By OBINNA EZUGWU
They emerged on the scene a few years between each other, Max Okada (Max.ng), Gokada and more recent entrant, Oride were poised to redefine transportation in Nigeria’s largest commercial city, Lagos. They were witnessing rapid growth and expansion of services until suddenly in early February, the state government, citing its 2018 Transport Sector Reform Law that prohibits engines of less than 200CC capacity from plying major roads, slammed a ban on their operations.
Unable to get the government to change its mind after days of protests and negotiations, the companies are seeking alternatives in logistics, ferry, among other services.
Driven by technology in a city with rapidly growing population and resultant traffic congestion, the start-ups had only the sky as their limit. And had indeed, within the few years of their operation, showed great promise.
Weary of spending hours in traffic, many middle class Lagosians were electing to park their vehicles in favour of the bike hailing services, a viable solution to the frustrating Lagos traffic.
Max came on board in 2015, founded by two tech savvy young entrepreneurs, Adetayo Bamiduro who serves as its Chief Executive Officer Chinedu Azodoh, its Chief Growth Officer.
The company began operations as a delivery service outfit before branching out into on-demand motorcycle-taxi hailing platform.
In May last year, it closed a $7-million Series-A round – bringing to $8.5million it’s total finding – which it planned to use and expand to 10 cities across the West African sub-region as well as scale up its technology infrastructure, deploy mobile payments in partnership with Mastercard, introduce an electric fleet and deploy new vehicle categories.
It’s investors comprise Novastar Ventures, motorcycle and marine hardware manufacturer Yamaha, Breakthrough Energy Ventures, Zrosk Investment Management, Goodwell Investments, Techstars, Olive Tree Capital, Venture Garden Group, RightSide Capital Management, the Shell Foundation and angel investors’ Greg Schroy and Michael Lazerow.
The start-up as at December had nearly 100,000 downloads of its online application and hundreds of bikes for its hailing services.
Gokada on the other hand, was founded in 2017 by m Fahim Saleh, a young Bangladesh investor who resumed as CEO in April last year, following the resignation of embattled former CEO, Deji Oduntan.
The company began operations first in Yaba axis before extending to Ikeja, Victoria Island, Lekki among other areas in Lagos.
Lured by the massive Lagos population, Gokada began to expand its bike hailing services and prior to the ban, had well over 1000 bikes, with over 200,000 app downloads completing 500,000 rides a day.
But the dreams suffered crushing blow early February following the ban. In an emotional video fortnight ago, Saleh lamented the ban and disagreed with the suggestion by Lagos government officials that the bikes led to more accidents on the road.
“We created a beautiful community which was developing and really something that move me to the point where I was OK putting all my money and all my effort into it,” he said.
“Gokada is not just a business, it’s a mission. And every part of that mission was always being safe and providing jobs.
“We provided helmets that the US department of transportation certified which means that if you get a motorcycle accident with that helmet, you are protected. We trained our drivers extensively and we monitored our drivers with technology to know which ones are the bad ones and eliminate them. All these resulted in an accident rate that was well below 0.7 percent. Actually since we relaunched in September 2019, we had about 250 accidents, mostly minor, out of the 350,000 rides that we did.”
But having failed to convince the state government to reverse the ban, the companies are adopting new strategies.
In a statement last week, Gokada said it was exploring the new opportunities, while thanking Nigerians for their support.
“We are currently exploring other business verticals, which include logistics,” the company said a statement on twitter.
“Our transition into other business verticals is alluded to the enabling environment the government has provided for businesses like ours to thrive.
“Our commercial bikes are 200CC and fit to ply the roads based on the law which exempts bikes with engine capacities of 200CC and above. We are registered for commercial purposes and not restricted to bike hailing. So, expect more from us.”
The company has started logistics services, and is said to be considering ferry and taxi services in addition. Max.ng, which originally began as a logistics company is also, in addition, considering other services as it seeks to expand to other cities.
“The key thing for us is to continue to drive value across society and Africa while transforming mobility. Presently we are in Lagos, Akure, Ibadan and Kano; expanding into other cities has always been part of the plan,” Fola Ilawole, the company’s head of Content & Community Development told this correspondent.
“As a business, our mission is making mobility Safe, Affordable, Accessible and Sustainable through the deployment of high-performance technology, systems and operators. Prior to the restrictions in Lagos, we had rolled-out plans and strategies to launch effectively in 10 other high-density cities in Nigeria.
“There are also big plans in the works for African cities. We will play big in the area of technology this year from a point of systems. Also following last years unveiling of our electric vehicles, Nigerians can expect to see our upgraded version of the MAX E-series across major cities in the country.
“Overall, opportunities are immense, right from when we had the vision to bring this service to the market, it had always been about Africa.
“We will be launching our different products in more cities before the end of the year. We are also engaging major stakeholders and partners to deploy charging/battery swap stations across cities. 2020 is a big year for us irrespective of the restrictions.”
Oride, the giant of the three, happens to be only a branch of Opay a multi-service commercial internet platform with interest in fintech, bus rides, keke, media among others, and operating in various cities outside Lagos.
Opay had come into country in 2010 as PayCom Nigeria Limited, a mobile money platform. It would acquire PayCom in 2018, following which it divested into wide range of business interests, one of which was bike hailing, Oride.
Though based in Lagos, Opay is an Africa-focused fintech startup founded by consumer internet company Opera, a Norway-based, Chinese-owned (majority) company in 2018 on the popularity of its internet search engine.
Late last year, OPay raised a $120 million Series B round backed by Chinese investors, Meituan-Dianping, GaoRong, Source Code Capital, Softbank Ventures Asia, BAI, Redpoint, IDG Capital, Sequoia China and GSR Ventures, with which it is expanding its payments products to Kenya, Ghana and South Africa.
The $120 million round comes after the startup raised $50 million in June last year, which also followed Visa’s $200 million investment in Nigerian fintech company Interswitch and a $40 million raise by Lagos-based payments startup PalmPay led by China’s Transsion.
With far more bikes deployed for hailing services than Max and Gokada combined, the restriction has not doubt also dealt a huge blow to the company. But because it is a multi services enterprise with foothold already in other key states, it’s businesses continue without much slowing. In Lagos, the bikes have been deployed mostly to local routes.
The company has built a hefty suite of internet-based commercial products in Nigeria around its financial utility.
These include OFood delivery service and OLeads, Ocar service, Otrike tricycle services, sports betting, SME marketing and advertising vertical.
“OPay will facilitate the people in Nigeria, Ghana, South Africa, Kenya and other African countries with the best fintech ecosystem,” Opera CEO and OPay Chairman Yahui Zhou, noted in a statement recently.
“We see ourselves as a key contributor to helping local businesses thrive from digital business models.”
Since its Series A raise, OPay in Nigeria has scaled to 140,000 active agents and $10 million in daily transaction volume, according to company stats.