LagRide’s asset financing model under criticism after recent moves upsets partners

Ibile Holdings will investigate partners who subjected drivers to poor working conditions after recovering cars from the partners.

LagRide, the Lagos state-backed ride-hailing platform, has recovered 21 cars from one of its partners, one Idris Shonuga, as part of efforts to reform its asset financing model with drivers on its platform. The asset financing model means that LagRide vehicles remain the company’s property until the driver completes payment for it. Drivers have to pay ₦8,900 daily for four years to claim vehicle ownership.

Explaining the need for the reforms, an executive director of Ibile Holdings, LagRide’s parent company, Oyekanmi Elegushi, told TechCabal that Shonuga held 21 cars in his custody unused for six months. This resulted in losses for Ibile Holdings who secured the cars via a loan facility with Polaris Bank.

“The cars we seized were from IOS Holdings [a company owned by Idris Shonuga],” Elegushi said. “The cars were seized because they were meant to make money but were not making money. That means you don’t need it. Each of the cars was expected to remit ₦8,900 daily to LagRide but did not.”

Elegushi said Shonuga held on to three extra cars and refused to let go of them, an act that was criminally motivated. “We have submitted the case to [the police station at] Alagbon,” he added.

Fred, a Lagride driver, breezes through the third mainland bridge in Lagos as he trails another Lagride vehicle | Image source: Techcabal / Caleb Nnamani

Shonuga admitted to owning IOS Holdings, a company that recruits drivers and gives them vehicles to drive for LagRide. “They [LagRide] said categorically they do not want partners after bringing them on board,” Elegushi said, in response to the allegations against him. “IOS is helping [LagRide] to get good drivers. We always get drivers in line with what the government said the scheme is created for.”

Offering an explanation for the idle cars discovered in his possession, Shonuga told TechCabal that fuel scarcity was part of the factors that made some drivers abandon the cars with him.

Ride-hailing drivers, under the Amalgamated Union of App-Based Transporters of Nigeria (AUATON), have criticised the asset financing model of LagRide. According to them, LagRide’s partners take advantage of the model to accumulate cars and demand unrealistic returns from the drivers.

“We have told LagRide that the [asset financing] scheme is a killer,” the general secretary of AUATON, Ibrahim Ayoade, told TechCabal in an interview. “In totality, it is a failure of the government, especially the Lagos government, who promised drivers employment. We critiqued this model, but they used our members against one another.”

The state of affairs at LagRide has reawoken the debate of the viability of the asset financing model in the Nigerian mobility sector. Earlier this year, Moove drivers protested against the model due to the steep repayments.

Ayoade is of the opinion that the Lagos state government cannot impose cars on e-hailing drivers: the model the mobility service operates does not allow drivers to register their own cars on the platform like they can with other ride-hailers like Uber and Bolt. They can only use LagRide-branded cars on the platform.

“If the government wants to do an empowerment scheme, it can give drivers grants to buy cars. You cannot impose cars on drivers!” Ayoade said when he spoke to TechCabal.

He also believes that LagRide should be an empowerment platform that gives drivers cars instead of them paying for it for a period of four years under the asset financing model.

Ayoade however vowed to work in the best interest of vulnerable drivers under their union that were caught up in this issue.