On a Friday afternoon in December, 33-year-old Declan Okechukwu completed a delivery order and drove down to Lagos’ popular electronics market Computer Village to grab lunch. Within 20 minutes, he was back on the road to pick up another delivery order.
“In this work, if you’re not lazy, you’ll probably complete more than 10 deliveries in a day,” he told Rest of World, adding that the pay is good and he has no plans to return to a full-time job.
This is a typical experience for delivery riders in Lagos. Every day, thousands of motorcycles, called okadas, dart through the city’s busy roads, moving everything from meals, clothes, groceries, and documents in two-foot boxes. The sudden and sweeping growth that the delivery business has seen is now beginning to catch the attention of global giants like Uber, Bolt, Glovo, and China’s DiDi.
As a city of over 20 million people battling with traffic congestion, Lagos was once a promising hub for passenger bike-taxi-hailing. Between 2018 and 2019, venture capital–backed startups, including MAX, Gokada, and OPay’s ORide raised tens of millions of dollars to unlock the market. They used a “hire purchase” model to attract riders with the promise of eventually owning their motorcycles if they paid a fixed sum of between $7 and $12 a day. “Bike hailing was lucrative,” said Okechukwu, who has been riding commercial motorcycles since 2017.
However, by mid 2019, the fledgling sector was grappling with inconsistent local regulation and transport worker unions, who forced motorcycle riders to pay arbitrary daily levies. In January 2020, the Lagos state government — citing security and safety concerns — banned bike hailing in key parts of the city and as a result, also the apps used to book passenger transport.
But a few months later, amid the arrival of a global pandemic, the creators of those apps pivoted, rebuilding their bike hailing apps to match riders with delivery orders instead of passenger transport. Now, gig workers are spurring a boom in the delivery business with a workaround to the ban, leading to high demand of delivery services and as a result, more demands of riders themselves.
To survive the ban in January 2020, companies pivoted to offering logistics services. “The demand was always there, but few people took the sector seriously or focused on the last mile,” said Abbas Dayekh, CEO of OyaNow, a Nigerian logistics startup which says it has 150 dispatch riders in four cities — Lagos, Kano, Kaduna, and Abuja. The company said it now completes around 12,000 deliveries monthly across the country, with around 3,000 small business customers. While delivery prices fall and riders become more available, the nature of delivery orders is changing, as customers become increasingly comfortable shopping online and the pandemic persists.
As in many other cities around the world, food deliveries for office and home workers in Lagos saw a notable uptick last year, OyaNow’s Dayekh told Rest of World. In June 2020, Jumia Nigeria’s CEO, Massimiliano Spalazzi, said the e-commerce market leader had seen an early shift in the direction of food delivery orders, as more requests flowed from residential neighborhoods instead of the office locations that had been the customer majority before the pandemic. Now, according to the CEOs of Gokada and OyaNow, food delivery businesses, alongside regular pickups, make up a significant chunk of monthly dispatch orders. “[Food delivery] is growing by almost 40% year over year,” Jumia Group’s Co-CEO, Jeremy Hodara, told analysts at the company’s third quarter earnings call in November. The category has “maintained its strong momentum and was the second fastest-growing category in terms of items sold” on its marketplace which operates in 11 countries and has over 7 million annual active customers.
But some dispatch riders complain that the low prices are starting to discourage them — and increase their burdens. This scenario has played out in other emerging markets, in cities from Southeast Asia to Latin America. Falling prices mean riders have to work longer hours than before, and their desperation to hit personal revenue targets or thresholds leads to poor safety practices, as they rush around town to satisfy increasingly voracious algorithmic demands.
“As companies use low prices to attract customers, they should also consider we the riders,” Okechukwu, the Gokada rider who stakes out the Computer Village location for delivery orders.
And the job is hazardous work. In a locale where the state government believes motorcycle transport is not part of the city’s “master plan,” no changes have been made to Lagos roads to support riders. There are no dedicated garages, motor parks, or road signs for motorcycles, which increases riders’ exposure to crashes. Both Okechukwu and Benjamin said that this is a dangerous reality of their work, even though the companies provide riders with insurance coverage.
Okechukwu at Gokada said he has also worried that riders have little negotiating power against practices they deem unfair. Even though the market demand for riders is high, Nigeria’s tough unemployment environment means many people will still take these jobs at relatively low pay and on challenging terms, he said. This weakens riders’ overall capability to negotiate higher fares and better working conditions.
A Kwik Delivery rider who asked to be identified as Benjamin, to avoid repercussions for speaking to the media, said that earnings are so low with unfair practices, he’s only still on the job because of his family’s needs.
Today, the bike delivery model is so popular in Lagos that delivery riders have set up informal motorbike parks at several popular commercial locations, where the demand for the service is highest.
Making deliveries is not always as lucrative as ride-hailing was, said Okechukwu, the Gokada rider. Some of them complained the delivery fees are quite low, making it difficult to hit targets. The riders sometimes negotiate private delivery gigs with some of their regular customers, to circumvent the app fees, two riders told Rest of World. Delivery orders that are not booked via the app platform can sometimes pay as much as three to five times more because the riders control their fees and keep all revenue for themselves.
In 2019, Lagos residents spent around 830 billion naira ($2 billion) eating out — before the pandemic, according to a report by Nigeria’s National Bureau of Statistics (NBS). The full potential of the market means new delivery players are piling into the market with an eye on food, drinks, and small business needs. Spanish on-demand delivery company Glovo announced its entry into the Nigerian market earlier this year, after its mammoth $528 million series F round in April. The startup is doubling down on the market and has committed around $60 million to grow its operations on the African continent to more locations, including Ghana, Morocco, Uganda, Kenya, Ghana, and Côte d’Ivoire. Glovo has bought billboard advertising around key spots in Lagos and is spending on other marketing channels, to extend its reach in the business community.
Two other international giants making a run at the market are Silicon Valley’s Uber and Bolt, originally from Estonia. The American company, which has diversified into deliveries since 2019, has long had its eyes on the Nigerian delivery market. Earlier attempts by Uber to expand in the country were put off by uncertainty around motorcycle regulation, both for passenger transportation and logistics. Elsewhere in Africa, it has introduced motorcycle options for Uber Eats, its food delivery services, and Uber Connect, its parcel logistics arm in places like Kenya. Now, Uber has entered the Lagos delivery market with motorbikes, in partnership with Moove Africa, a mobility asset financing startup. And in October, Bolt launched its own food delivery service in Lagos. Other companies, including China’s DiDi and Egypt’s Breadfast, also want to expand their operations on the continent, and Nigeria is an obvious choice.
As new players make their way into the market, the risk of stricter regulation increases. One early warning of this came last year, in the first few months of the pandemic, as Lagos state government threatened to impose higher license fees and tighter controls over logistics operators. The state government has since announced it would reverse this plan several months ago, while independent riders are getting around the higher license fees by giving up their independence, to become partners of logistics companies.
Regardless, the Lagos delivery market is on track for further growth. Small businesses that focus on food deliveries in particular could usher in more opportunities, and the demand is abundant, said OyaNow’s Dayekh.
“But,” he added, in anticipation of the competition that is brewing, “are you [companies] ready to work for the slimmest of margins?”