okada-riding community about what happens next. REUTERS/Temillade Adelaja

The government of Lagos reintroduced a ban on commercial motorcycles and tricycles in many of the city’s major residential and business clusters.

Traffic problems have added up to four hours to the daily commute of the city’s residents, and tricycles and commercial motorcycles have provided a solution for many of the megacity’s inhabitants.

Why it matters

Lagos has a world-wide reputation for its infamous traffic jams and poorly maintained roads, and the ban will only increase the problems for residents of the city. For the 22 million residents of Lagos, commercial motorbikes — known as “okadas” — have gained repute for their ability to snake through Lagos’ ever present congestions. Tricycles — “keke’s” — are also a major form of transport used to beat the congestion.

To the government of Lagos, however, these alternatives probably deviate from their vision of how a megacity should look.

  • The Lagos State information and strategy commissioner Gbenga Omotosho said it was to, “protect Lagosians from the negative effects of these illegal modes of transportation.”

Lagosians are – to put it mildly – unimpressed.

Given the limited routes and coverage of the state run BRT, keke’s and motorcycles are a cheaper and safer option to navigate Lagos.

There are reports of furious okada riders clashing with police in Lagos today.

Background

In 2012, the then governor of Lagos, Babatunde Fashola, placed a total ban on commercial motorcycles in the Ikeja area of Lagos. Hundreds of motorcycles were impounded by the police, who later issued a statement explaining that the ban was imposed because of the high rate of robberies involving the use of okadas.

This time, the government has cited security and safety concerns as their reason for the new ban. They also cited a tendency to disregard traffic laws and the number of accidents involving these forms of transport. According to Gbenga Omotoso, the commissioner for information and strategy, “They have been found to have become part of the problem they set out to resolve,” but added the ban does not extend to courier service companies.

The Lagos State Transport Sector Reform Law from 2018 cited as the legal basis for the decision made an exception for motorcycles with engine capacities above 200cc. However, the new ban that goes into effect from 1 February, makes the use of passenger motorcycles illegal in most of the state. Already, all the bike-hailing startups in Lagos assert that their bikes are well above the 200cc benchmark.

The Lagos state government has often touted its intent to regulate the motorcycle hailing industry. Following operational hiccups, the Lagos State government on behalf of bike-hailing start-ups brokered a deal to introduce a ₦500 ($1.4) daily ticket from the NURTW to allow them to operate anywhere in the state, without the fear of consistent harassment.

In 2019, mobility technology companies like Gokada, ORide, and Max.ng became increasingly attractive to investors and raised over $100 million in funding.

One of the affected companies, MAX, claimed that mobility-tech companies were in constant communication with the state government and the government actively encouraged operators to invest millions of dollars in asset acquisition, technology, and manpower.

For ORide riders, there is a general confusion as to what the future holds. To a few riders, the company assured them that the ban would not affect them.

Investment in danger

There is a fear that investors will move their capital to more favourable markets. Citing the over $100 million raised by MAX, Gokada and OPay in 2019, Oluwatosin Ajani, a Lagos-based economist believes the measure will impact the country’s standing on the ease of doing business index.

“In time, these things will factor into the ease of doing business index and Nigeria will fall back down in the rankings,” he warned. “If investors find that they can’t find get out their investment because of terrible government policy, there will be little to no investment in the country and Lagos as a city.”

Other experts criticise Lagos for implementing policies without putting alternatives in place. The government has announced that it will roll out buses, but the BRTs do not cover the whole city, leaving a huge gap for the tricycles and commercial motorcycles.

  • Adetayo Bamiduro, the co-founder of MAX, explains that Lagos is a very important market with a problem that mobility tech companies are solving. “Because we did not want to be lacking, we bought 220cc motorcycles, bigger than the recommended 200cc, so we would be able to operate. We have conversed with the government at different times and helped come up with frameworks to see the problems of the informal transport system and how to enforce safety,” he explained.

Bottom line: This government policy threatens the quality of life of residents of Lagos, but also investors and entrepreneurs, who will look away from Lagos if their investments cannot be backed by a predicatable business climate.

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