It looks like the state of regulation of bike-hailing startups in Africa is now taking a certain shape. Five months after Nigeria’s largest city, Lagos, banned bike-hailing on its major highways, Uganda is indirectly showing signs that the days of bike-hailing startups are numbered; at least, as long as the country’s capital city, Kampala, is concerned. After much agitation against a previous directive banning commercial cyclists from accessing the city centre and surrounding places, government has now suspended the enforcement of the guideline, all moves coming immediately after more than 3 months of COVID-19 lockdown in the East African country. 

“This morning,” Mr Fred Enanga, the police spokesperson, announced, “we had started operating the free zones. But upon guidance from the Ministry of Works and Transport, the operation on the implementation of the boda boda free zones has been suspended to allow creation of outer stages out of the gazetted zones and signage.”

“Some boda boda riders, including passengers were not being guided. So a roadmap clearly outlining the process will be released for our implementation. We call upon those in the boda boda industry to continue with their operations pending new developments. They should observe the SoPs (standard operating procedures) and should also work within the timing of the curfew and avoid carrying more than one passenger,” Mr Enanga added.

Those new developments are now expected to occur on August 31, 2020. On and after that day, all boda bodas, including their digital adaptations — Safeboda, and others — are expected to disappear from the Kampala city center and its adjoining territories. 

“We said the enforcement will start on August 31. So there was no need to start enforcement today. Maybe the security forces were enforcing the national directive, not the one issued by KCCA,” Mr Daniel Nuweabine, the acting KCCA manager of communications and corporate affairs said in a press briefing. 

A Tactical Way Of Gradually Shutting Out Digital Bike-Hailing Companies? 

Perhaps or perhaps not. Earlier in May this year, Uganda’s State Minister for Kampala, Kampala Lord Mayor Erias Lukwago, Kampala Capital City Authority (KCCA) and the Ministry of Works and Transport issued guidelines expressing their intentions to force all traditional commercial motorcyclists (locally more known as “boda boda”) to go digital or cease to exist. 

The latest announcement by government reopening roads for boda boda operators appears, however, to indicate that government is now back-tracking on the plans, but with some caveat: going forward, from the terms of the new guidelines, the Kampala Capital City Authority (KCCA) wants all bike-hailing operators to form a union or a company.

“All Boda Boda operators must be registered at any of the gazetted stages and this shall be their address,” the guideline reads in parts.

“All Boda Boda App companies and associations shall share the register of all their members (after registering every member to a gazetted stage),” it further reads. 

One indirect implication of this is that the unions or companies may be a way of gradually (and easily) making way for the on-boarding of boda boda operators onto digital platforms. Already, KCCA has launched an invitation to tender inviting all digital companies operating in Uganda to be part of the government’s new era of disruption in the country’s public transport system. 

“In light of the presentations, KCCA in consultation with other key government agencies has come up with a roadmap that will facilitate operation of the digital companies as well as streamlining public transport. The roadmap entails a validation exercise for digital companies and make recommendations to each for the city to achieve a harmonized transport system,” the invitation reads in part.

While this may be a possibility, the future of bike-hailing startups operating around the country’s capital city, Kampala, looks chequered. 

“Cabinet approved Boda Boda Free Zone where All Boda Bodas are prohibited from entering/accessing,” the earlier guidelines further read. 

By the terms of the new guidelines, the Boda Boda Free Zone exists along the following key roads: Wampewo Roundabout- Jinja Road to Kitgum House junction — Access Road — Mukwano Road to Clock Tower -Kafumbe Mukasa Road -Kisenyi Road -Mackay Road- Kyaggwe Road- Watoto Church-Bombo Road — Wandegeya — Hajji Musa Kasule Road- Mulago roundabout- Kamwokya junction — Sturrock Road — Prince Charles Drive- Lugogo Bypass-Jinja Road- Wampewo Roundabout.

In any case, while it may look like there is still hope for bike-hailing startups operating in Uganda given that not all roads, and cities were blocked from access by bodabodas, they should however be doubtful of the sustainability of their business models. KCCA says it is soon procuring Boda Boda Stage Signs to mark the gazetted stages permanently as well as Traffic signs to demarcate the Boda Boda Free Zone as approved by Cabinet. 

One thing is, however, clear from all these: come August 31, 2020 there is nothing free about the Boda Boda Free Zone, and all digital bike-hailing companies must procure operational licenses in order to be able to even operate outside the Free Zone where their movement had not been blocked. 

What Does The Future Look Like For Bike-Hailing Startups In Africa?

In exactly the same fashion, the city of Kampala, home to about 1.5 million people, is doing 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. 

Kampala is Uganda’s largest city, population-wise, by far ahead of cities like Gulu, Entebbe, Lira, Mbarara or Nansana which have a combination of not up to 1,000,000 people. Only about 18 million Ugandans, representing about 40.1% of the population have access to the internet.

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 nor Kampala is the first African city to lead the ban. 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