The Lagos’s N25 Million ($70,000) Licensing Burden on ORide, Max, Safeboda and Gokada

Nigeria killed drone business with excessive “licensing requirement” which required getting clearance from the top national security apparatus in the nation. Besides, you need to pay a fee of $4,000 to register and fly a drone in Nigeria. In our business, we were developing Zenvus Drone for farming when the rules were passed. Immediately, we exited anything about drones, and wrote letters to Imo and Abia states police commands that we had exited anything related to drone development. My concern was the safety of my team since the IPOB heat was deep-active then. So, drone has been killed in Nigeria as there is no way any civilian drone usage can work with $4,000 registration fee. Government has done it, as always: kill ideas. Yes, there is no security concern they cannot manage along with drone if they truly want to!

But that drone experience pales to the Lagos state N25 million ($70,000) annual licensing requirement for motorbikes: “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.” With this new regulation, if it is not reversed, the motorbike ride-hailing sub-sector will simply fold especially for indigenous players which may not have the resources for this game.

The state government has proposed new regulation, including licensing fees, required for them to operate as part of local transportation infrastructure. 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.

Government is evidently interested that these companies are raising tons of money, and wants to get its portion despite any concern of perceived nuisance of the bikes. Government may not know that the money does not belong to the startups as the funds are for missions: build the companies. Gokada recently raised $5.3 million while Max picked $7 million; ORide came with truckloads of excess of $50 million. So, relatively, they should afford the fees. Not really: the funds they raised are not designed for paying fees to governments. I am confident that if this is not resolved, investors will trigger for call-back for portions not yet deployed! The regulatory change is a clear factor to make such calls.

And when you add that Lagos state is not Nigeria, the complications intensify. Yes, other states can put their own fees and demand just huge fees like Lagos is asking. Under that ecosystem, there is no way these companies can function.

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