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MarketScreener Homepage  >  Equities  >  Xetra  >  Allianz SE    ALV   DE0008404005

ALLIANZ SE

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Motorbike taxi firms rev up for race into West Africa

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06/12/2019 | 05:14am EDT
Adetayo Bamiduro Co-founder/CEO of Max.ng explains his company operations during an interview with Reuters in Lago

LAGOS (Reuters) - Motorcycle taxi companies are expanding in West Africa with backing from investors betting that the meteoric rise of two-wheeled taxi firms in Asia can be replicated in some of the fastest growing countries in the world.

Four bike taxi firms are now battling it out on the streets of Nigeria's commercial capital Lagos and the oldest, Nigerian motorcycle taxi firm max.ng, is planning to launch in Ghana and Ivory Coast this year, as well as a fourth Nigerian city.

While informal motorcycle taxis have been around in Africa for years, the new companies are hoping to win market share by offering trained, accountable drivers and the convenience of booking rides through a mobile app.

As in Asia, the companies are also looking to turn their ride-hailing apps into one-stop mobile shops offering a host of services from e-payments to deliveries to insurance - the kind of strategy that transformed Indonesia's Go-Jek into a $10 billion company in less than a decade.

Max.ng co-founder Adetayo Bamiduro said its expansion would be funded by a recent investment round that raised $5 million-$7 million and that it was targeting an accumulated total of 2 million rides by the middle of 2020, up from 200,000 by May.

The company started out as a motorbike delivery service in 2015 in Lagos and added an app for ride-hailing in 2017, as well as credit facilities for would-be drivers to lease new bikes and pay for them over time.

"What we've done is to look at the market in Nigeria and across the region and say 'what pieces are missing?': financial infrastructure for mobility doesn't exist, ride-hailing technology for two-wheeled and three-wheeled mobility doesn't exist," Bamiduro told Reuters.

Africa offers huge potential for motorcycle ride-hailing firms due to low personal car ownership, rapidly expanding populations and a lack of efficient mass transport systems in fast-growing cities that are clogged with cars.

BIG OPPORTUNITY

Known as okadas in Nigeria and Ghana and boda bodas in East Africa, informal motorbike taxis are part of the African transportation fabric. In Nigeria alone, there are an estimated 8 million okada drivers, according to max.ng and rival Gokada.

Nigeria has Africa's biggest economy and largest population while Ghana and Ivory Coast are two of the world's fastest growing economies, according to the International Monetary Fund.

While the motorbike taxi firms in West Africa are small now, investors hope some can replicate the success of the Asian ride-hailing unicorns.

"Go-Jek showed what could be achieved in a market like Indonesia, then the Uber and Lyft IPOs led to a global interest in mobility," said Aubrey Hruby, co-founder of Tofino Capital, which invests in emerging market tech firms.

"People are looking at mobility and they're looking at the next big opportunity," Hruby said.

Bamiduro declined to name the investors in max.ng's latest funding round, but said two had also invested in Singapore's Grab which, like Go-Jek, expanded quickly thanks to consumers using smartphones to shop, commute and make payments.

Besides max.ng, the other three companies offering motorbike taxis in Lagos are Gokada, SafeBoda, which started out in the East African, and ORide.

Gokada is funded by U.S. and Gulf investment and venture capital funds while SafeBoda counts Go-Jek and Allianz among its backers.

When the German insurance giant's Alliance X digital division announced its investment in SafeBoda in May, it said the firm had substantial growth potential with scope for developing financial services and insurance products.

Founded in Uganda in 2015, SafeBoda launched in Kenya last year. Babajide Duroshola, who heads its Nigeria operations, told Reuters the West African country's population of about 190 million made it appealing.

By comparison, about 120 million people live in the East African Community, which is made up of Burundi, Kenya, Rwanda, Tanzania and Uganda.

ORide, the latest motorbike ride-hailing app to enter the Lagos market, is part of OPay in which Norwegian software firm Opera has an equity interest.

The company told Reuters it hopes ORide will help both its Opera web browser and OPay expand their reach into new services.

E-WALLETS

The idea of booking a motorbike taxi through a company that has trained drivers and provides passengers with a helmet appeals to some commuters in Lagos.

Engineer Dayo Omolosho said he booked a Gokada rider with his mobile phone after his car broke down in the Victoria Island business district, partly because he wanted to feel more secure.

"Everybody wants faster movement in Lagos but we're still afraid of the normal okada. You see some people already drunk, they're already high, so you can't control them," he said, adding that riders working for companies have been trained and are accountable through a ratings and complaints system.

Okadas were so heavily criticized for unpredictable driving and accidents that in 2012, Lagos banned motorcycles with a cylinder capacity below 200cc from using major roads or the bridges that criss-cross the city built around a lagoon.

That was a blow to the informal sector where most bikes are about 100cc. But max.ng and Gokada bought fleets of 200cc motorbikes that met legal requirements.

Gokada launched in Lagos in January 2018 and its bright green motorbikes and helmets have become a fixture on the city's streets.

Founder Fahim Saleh, who set up motorcycle taxi firm Pathao in Bangladesh in 2013, said the company was planning to launch services in the northern Nigerian city of Kano and southern oil hub Port Harcourt by the end of this year.

He told Reuters the expansion into new cities, along with repair centers and rider training schools, will be funded with some of the $5 million it raised this year. Gokada then plans to start rolling out other services.

"Within the next couple of months we will start developing a wallet that would allow you to pay for rides," he said. "We want to be in all forms of transport. And also food, and services - a hairdresser delivered to your door, or a masseuse."

(Reporting by Alexis Akwagyiram in Lagos; additional reporting by Angela Ukomadu in Lagos and Gwladys Fouche in Oslo; editing by David Clarke)

By Alexis Akwagyiram

Stocks mentioned in the article
ChangeLast1st jan.
ALLIANZ SE 0.07% 211.95 Delayed Quote.20.93%
LYFT INC -1.80% 46.43 Delayed Quote.0.00%
ONE STOP SYSTEMS INC 4.03% 2.84 Delayed Quote.40.72%
OPERA LTD -7.76% 10.1 Delayed Quote.96.94%
UBER TECHNOLOGIES INC -3.61% 32.6 Delayed Quote.0.00%
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