The future of bike-hailing in Africa looks certainly unclear. From Uganda to Rwanda to Nigeria. The latest is Ghana. The country’s National Insurance Commission (NIC) has directed insurance companies to stop issuing insurance policies to motorcycles and tricycles used for commercial purposes.
“We wish to bring your attention that regulation 128 of the Road Traffic Regulations, 2012 (Legislative Instrument 2180) prohibits the usage of motorcycles and tricycles to carry fare-paying passengers and also prohibits the DVLA from licensing motorcycles and tricycles to be used to carry fare-paying passengers,” the Commission noted in a statement.
“The Commission hereby directs all insurance companies to desist from issuing insurance policies to cover motorcycles and tricycles used for all commercial purposes, except courier and delivery services,” the statement further reads.
Here Is What You Need To Know
- According to Ghana ‘s Insurance Commission, usage of motorcycles, whether digitalised bike-hailing or not; and tricycles to carry fare-paying passengers is illegal.
- The Commission further added that “henceforth, accident victims who were fare-paying passengers on motorcycles or tricycles will not qualify for compensation from the Motor Compensation Fund.
Below is the full statement from the NIC
What Does The Future Look Like For Bike-Hailing Startups In Africa?
In exactly the same fashion, the Ugandan capital city of Kampala, home to about 1.5 million people, recently did what Nigeria’s most populous city, Lagos did to its famously known okadas back in February this year — the city’s government banned them from operating on its highways. In a recent announcement, the Kampala Capital City Authority (KCCA) and the country’s Ministry of Works and Transport directed all boda boda operators (motor cycle operators), including their digital adaptations — Safeboda, and others — to disappear from the Kampala city center and its adjoining territories on November 1, 2020.
Perhaps, would this be the best time African startup founders looked away from launching out bike-hailing startups given the continuing policy instability against bike-hailing across the continent?
In May 2019, Rise Capital with Adventure Capital, First MidWest Group, IC Global Partners and other investors led a $5.3 million investment in Gokada, an on-demand motorcycle taxi startup in Nigeria. A month after, this was exceeded by another motorcycle startup, MAX.ng which raised a $7 million funding round led by Novastar Ventures, with the participation of Japanese manufacturer Yamaha, an investment which brought the startup’s total funding to $9 million. Inspired by the funding MAX.ng planned introduction of electric motorcycles. And yet five months later, in November 2019,Opera’s Africa-focused fintech startup added a new $120 million to its $50 million series A round which it raised in June of 2019, backed by Chinese investors.
In Uganda, leading bike-hailing startup Safeboda has up to $1.3 million in funding with most of the investments coming from Allianz X, the digital investment unit of international financial services provider Allianz Group. Go-Ventures, a venture fund whose cornerstone investor is the Indonesia-based “Super App” company GO-JEK also participated in that investment. Investment in Safeboda was Allianz X’s first ever investment in an African-headquartered company
Opay had earlier this month, after several insinuations in the media about its troubled Super App, come clear, declaring that “some of our business units including the ride-hailing services: ORide, OCar as well as our logistics service OExpress will be put on pause.”
Opay’s move was the first sign that all was not well with existing bike-hailing startups in Nigeria whose operations had been severely affected by government ban, even though they had all pivoted to other Nigerian cities, apart from Lagos, including branching out to other business verticals such as logistics.
Notwithstanding all these, Tunisia’s bike-hailing startup InstiGo has recently gone ahead to secure renewed confidence of investors in the continent’s bike-hailing ecosystem. The startup raised a new $1 million from Capsa Capital Partners and other investors, early July, although it plans to use the investment to explore deeper into other market opportunities, including car sharing.
Neither Lagos, Ghana nor Kampala is the first African city to lead the ban on bike-hailing. The Rwandan government did so a few years ago, only to famously back-track on the decision after the streets of Kigali ground to a near halt. Today, Rwanda is encouraging startups to take up the challenge of helping the government regulate an industry in which most riders are self-employed.
From all indications, it looks like bike-hailing startups in Africa still have a pretty long future, if not an entirely foggy one.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer