Lagos bans tricycles and bikes, what's next for bike-hailing startups?

The Lagos State Government has announced the ban of tricycles (AKA "Keke NAPEP" or "Maruwa") and motorbikes (AKA Okada), including ORide, Gokada and MAXOkada. But by the book, there is a wiggle room for bike-hailing startups to negotiate the sanction.

Effective from Saturday, February 1, 2020, tricycles and motorbikes are restricted from operating in six local government areas, nine local council development areas, 10 major highways and 40 bridges across Lagos State—the commercial capital of Nigeria. (See the full list here)

In total, out of the 37 local government areas in Lagos State, bikes and tricycles have been restricted from operating in 22 local government areas.

Gbenga Omotoso, the commissioner for Information and Strategy, made the announcement on Monday during a press parley held at the State House in Alausa, Ikeja. The Commissioner for Transportation, Frederic Oladeinde, and the Commissioner for Justice and Attorney-General, Moyosore Onigbanjo, were also present at the press briefing.

After consultation with the stakeholders, the State Security Council, in compliance with the extant transport sector reform laws 2018, has decided to commence enforcement of the law which bans motorcycles and tricycles.

On January 20, 2020, the Lagos State Government had issued a restricting order in a statement captioned, "Lagos Govt Has Banned Okada and Keke Marwa From Plying The Roads … Be Warned."

The statement, however, did not clarify whether ORide, Gokada, Max.ng and other bike-hailing startups and dispatch riders were affected by the ban or not. The commissioners clarified some of the grey areas at the press briefing on Monday.

The Commissioner for Transportation, Frederic Oladeinde, said the ban affects all forms of commercial tricycles and bikes, which include ORide, Gokada, MAXOkada, and other bike-hailing startups but excludes dispatch riders if (i)their bike is 200cc and above, (ii)their box is properly attached, (iii)they have their complete papers, and (iv)they are not carrying any passenger.

Tidbit: CC in bikes means Cubic Centimeter capacity of combustion cylinder and it represents the power of the engine. The higher the CC, the more powerful the bike is.

By excluding dispatch riders with this clause, the State government has further muddled not only the restriction order but also the provisions of the 2018 Lagos State Transport Sector Reform Law it intends to implement. More baffling is the inclusion of MAXOkada, ORide, Gokada and other bike-hailing startups in the ban since they operate within the purview of the Reform Law.

Old laws, another attempt at implementation

In 2012, the former Governor of Lagos State Babatunde Raji Fashola (now minister of works and housing) gave assent to the Lagos State Road Traffic Law, which among other things proscribed the riding of tricycles and bikes on major highways and allow them to only operate in other areas between 6:00 AM and 8:00 PM.

Similarly, the extant Lagos State Transport Reform Law which the current administration of Governor Babajide Sanwo-Olu intends to implement was enacted two years ago. Although the provisions of the 2018 Reform Law are comparable to the 2012 Road Traffic Law, it was commended as a remarkable improvement.

Aminat Dakeje-Ibraheem, an associate at TNP—a commercial law firm in Nigeria, said the 2018 Reform Law was the long-awaited messiah for Lagos transport system. "The Law has put a structure in place to determine the continued operation of commercial buses (AKA danfos), motorcycles and tricycles on Lagos roads," Aminat said.

Unfortunately, the structure is only as solid as the whims and caprices of the powers that be.

Instead of a blanket ban on bikes and tricycles on major highways, section 15(1) of the 2018 Lagos State Transport Reform Law permits bikes and tricycles with 200cc engine and above to operate on Lagos roads.

Subject to the provisions of Sector 46 of this Law, motorcycles above 200 cubic centimeter engine capacity are exempted from the restriction on the use of motorcycles on the State highways.
Other motorcycles exempted from the law are those for mail distribution or courier services with engine capacity of 200cc, carrying prescribed vehicle plate number and or identification and not carrying a passenger.

Such a motorcycle must also have a comprehensive insurance policy.
`Lagos State Transport Reform Law

Other provisions of the Law include the use of standard protective helmet, not carrying more than one passenger, pregnant women, children below 12 years of age and adult with a baby or heavy luggage placed on the head or which obstructs normal sitting position on the motorcycle are prohibited from boarding bikes.

Clearly, bike-hailing startups created a system that comply with the provisions of the Law. Except the government amends the Reform Law, bike-hailing startups could argue their case and negotiate the sanction.

Why is the government throwing a blanket ban on Keke and Okada, including ORide, Gokada & MAXOkada?

In addition to the two reasons given by the Lagos State Government albeit untenable, there are other underlying explanations for the blanket ban of  tricycles and bikes on major Lagos roads and local government areas.

The reason given by the Lagos State Government for the ban is to curtail the "scary figures" of crimes and fatal accidents recorded between 2016 and 2019 as a result of the operations of bikes and tricycles in the State.

From 2016 to 2019, there were over 10,000 accidents recorded at the General Hospitals alone. This number excludes unreported cases and those recorded by other hospitals. The total number of deaths from reported cases is over 600 (as of today). Also, the rate of crimes aided by motorcycles and tricycles keeps rising. They are used as getaway means by criminals.

To cushion the effect of the ban on commuters, the State Government said it would be providing buses in the areas where Keke and Okada have been banned from operating.

Areas where we are phasing out Okada as well as Keke NAPEP, we will roll out more buses [LAGBUS] and ensure that people are adequately served. The key point is that we need to make transportation safe. Keke NAPEP and Okada in those areas in particular are not safe. They contribute to congestion and we need to remove the gridlock.

The Commissioner for Transportation added that the Strategic Transport Master Plan (STMP) is being rolled out and more buses will be provided to serve those areas affected by the ban.

Meanwhile, some Lagosians have opined that there are better ways to curb crime, decongest roads and protect lives and properties than to proscribe the livelihood of many young Lagosians and the fastest means of transportation in a traffic-congested soon-to-be Lagos mega city.

Speaking with benjamindada.com, Mofe—a manager at one of the leading co-working spaces in Lagos, said: "Banning Okada would increase the rate of crime because most of the young boys riding bikes would become idle. And as they say, the idle hand is the devil's workshop. Although there is no excuse to commit crime, you cannot collect people's livelihood and not give them something to do."

The CEO of a digital and financial services company, who requested anonymity, told benjamindada.com: "The problem bike-hailing startups are facing is the reason many startups don't like to reveal much information. Since OPay announced the launch of ORide with large investment round, the government has given unsolicited attention to that sector."

One of the underlying reasons for the ban is the fact that bikes and tricycles are not part of the Lagos State transportation model—the Strategic Transport Master Plan (STMP). Restricting their operations on major Lagos roads not only make this clear, it also shows the loophole in the set-up of the bike-hailing startups. Bike-hailing startups were neither licensed by nor have a 'working relationship' with the State Government.

I'm not holding brief for the government. But to the best of my knowledge, no money exchanged hands between bike-hailing companies and the Lagos State Government.

The Senior Special Special Assistant to Governor Babajide Sanwo-Olu on New Media, Jubril Gawat, said, "All the photo ops [such as cover image of this post] were stunt and lobbying tactics. They were not given any approval. Go and ask them yourself."

He was corroborated by his colleague, Wale Ajetunmobi, Special Assistant to the Governor on Media. Wale said: "The Government knew from the onset that Okada won't be part of its transportation model, so it never got them licensed. Those O- guys [referring to ORide] are operating under the CAC registration of their parent companies. That's why they usually have issues with local government officials and NURTW."

What's next for bike-hailing startups?

What do you do when your best is not enough? Do you quit or keep trying? This is the question the executives of Gokada, ORide and Max.ng, would have to answer.

Last year, SafeBoda made the unpopular decision of launching in Ibadan instead of Lagos.

"Due to the undulating bike-hailing (okada) regulatory landscape in Lagos, we decided to start with Ibadan..." Babajide Duroshola, Country Manager of SafeBoda, told us.  

Babajide added that the next line of action for the bike-hailing startups would be to explore other states and "start operating outside Lagos Metro". Although, many of the ride-hailing startups into bike transportation already operate outside of Lagos, like OPay, Safeboda and Max.ng.

Titi Akinsanmi, Policy and Government Relations Lead for West and Francophone Africa at Google, advised that startups need to collaborate in negotiating with the government . "(Bike-hailing) startups must come together and negotiate with the government," she said.

This means the membership of the Transportation Hailing Alliance of Nigeria (THAN), which currently comprises of MAX, ORide and Gokada, must expand to include others such as EasyMobility and TORA Africa. And they must review their lobbying tactics and ensure it goes beyond "photo ops".

However, there exists a crop of bike-hailing startups that might find this ban of little effect or better still near-perfect-timing, if their other business revenue lines are well-to-do. Like the fintech-esque bike-hailing startups. Think of OPay.

It has been famously stated that OPay is running a double-play strategy where the bike-hailing business was a feeder to the "real" fintech business that thrives on transactions (volume, value and fees). Akin to also benefiting from the treasury (interest) from the monies held in their wallets by customers looking to make payment with OPay.

Super apps like OPay have since looked beyond ride-hailing which also gave them visibility and presence and have teased the launch of a smartphone.

Other bike-hailing startups without other business lines are left with three choices: Go home (and focus on other business lines), Go outside of Lagos, Appeal the ban.

Whatever it is, we will be here to tell you the story. Subscribe below.

Friday, 31st January, 2020; The concluding section on what's next for bike-hailing startups has been updated.