How MAX is scaling mobility solution despite Lagos Okada ban

Metro Africa Express (MAX) has come a long way as a mobility company. The company originally started out as a motorcycle-based operator for delivery services. With its mobile app, users could order pickup riders who could fulfil deliveries quickly in the congested city of Lagos. By 2017, MAX had expanded into bike hailing, becoming the first company to pioneer the innovation in Nigeria.

Between 2017 and January 2020, MAX witnessed impressive growth as a bike hailing and mobility service in five states. But in February, the Lagos government’s restrictions on passenger motorcycles threatened the company’s growth in Nigeria’s largest city.

Six months after, the company says it is still growing.

“Talking about our business from the point of view of what we do in Lagos is very different from talking about our business as a whole because we are actually in five cities,” said Adetayo Bamiduro, CEO and Co-Founder of MAX.

The company is doubling down on growing its services across five Nigerian cities and said it has witnessed “amazing growth” since the start of the year.

From Logistics to Bike Hailing – Mobility: MAX’s Origin Story

MAX was created to solve the logistics problem in Lagos, Nigeria’s biggest city. Although economically advanced, the infrastructure and transport systems in Lagos were underdeveloped. With a population of over 20 million and bad roads, traffic is an everyday reality for residents. For logistics operators, this extends delivery timelines, causing packages to arrive much later than expected.

Using only motorbikes, MAX saw an opportunity to provide small businesses with low-cost delivery services and faster fulfilment options for bigger companies including e-commerce services.

Inspired by the mobility innovations of GoJek in Indonesia and Grab in East Asia, by 2016, MAX started exploring the idea of bike hailing in Nigeria.

“Looking at the phenomenal growth and what GoJek was doing in South Asia, what Grab was doing and we looked at platforms in Latin America as well,” Bamiduro explained to TechCabal, “we decided there really is an opportunity to digitise the okada space [in Nigeria].”

“But how do we go about it?” he asked. “We started doing a bit more research [and] interviewed drivers and customers.

By June 2017, MAX pioneered bike hailing in Lagos. It started piloting the innovation with a fleet of 22 bikes.

Explaining why it introduced bike hailing in Nigeria, Bamiduro shared that the company considered global trends and customer thinking in the Nigerian market.

“We realised that people wanted to get on an okada that was safer,” he explained. “We also realised that a lot of people wanted to be able to use the okada service to move around quickly but they were concerned about the safety of the informal okada that was not regulated.”

Of course, the okada market was a far bigger market than delivery services. Millions of people used motorcycles for transit within neighbourhoods. A high number of people also used okadas, albeit risky, for longer commutes to escape traffic in Lagos.

“We saw an existing market and we also saw an unmet need for safer and better looking trained drivers that could provide the same service.”

After the pilot phase, MAX secured bridge funding to expand its fleet of bikes.

Meanwhile in Lagos, motorcycle regulation was an important issue. 

Since 2012, the government has restricted motorcycles below 200 cylinder capacity (CC) from passenger transportation and deliveries.

“We spent a lot of time talking to people. I remember we used to spend 2-3 days every week from October 2016 till March 2017 going from one office to the other,” Chinedu Azodoh, MAX’s co-founder told TechCabal in 2019.

MAX tried to walk around this regulation by introducing bikes above the 200CC range. These bikes were not affordable. They each cost $830, roughly ₦298,800 using the exchange rate of $1 = ₦360 in 2017.

To help bikers finance the motorcycles, the company used a high purchase model. Riders took possession of the bike and paid back the cost at a flat amount daily. MAX later switched to a different fleet of bikes, each costing over $1,700.

While the 200CC bikes allayed regulatory issues with the government, transport unions in the state were not satisfied. Issues with unions remained but stayed off the mainstream media for some time.

Following its entry into the bike hailing industry, MAX had grown “exponentially”, Bamiduro explained. Before its 2019 funding round, he explained that: “our owner-operated fleet, that is the drivers that are financed by the MAX platform and who got their bikes on the MAX platform were around 200.” 

That figure grew 10 folds to 1,250 within the last six months of 2019, according to Bamiduro who declined to give actual growth figures, but MAX’s traction in Lagos was clear. In every major bus park, its riders were positioned there waiting for the app to pair them with passengers.

In the meantime, MAX focused on growth. By June 2019, the company raised $7 million Series A, after raising $2 million between 2015 and 2018. Following the fundraising, the company planned to introduce electric bikes.

As the first mover in the bike hailing space, MAX would later face competition from Gokada beginning from 2018, and OPay’s ORide in 2019.

For MAX, growth outside of Lagos was critical. The company quickly expanded its bike hailing and logistics innovations to four other cities: Ibadan, Kano, Akure and Ado Ekiti. And on its app, MAX integrated financial services such as wallets to allow cashless payments for rides.

“MAX’s approach for a while now has been fundamentally about mobility,” Bamiduro said, “Mobility essentially is an agnostic term that refers to the movement of people and the movement of things. So for us, the focus has been on building the financial and technology infrastructure that allows people to be able to move around.” 

Growth in 2020

MAX’s struggles with regulation and the transport unions returned in 2019. Between May and July 2019, bike hailing companies raised over $10 million to disrupt the informal okada transport.

As formal businesses with tax records, these companies didn’t have to come under the terms of transport unions in Nigeria’s largest city. But the unions forced their way, demanding MAX and other companies paid daily levies like every regular okada operator. After months of harassment, a settlement was finally reached in November 2019.

Despite brokering the agreement with the union, the Lagos government made a quick U-turn in January 2020 announcing restrictions on motorcycles. The ban restricted passenger motorcycles from six highly important areas of the state, essentially crippling bike hailing.

“Our network was impacted in Lagos,” Bamiduro explained. “especially our drivers who relied more on the transport side of things.”

“Some of our drivers moved to the non-restricted areas [in Lagos]. The volume of business wasn’t as much in those areas.”

With the restriction, bike hailing services in Lagos had two options: pivot or die. Gokada, which operated only in Lagos, quickly transitioned to a logistics service.

For MAX, on the other hand, logistics was always part of its business. 

“Deliveries is something that was already native to MAX so it didn’t require a lot of changes in order to serve that market,” Bamiduro said. The company shifted a “significant chunk” of its bike fleet to handle growth in logistics.

Also, the company had expanded to four other cities long before the ban was imposed. Bamiduro shared that MAX has been focused on scaling up in these cities since February.

“Now our focus has been mobility within the context of cities, whether it’s a parcel or package,” he explained. “So our focus is more on building that infrastructure that allows people and things to move around rather than taking a thematic approach to oh we’re doing okada transport or okada delivery.”

Since February, MAX claims its logistics business has grown at least 100%.

Outside Lagos, the company said it is witnessing exciting growth, especially in Kano and Ibadan. Located up north, Kano is one of Nigeria’s biggest cities. Since last year, MAX has operated tricycle and bike hailing services in the city. Meanwhile, Ibadan is the next major city for bike hailing with operators recording important growth over the last six months.

“We’re seeing amazing growth in Kano, Ibadan [and] Akure and we’re launching a new type of service in Ekiti,” Bamiduro explained. “[In these cities] we’re on a track to achieve a 10x growth before the end of the year from February.”

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