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Fahim Saleh’s Nigerian venture Gokada was hit hard by new regulations

  • Published at 03:51 pm July 15th, 2020
Nigerian ride-sharing company Gokada
Motorbikes registered to Nigerian ride-sharing company Gokada Fahim Saleh's Instagram

The new law was derived from the subsisting government restriction order on motorcycles and tricycles operations in six local government and nine local council development areas, 11 highways, and 41 bridges in Lagos

Fahim Saleh, co-founder of Bangladeshi ride-sharing company Pathao, who was found dead in his New York luxury condo on Tuesday, was trying hard to revive his latest venture in Nigeria after the Lagos government enforced a ban on passenger motorcycles in February this year.

Following that ban, Saleh’s Nigerian ride-sharing company Gokada laid off 80% of its workforce and had pivoted towards the delivery services, at a time when the company already invested huge sums to expand its ride-hailing fleet. 

Co-founded in 2017 by Fahim Saleh, Gokada at its peak had over 1,000 motorcycles and drivers on its app, connecting commuters to moto-taxis and completed nearly 1 million rides by the end of May 2019.

Gokada came following his success with Pathao in Bangladesh, which he founded with Hussain M Elius and Shifat Adnan in 2015, and was valued at over $100 million. Pathao, however, also witnessed a downsizing of the company by laying off nearly 300 employees in June 2019, allegedly without any prior notice.

Unlike other ride-sharing services in Nigeria, Gokada offered various facilities for both drivers and passengers, such as charging drivers a flat-fee of 3,000 Nigerian Naira ((around $8) a day instead of fare sharing to work on their platform and providing quality DOT– approved helmets for passengers, said a report by Techcabal.com.

The company used bikes with engine capacities of 200cc and went above meeting government standards for load-bearing on major Lagos roads. While it charged a fare for rides, Gokada used the hire purchase business model, allowing bikers to use its 200cc bikes and repay a fixed amount daily, according to the report.

Later, the company raised $5.3 million in a bid to boost its fleet and ride volume, as well as create a network to offer goods and services to its drivers.

However, Gokada’s plan of expansion came crashing down in February after the municipality that governs Lagos, the only city where the company offered only one service (bike hailing), began enforcing its 2018 Transit Sector Reform Law and banned passenger motorcycles citing safety and security concerns.

The new law was derived from the subsisting government restriction order on motorcycles and tricycles operations in six local government and nine local council development areas, 11 highways, and 41 bridges in Lagos.

According to Techcabal.com, Gokada formed a coalition with other bike hailing companies to protest and lobby the government to relax the rules. 

In a video on youtube on February 2, the self-made millionaire was seen making an emotional appeal to the government which, however, backfired and Saleh was criticised on social media for how his bikers were portrayed in the video.

However, the coalition could not make the Laos government step back from the ban.

Two days after the ban went into effect, Gokada laid off roughly 80% of its workforce and announced a pivot into delivery services, saying that it wanted to conserve enough cash for its runway in the new business. It also paused repayment from bikers under its hire purchase model.

“The company raised $10.6 million in funding after four rounds. Its last round was a $3.3 million raise in June 2019 according to Crunchbase. Gokada was on track to break even by January 2020,” Saleh told another tech site TechCabal in May this year.

Six months before the ban, Saleh made a gamble. He had bet the future of his company on new bikes. In August 2019, he shut down Gokada’s bike hailing operations for two weeks to retrain bikers, the Techcabal report said.

He confirmed to TechCabal that he bought 1,500 new bikes for $1,200 each, and spent another $450,000 on new phone helmet gears for each of the bikes. The new helmets cost $300 each. In total, Gokada spent an estimated $2.25 million on these new bikes and helmets; roughly 21.2% of its total fundraising since 2018 and more than 40% of the $5.3 million it raised in May 2019.

But when the ban kicked in, Gokada had to pivot to logistics services to survive.

The logistics industry in Lagos similarly allows only the use of bikes with 200cc. Gokada has 2,000 of them and 800 bikers.

Since the pivot, it now rents its motorcycles to bikers for 2,000-3,000 Nigerian Naira per day. It abandoned the former hire purchase model. 

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