Can on-demand delivery services scale in Nigeria?
Scaling on-demand delivery in Nigeria

2019 was a big year for ride-hailing startups in Lagos. The city’s 21 million inhabitants were an attractive market for startups like Gokada, Max NG and ORide from Opera. 

In May 2019, Gokada raised $5.3 million in Series A funding to increase its fleet and ride volume. It also had plans to introduce Gokada clubs and shops where drivers could relax or buy items. Again in June, Max NG attracted a $7 million investment to expand to 10 cities in West Africa, scale its technology infrastructure and introduce an electric fleet. ORide also benefited from the $50 million and $120 million its parent company Opera raised for its digital service verticals in July and November 2019, respectively. Branded helmets of the different ride-hailing players were common on the streets of Lagos.

 

Key takeaways:

  • Ride-hailing startups in Lagos turned to on-demand delivery after they were banned from major commercial highways. Their pivot proved timely as demand for faster delivery services grew during the COVID-19 pandemic lockdowns.

  • But most of these startups operate in Lagos. Their growth would typically be funded by venture capital, but a looming recession and contraction in global VC funding mean startups have to find other ways to bring their services to new users. 

  • On-demand delivery startups can scale, but to do so, they will need to tweak their business models and lobby for better regulations from the authorities. 



But all of this came to a screeching halt when Governor Babajide Sanwo-Olu’s government enforced its 2018 Transit Sector Reform Law which banned motorcycles (okada) from major highways in Lagos, citing safety and security concerns.

Faced with the prospect of winding down operations, ride-hailing startups laid-off workers and began selling off motorcycle

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Jonathan Ntege Lubwama

Jonathan Ntege Lubwama

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