Following the proscription of the activities of motorcycles and tricycles in some areas of Lagos, the first major casualties have emerged as bike-hailing company, Gokada has fired up to 70% of its staff.
The report, which first emerged as a rumour was eventually confirmed by Gokada CEO, Fahim Saleh.
“While much of your report is accurate, we still have money in the bank,” Fahim said while responding to a TechPoint post that made several suggestions including the sacking and a possibility that the startup is running out of funds.
With 10,000 staffs (excluding indirect jobs), this will mean the startup sacked about 7,000 of its workers. And this decision is said to have come two days after the announcement of the ban.
A Panic Action by the Startup?
With a total investment of $5.3 million, Gokada raised the least funding of the 3 prominent bike hailing companies in the state. Max.ng raised $8.1 million while Oride’s parent company, Opay raised $170m.
According to reports, when the startup raised the funds, CEO, Fahim Saleh, used a bulk of it to get over 2,000 bikes with each bike cost about N542,250 ($1500). A quick calculation will bring the entire figure to about $3m, which is about 57% of the entire funding.
And this is without the cost of the other accessories given to riders like helmet, trackers, Bluetooth and even the shipping, custom fees of the bikes. These new equipment were issued to its riders when the startup returned a 2 weeks hiatus to revamp its operations.
With that much amount spent on its operations and its future in the state hanging by an invisible thread, it only made sense to the startup to have laid off it’s staffs to avoid bleeding too many losses.
Deliveries to the rescue?
The CEO, while still hoping for a resolution of the imbroglio, however noted that the company would focus on logistics, last mile deliveries and dispatch riding to help withstand the blacklash of the ban.
“We are pivoting towards deliveries while this transport ban gets sorted,” he said. “We were due to make a profit in January before the ban was announced.”
It will be noted that the state government exempted delivery bikes from the ban after images appeared of the police manhandling a delivery man and confiscating his motorcycles. This leaves dispatch riding as the next viable option.
With a motorcycle giant like Gokada joining Max.NG in that line, competition is bound to become stiffer. And with other motorcycle hailing companies expected to tow similar lines, it remains to be seen how explosive the deliveries subsector would get.
It is still unclear if Gokada would maintain its technology and model going into the deliveries market or if anything would change.
Worst fears turned reality….
Following announcement of the ban in January, Gokada and MaxNG drivers took to the streets to protest the imminent loss of their jobs. Social media was awash with images of Gokada drivers pleading with the government not to let them slide back into crime.
If any of the Gokada drivers have been optimistic about saving their jobs with that protest, then their worst fears has just become reality following this latest development.
The nightmare doesn’t end with the drivers as even the CEO of Gokada, Fahim Saleh, along with his investors, would be badly hit as its business that has appeared very viable all along, is going down the drain very suddenly.
It is no surprise that a distraught-looking Fahim took to YouTube where he lamented the death of innovation and investments that the ban has caused. He insisted that Gokada is not okada as it takes safety very seriously. As such, his business shouldn’t suffer collaterally for the shortcomings of okada.
This sacking represents the first major backlash for a motorcycle-hailing startup as a result of the ban but it may not be the last. Other motorcycle companies like ORide and Max.Ng would need to take drastic measures to withstand the obvious effects of the ban. More sacking might be in the offing unless a resolution is reached quickly.
But a resolution looks very unlikely. In August of last year, a spokesman of the ruling APC in Lagos state, Joe Igbokwe had in a Facebook post, lambasted bike-hailing companies for investing wrongly into motorcycles. He describes them as threats to government’s mass transit investment.
“Instead of partnering with govt on BRT, you invested ‘5.3 million dollars’ in okada business and expect that Lagos state will allow you jeopardise its multi-billion naira mass transit investments.”Lagos APC spokesman, Joe Igbokwe in August 2019
More recently, the Lagos Commissioner of Transport, Dr. Frederick Olaseinde categorically noted that motorcycles don’t have a place in the Lagos Masterplan and as such, their ban is total and final.
“Let me make it clear, motorcycles and tricycles are not part of the Lagos masterplan. They came in because there is a gap, but they don’t have a place in a mega-city,” he says.
There are over 800,000 motorcycle riders in the state. It raises the question of how these people will make a living.
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