Due to the mobility laws in the country's commercial capital, several bike-hailing firms have been forced to relocate their operations to neighboring states such as Oyo and Ogun.
This change would result in the company leaving a city with a large number of young, technologically aware Nigerians. In Oyo and Ogun, for example, they must focus on the state capitals, where travel is often shorter and tickets are consequently cheaper. In Lagos, they would have been able to commute from the mainland to the island as well as contend with traffic congestion, resulting in longer, more expensive journeys. TechCabal reports that SafeBoda, a Ugandan bike-hailing firm that opened in Ibadan in 2020, has announced it will be terminating its operations in Nigeria.
The company, which was able to build its business in Uganda before embarking on enormous expansion in Kenya and Nigeria, has announced that it will now pull back and concentrate only on its Ugandan operation.
SafeBoda's departure from Nigeria comes despite the company's success, as it recently announced that over three million rides have been conducted using its app.
According to a statement released by SafeBoda, the company is departing Nigeria because the bike-hailing industry there is not yet "economically sustainable." The sector, according to the statement, "is not commercially sustainable in its current condition and sadly requires major investment in the current hard global economic climate."
SafeBoda noted that it arrived at this conclusion as part of its strategy to "bring the firm to profitability by strengthening its core transportation product" in Uganda.
In 2020, at the height of the epidemic, the corporation halted operations in Kenya, blaming the negative impacts of the pandemic.
"While Nairobi is seeing some economic recovery from COVID-19, boda boda transportation has been hit hard," the company said. "This has meant our business cannot sustainably operate in this environment, and unfortunately, the timeline for a full recovery is not certain. This decision is a hard one for SafeBoda to make. We know that this will negatively impact our community of boda boda drivers."
Therefore, SafeBoda's struggles with profitability in Kenya and Nigeria are not unique to the firm. It is part of a basic question that ride-hailing companies have resisted answering for years. Since the inception of ride-hailing over two decades ago, industry titans such as Uber and Bolt have battled with profitability.
To entice customers, ride-hailing businesses have incorporated frequent discounts into their business models. It results in enormous losses at the end of the year for some of these firms.
According to Forbes, Uber recorded a third-quarter loss of about $1.5 billion in 2017, pushing its total loss for the year to over $3.2 billion.
Some ride-hailing businesses have begun to place advertisements on their platforms. Uber developed an entire advertising section this year, which it claims will serve major companies globally.
As the global IT sector stinks of diminishing earnings this year, entrepreneurs who would have given these African ride-hailing businesses more runway have scaled down their investments and are focusing on other potential ventures.
This has caused African entrepreneurs to be more prudent and frugal with their expenditures. Numerous firms have been forced to lay off employees, with others closing down entirely. This week, the crypto payment business LazerPay was forced to lay off a portion of its workers.
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