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LASG MAY Slam N25m Operating License Fee on Motorcycle-hailing Startups

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Motorcycle-hailing startups like Gokada, Oride, SafeBoda and MaxOkada may have considered Lagos as a viable hub or haven for their on-demand motorcycle business. However, they are about to face some regulatory hurdles in the state according to several reports.

The Lagos State Government (LASG) is proposing an annual licensing fee of N25 million to operate an on-demand motorcycle service in the state as part of local transportation infrastructure.

Quartz reports that:

Under the proposed regulation, each startup will pay annual licensing fees of 25 million naira ($70,000) per 1,000 bikes and then 30,000 naira ($83) per bike after the first set of 1,000. The startups will also still be expected to pay annual taxes on revenue. Gokada, Oride and Max.ng, three of the major startups in the space, all have over 1,000 riders signed up to their service.

The reason for the exorbitant licensing fee according to Quartz is due to the Lagos State’s government aversion “to having commercial motorcycles for transport in Lagos given its long-term plans as it builds a mega-city. As such, the licensing fees are being seen as a tactic to frustrate the startups and raise the barrier to entry.”

It may interest you to know that “The regulations follow a series of meetings between executives at the biggest ride-hailing startups and the state government since the start of the year.”

Not Good News for Motorcycle-hailing Business

Over the last few months, motorcycle-hailing startups have been making headlines as they unveiled grand plans and strategies to profer solutions to the horrible traffic in the state. Lagos commuters lose 75% of weekly working hours in traffic.

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To escape traffic, they result in taking the regular motorcycle popularly called Okada which is quite dangerous. Thus, the attractiveness of the motorcycle-hailing startups which are better structured and organised.

Clearly, the proposed licencing fee, if actually implemented, would come as a source of concern for these businesses which have raised several millions of dollars and invested heavily in the business.

MAX.ng, the pioneering Nigerian mobility startup, raised $7 million from an elite group of strategic and financial investors from the US, Europe, Asia and Africa while Gokada, a Nigerian motorcycle ride-hailing firm raised $5.3 million Series A round led by Rise Capital to scale its business.

Riders are already facing harassment

Sensing that the motorcycle-hailing startups are gaining ground, some members of the transport associations in Lagos like Road Transport Employers’ Association Of Nigeria (RTEAN), National Union of Road Transport Workers (NURTW) and Amalgamated Commercial Tricycle and Motorcycle Owners, Repairs and Riders Association of Nigeria (ACOMORAN) are harassing and hassling riders of these motorcycle-hailing startups.

The Associations want the riders to pay daily fees and this has inadvertently forced them to avoid some routes. As one executive put it: “Except government taxes, every other thing is extortion.”

A history of banning Okada

The Lagos State has a history of banning Okada in the state. The administration led by Babatunde Fashola banned Okadas in 2010 in some parts of the state to bring back sanity. The Okadas which swarm the city like mosquitoes constituted a nuisance in the state.

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However, the Okadas returned to Lagos streets during the tenure of Ambode and they have never looked back.

Without doubt, the motorcycle-hailing startups would have considered all this before they decided to set up shop in Lagos.

They must have hinged their decisions on the fact that they are safe, organised and structure. And sooner rather than later, the regular Okadas will die a natural death as prices continue to drop due to the competition.

What next?

If the Lagos State Government decides to enforce the licensing fee, the state will be sending wrong signals to potential investors that it is not ready for business.

What the government should do is to create an enabling environment for businesses to thrive and not slamming a ridiculous fee on these startups that are barely 2-years-old in the state.

Perhaps, the LASG should take a queue from the partnership between Ondo State Government and Max.ng. The collaboration was fast-tracked by both parties under the “SUNSHINESAFEBIKES” initiative.

The motorcycle-hailing startups should continue engaging the government making them see reasons why it is important for them to be part of the state’s long term transportation plan. If in any case, there should be a licensing fee, an acceptable and reasonable amount should be charged.

 

 

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