The call for a blanket ban on ‘Okada’ or motorcycle taxis in Nigeria could spell trouble for Bajaj Auto, India’s third largest two-wheeler producer, which depends on the west African country for nearly a quarter of its two-wheeler exports.
The Federal Government of Nigeria is considering banning Okada to curb the escalating insecurity in the troubled country even as a top economy awareness group, Nigeria Economic Security Agenda (NESA), warned the government about the repercussions of the ban.
Rakesh Sharma, Executive Director, Bajaj Auto said, “There has been talks in the government circles about banning motorcycles because they are being used for terrorist activities in some parts of Nigeria. There has been no notification of this but we are in touch with the Indian High Commission there, and we are watching out for it.”
Impact on citizens
According to NESA, the nationwide ban will impact 5.2 million citizens who operate these taxis and another 15 million indirectly dependent on them, including people working in the vehicle service stations. The ban has been in effect in Lagos, Nigeria’s largest city, since June.
“They (motorcycle taxis) ferry about 40 million people every day. The industry employs a very large number of people such as mechanics. So, an outright ban of motorcycle across Nigeria will be a huge challenge for whoever does it. We expect normalcy to return and it is not as if the entire country is troubled with terrorism,” Sharma added.
Honda is the largest player in Nigeria, followed by Bajaj Auto, Hero MotoCorp and TVS Motor Company.
Pune-based Bajaj Auto depends heavily on its two-wheeler exports, which now accounted for 57 per cent of the company’s total sales during the June quarter. The maker of Pulsar and Boxer exported 5.32 lakh two-wheelers during the June quarter, while the domestic market saw sales of 3.14 lakh during the same quarter.
Nigeria could become the latest trouble market for Bajaj Auto. Sri Lanka, which is trapped in economic turmoil, was also once a large market for Bajaj’s three-wheelers. While there are more than 70 countries where Bajaj Auto exports its two and three-wheelers to, the company has expanded to newer geographies such as Latin America to reduce its dependence on its bigger markets.
Mitul Shah, Head of Research at Reliance Securities, says, “Nigeria being the largest market for the Indian two-wheeler exporters, any adverse development in the country impacts the overall exports of these companies significantly. We expect a huge pressure on the exports of Bajaj Auto in the near to medium term. Therefore, we cut our export volume estimates by 16 per cent and 14 per cent for FY23 and FY24 respectively.”