The Economic Implication Of Okada Ban In Lagos State

Project and Seminar Material for Economics Education

The Economic Implication Of Okada Ban In Lagos State

Chapter One


1.1 Background Of The Study

Most of of Nigeria’s major cities have been rapidly growing, with Lagos at the apex of it all. The c ities serve as administrative, industrial, and commercial capitals. They are headquarters to at least 70% of the country’s commercial banks, insurance companies, industries, and more than 50% of national manufacturing activities, as well as a proportionate share of skilled labor (Kumar 2011). Despite the economic and commercial importance of cities, authorities have struggled to meet the basic needs of urban residents, particularly the poor, who rely heavily on public provision of water, electricity, transport, and other services, regardless of the fact that rapid growth affects all segments of society (Odugbesan (2014). The lack of enforced policies on land use and economic development has resulted in urban sprawl, low density, and uncontrolled growth in city outskirts. Population densities have increased the size of required water, sewer, and electricity distribution systems, increased travel distances, and raised the cost of providing all basic services, including public transportation (Odugbesan (2014). Meanwhile, the increased use of private cars has clogged roads for all users, endangering pedestrian safety and the health of city dwellers who breathe in vehicle emissions (Olobomehin) (2012). It has also caused all modes of surface public transport to become slower, less reliable, and more expensive to operate. In developing cities around the world, the private sector is the dominant provider of public transport services, employing a large number of people (Ume et al. 2011). It is perplexing that in developing cities where vehicle ownership is low, reliance on public transport is high, despite the fact that the financial condition and performance of all forms of government-organized public transport, whether state or privately owned, are declining. This situation has compelled people and the market to devise novel solutions to meet daily transportation needs (Ayanwuyi 2013). The search for these alternatives has resulted in a rapid increase in non-traditional modes of public transport, initially provided by minibuses and shared taxi/vans, and more recently by commercial motorcycles. According to Olobomehin (2012), para-transit modes have become the dominant mode of public transport, but they also present clear disadvantages from the standpoint of general public welfare in terms of the negative externalities generated (noise, safety, pollution etc). Commercial motorcycle operations (CMO) as a mode of public transport in Lagos began in 1980 by a group of people in the Agege local government area. Initially, they were used to supplement family income by working after normal work hours. With the decline of the formal public transport system, the operation spread to other areas and became a popular mode of transportation by the early 1990s, with nearly 10,000 motorcycles registered for commercial use by 1995. Economic recession and high inflation aided the growing popularity of this mode among the unemployed, which grew to nearly 200,000 by 2007. (Kumar 2007, Sumaila 2012, Osoba 2012).

The introduction of motorcycles (Okada) provided a significant relief to the existing transportation and unemployment issues, as well as other benefits such as reducing lost economic man-hours, tardiness to work, and other challenges associated with traffic jams. The problems associated with its operations are massive. However, the Lagos State Government has restricted the operation of motorcycles to a certain extent over the years, which has not completely ended their operations in the state. After successfully restricting their operations, the government implemented a total ban on motorcycles in the state, regardless of the consequences for residents, unskilled motorcyclists, businesses, and even the state’s economy as a whole. As a result, the purpose of this research is to look into the economic implications of the Okada Ban in Lagos State.

1.2 Statement Of The Problem

The Okada ban in Lagos has had a negative impact on both commercial and non-commercial activities in various ways. Economically, the ban has increased transport fares as bus drivers take advantage of increased demand and a lack of alternatives. Riders on motorcycles and tricycles typically charge between #30-100 depending on location, which is a small fee when compared to taxi fares (Stear business 2021). However, in recent years, people have had no choice but to spend a larger portion of their already limited disposable income on bus fares. This drastic decision has resulted in an increase in transportation prices, which has a negative impact on the economy because the cost of transporting goods, including food, has put pressure on other items that residents consume. Furthermore, unemployment has risen to 14% as an estimated 800,000 drivers have become involuntarily unemployed with no alternative source of income. Also, the food vendors stationed at Okada parks, as well as the mechanics who specialize in repairing these motorcycles, have seen a significant drop in business. This research is thus built on this foundation to investigate the economic implications of the Okada ban in Logos State.

1.3 Objective Of The Study

The general objective of this study is to investigate the economic implications of the Okada Ban in Lagos State. Specifically, the study aims at;

  1. Investigating whether the Okada ban in Lagos state has any negative impact on the prices of goods.
  2. Investigating whether the Okada ban in Lagos state has increased transportation costs for commuters.
  3. Investigating whether the Okada ban in Lagos state affected the employment status of the Okada riders.

1.4 Research Hypothesis

A hypothesis refers to an experimental statement, tentative in nature, showing the relationship between two or more variables. It is open to test and can be accepted or rejected depending on whether it agrees or disagrees with the statistical test.

The two hypotheses that were tested in this study are the null and alternative hypotheses.

The null hypothesis reflects that there will be no observed effect in our experiment. In a mathematical formulation of the null hypothesis, there will typically be an equal sign. This hypothesis is denoted by H0. The null hypothesis is what we attempt to find evidence against in our hypothesis test.

The alternative or experimental hypothesis reflects that there will be an observed effect on our experiment. In a mathematical formulation of the alternative hypothesis, there will typically be an inequality, or not equal to the symbol. This hypothesis is denoted by either Ha or by H1. The alternative hypothesis is what we are attempting to demonstrate in an indirect way through the use of our hypothesis test. If the null hypothesis is rejected, then we accept the alternative hypothesis. If the null hypothesis is not rejected, then we do not accept the alternative hypothesis.

The study will test the validity of the following null hypothesis:

  • H01: Okada ban in Lagos state has no negative impact on the prices of goods.
  • H02: Okada ban in Lagos state did not increase the transportation costs for commuters.
  • H03: Okada ban in Lagos state did not affect the employment status of the Okada riders.

1.5 Significance Of The Study

Since this study deals with the Okada ban in Lagos state and its economic implications, the findings are expected to disclose the various aspects of the state economy which have been affected as a result of the ban, with loss of employment of Okada riders inclusive. This will evidently apprise the state government of the economic vacuums created due to the drastic decision. Furthermore, it has been envisaged that the recommendations outlined in chapter five of this study will urge the government to always ensure that sufficient opportunities are made available before decisions of this nature are executed to at least aid vulnerable individuals. This study will also contribute to the body of literature that has existed on this aspect of research and, hence, will be invaluable to students and researchers who may wish to carry out a study on a related topic.

1.6 Scope Of The Study

The study covers the economic implications of the Okada ban in Lagos State, with specific attention to the Okada ban in Lagos State and its impact on the prices of goods, transportation costs of commuters, and the employment status of Okada riders. Hence, the study is set to be limited to Lagos state residents in Ikotun, Lagos State.

1.7 Limitation Of The Study

It will be a non-challenge to state clearly that the major constraints on this research study are financial constraints and limited time due to the academic calendar. Due to the above constraints, the research could not cover the area of interest and calls for optimum support in future research.

1.8 Definition Of Terms


An Okada is a motorcycle taxi commonly used in Nigeria and other African countries to transport goods and commuters.


An official or legal prohibition of something.


This is the effect of an action.

The Economic Implication Of Okada Ban In Lagos State

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The Economic Implication Of Okada Ban In Lagos State


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