Ibadan is Nigeria’s third largest city with a population of 3 million people and it is fast becoming the new battleground for bike hailing services.
While the mobility sector has been in the news in the past year, most of that has been about the activities of bike hailing startups. In mid-2019, funding rounds by these startups suggested that the sector had promise.
In May 2019, Gokada raised $5.3 million while MAX.ng raised $7 million in June 2019. In July, OPay, with its Chinese backers, raised $50 million, and went on to raise an additional $120 million four months later.
Despite robust funding, the Lagos state government’s decision to ban motorcycles ended bike hailing in the state.
While some of these startups are in cities like Enugu, Akure and Ilorin, there is the sense that some of these cities are not big enough to deliver numbers and revenue.
Away from the spotlight, the city of Ibadan is where MAX, ORide and Safeboda are turning their attention to. While ORide launched in Ibadan in July 2019, SafeBoda and MAX.ng have launched within one week of each other.
A big city with a motorcycle culture
By land mass, Ibadan is one of the largest cities in Nigeria. While it is not the most populous city in Nigeria, it is home to over 3 million residents, a significant number.
Apart from a large population and a culture of commuting by motorcycle, another reason why these startups are in Ibadan is regulatory certainty. While Ibadan’s economy would have been considered, commuting remains a basic need for everyone.
In Ibadan, residents use cabs, tricycles and motorcycles for their daily commute.
Although Nissan Micra is Ibadan’s symbol of public transportation, motorcycle transportation is popular. According to Lily Odunaiya who has lived in Ibadan for over 20 years: “Motorcycles are an easy way to get around Ibadan and everyone uses it because unlike cabs, they can go anywhere. There isn’t a single place in Ibadan that a bike won’t take you to.”
Yet, transportation in Ibadan is cheap. According to this Wikitravel guide: “A journey from one end of the city to the other costs around ₦80 ($0.22). Okadas (motorcycle taxis) are cheap and available everywhere, though some drivers are erratic.”
I did not find Wikitravel’s ₦80 ($0.22) claim to be true. But I asked SafeBoda’s head of marketing and customer acquisition, Olumide Akinsola if they have any concerns over pricing.
He says SafeBoda does not intend to compete on prices in Ibadan.
“Our prices are affordable and cheaper than normal Okada rates and while we do not intend to compete based on prices, we focus on delivering great experiences for each of our driver and customer, and give them other incentives that makes them proud to be part of our company. We are building a community of drivers and customers, so there will be other benefits that will make it attractive to anyone who belongs in it”
He also went on to say: “Nobody wins price wars, so the important thing is to keep the pricing very affordable for the customers, and also focus just as much on creating value for everyone. “
Another startup, MAX.ng is using the model they used in Lagos. They give their riders, who they call Champions motorcycles and retraining them regardless of their skill level. At their Ibadan office, in a conversation with their city lead, safety was a recurring theme.
SafeBoda and MAX are promising safer rides to commuters
The city lead for MAX.ng in Ibadan, Musibau Lasisi says that what they’re bringing to the table is their track record for safety.
According to him: “We are the only company without any fatality incidents. One of the reasons for this is our retraining process. We don’t compromise our standards because we understand that safety is primary” .
SafeBoda has a familiar promise, with training focused on rider and passenger safety. The company says that a survey showed that affordability is what customers say they prioritise. But, because affordable prices are a given for the company, it is selling itself on safety instead.
ORide, which launched in Ibadan in July 2019, led with their tried and tested strategy of discounts.
In July, it was ₦50 ($0.14) for trips less than ₦1,000 ($2.73), for August, it was ₦100 ($0.27). For September and October, it was ₦100 ($0.27) for trips less than ₦800 ($2.18).
Discounts and a first mover advantage helped move ORide to the market leader in Ibadan, but there are signs that it is a market perfect for new entrants. One of those is an undercurrent of discontent among riders who signed up to ORide a few months ago.
Weaning customers off discounts
With big discounts and first mover advantage, ORide is the market leader in Ibadan. But they’re faced with a big issue: now that discounts are over, some riders think the fares are low. While low fares are great for passengers, it reduces revenue for riders on the platform.
Bidemi, who signed up to OPay is one of the motorcyclists in Ibadan I spoke to. He has many complaints, but most of his issues with the company began at the end of the three month discount period.
But he didn’t always have complaints. At the start, he got many orders on the app and despite the discounts, ORide paid him the full value for the trips. Once the discounts ended, he says the pricing became too cheap for him to meet his expenses.
“One Friday, all the money I made was ₦585 ($1.60). I will spend ₦800 ($2.18) on fuel, ₦200 ($0.55) on credit and ₦1000 ($2.73)on engine oil” Bidemi adds.
Mr. Amodu, another motorcycle rider who says he completed hundreds of rides on ORide said he had a problem with the company making policy changes without prior information. He also mentions his disappointment that the company did not help him when he had run-ins with the police.
ORide’s head of partnerships in Ibadan, Kaokab Oloso, agrees that Ibadan is a price sensitive market. But he believes ORide is finding a balance for riders and passengers.
He responded to some of the concerns via email.
“We believe the prices for both customers and riders are very fair. Our platform currently has over 2000 registered riders who still use the service to earn a living and take care of their families. It’s never easy finding a perfect balance for pricing between customers and riders, however, we believe it’s important both parties benefit richly from our service”.
SafeBoda and MAX.ng will be hoping to learn from ORide’s early experiences. Driver retraining, insurance packages, and support are some of what the newer entrants offer.
But one thing to consider is that, on the whole, competition could prove useful to driving adoption of bike hailing services in Ibadan. With three companies advertising to the public and asking their riders to also talk to people about using these services, growth is inevitable.
At SafeBoda’s training facility, a company rep tells riders to talk to people about their app. They encourage riders to use Facebook and other Social media platforms to push SafeBoda’s visibility.
While all three startups pursue growth, they will be counting on the conversations they’ve had with the government about regulation.
Simple regulations help bike hailing startups in Ibadan
In Oyo state, conversations about regulating the mobility sector have been simple. There are no policies on size of engines used or restrictions on motorcycles on highways. Yet, startups are aware of regulatory risk.
Musibau Lasisi made it clear that MAX had learned this much from Lagos. “We understand the regulatory issues and we’re prioritising that because we’ve gone through the Lagos experience. It is only smart and wise not to undermine the implication of regulatory risk. So that’s top of our radar, understanding our business environment and making decisions on market dynamics”
In the end, it is difficult to imagine that Oyo will one day ban motorcycles and tricycles because there is a history of people responding to unpopular policies at the polls.
You might not be able to draw a line between unpopular policies and election results in Lagos, where one party has led for 20 years.
In Oyo state, only one governor has won a second term in almost 15 years and any ban that affects thousands of people will be difficult to pull off.
Editor’s note: Olumuyiwa Olowogboyega reported from Ibadan, Oyo State in Nigeria.
