Drive45 gets $3 million to expand corporate transport in Nigeria

For most companies in Nigeria, getting employees to work is part of the cost of doing business. A company with a large workforce may have to pay for buses, drivers, fuel, insurance and maintenance. It also has to deal with traffic, changing work schedules and vehicles that can break down without warning. For smaller businesses, the problem can be even harder to manage. This is the market Drive45 is going after. The Lagos based mobility startup has secured a $3 million debt facility from TLG Capital to expand its corporate transport business into Abuja, Port Harcourt, Kano and Kaduna.

Moving employees is a business cost

Drive45 focuses on companies rather than individual passengers using ride hailing apps. Its customers can use the service to move employees and manage regular business transport without having to own and operate the entire fleet themselves. That matters because running company vehicles comes with costs that are easy to underestimate. A business might buy a few buses, but then it still has to pay drivers, fuel the vehicles, service them and replace tyres and other parts. There is also the cost of vehicles sitting idle when they are not being used. For a large company, those expenses can be planned for. For an SME, they can take money away from other parts of the business.

SMEs have a different transport problem

Small and medium-sized businesses may not have enough employees to justify running a large fleet, but they can still have transport needs. A manufacturer may need to get workers to a factory early in the morning. A logistics company may need staff moving between warehouses and customers. A growing business may also have employees travelling between different offices or work sites. Buying vehicles for these needs can be difficult when the same business is also trying to pay salaries, buy stock, rent premises and invest in equipment. Using an outside transport provider could give these businesses a way to move employees without making vehicles another major item on the balance sheet. But that only works if the service is affordable. For Drive45, expanding its corporate transport business therefore also means finding a price that works for smaller companies, not only large corporations.

Four more cities

The new funding will take Drive45 beyond Lagos into Abuja, Port Harcourt, Kano and Kaduna. Each market has its own mix of businesses and transport requirements. Abuja has a large concentration of government-related businesses, contractors and corporate offices. Port Harcourt has a strong connection to the oil and gas industry and the companies that support it. Kano and Kaduna are important commercial and industrial centres in northern Nigeria. For Drive45, entering these cities means building relationships with employers that already spend money on employee transport. The company does not necessarily have to convince businesses that transport is important. They already know that. The question is whether those businesses would rather continue managing it themselves or pay a specialist to take over some of the work.

What the funding means for smaller businesses

The immediate benefit of the $3 million facility is that Drive45 can put more resources behind its expansion. For SMEs, the impact will depend on what services become available and how much they cost. If Drive45 can offer smaller businesses reliable transport without requiring them to buy vehicles, it could remove one of the upfront costs that comes with expanding a workforce. A business could potentially take on more employees without immediately having to add another vehicle to its operations. There is also a productivity issue. Employees who struggle to get to work because of unreliable or expensive transport can arrive late, miss shifts or spend more of their income getting to work. For businesses, that can translate into lost working hours. A more organised transport service does not solve Nigeria's wider transport problems, but it can give individual companies more control over one part of the problem.

The challenge is keeping it affordable

There is a catch. SMEs are usually more sensitive to operating costs than larger companies. A transport service that works for a multinational may not make sense for a small manufacturer, retailer or services business with a much smaller workforce. That means Drive45's expansion will not only be about reaching more cities. It will also have to work out which businesses can afford the service and what type of transport they actually need. 

The company has already found a market in Lagos. Its next test is whether that demand exists in other parts of Nigeria. The $3 million debt facility gives Drive45 the money to expand. The harder part will be turning that expansion into long-term contracts with businesses. And if it can make the numbers work for SMEs as well as larger companies, corporate transport could become a useful service for businesses that cannot afford to run a fleet of their own.