Three startups that have invested millions in ride-hailing motorcycle taxis in the African country of Nigeria are left with wheels spinning after regulatory changes restricted the use of the vehicles in the city of Lagos, according to a report by TechCrunch.
The city of Lagos, which relies heavily on public transportation, has made the changes. Startups Max.ng, ORide and Gokada have all been affected, and they’ve gotten millions of dollars from Chinese, Japanese and U.S. investors.
The purpose of the startups was to shift the country’s ubiquitous motorcycle taxis into an on-demand mobility operation.
The three companies have been jostling for market share since they started. Max.ng raised $7 million last year, and Gokada raised $5.3 million. ORide’s Chinese parent company, Opera, raised $170 million for the company’s digital Nigeria offerings, which included ORide.
With all the capital, the ride-hailing moto taxis became a common sight in Lagos. On Feb. 1, however, lawmakers started enforcing the 2018 Transport Sector Reform Law.
The law is meant to improve transportation in Lagos, but it inadvertently may have harmed it, especially when it comes to the motorcycle taxis.
Lagos State Gov. Babajide Sanwo-Olu said safety and security were the main reasons they restricted the use of the motorcycles. He spoke at an event to launch more water taxis.
Olalere Ridwan, ORide’s senior director of Operations, said the rules include “a ban on commercial motorcycles … in the city’s core commercial and residential areas, including Victoria Island and Lagos Island.”
ORide said it would comply and stop operating in areas where the taxis are not allowed. The move has hurt traffic in Lagos, forcing people onto other forms of transportation and overloading them, or making them walk to work.
Max.ng Chief Financial Officer Guy-Bertrand Njoya said the move is hurting his company.
“Are we highly concerned? Yes, we are,” he said. “We haven’t shut down operations, but because the drivers can’t operate in the main commercial areas, their income generation ability is significantly reduced … and our business depends on the success of our drivers.”