Road transportation is a widely used mode of transportation in Nigeria. Millions of Nigerians commute using road transportation daily. As one of the major sources of transportation, it significantly impacts businesses and the economy at large. Goods and services are delivered effectively using road transport. Additionally, it serves as a profitable business opportunity for entrepreneurs. In this article, we will discuss the different types of road transport businesses and how you can start a road transport business in Nigeria.
Types of Road Transportation in Nigeria
- Passenger Transport
This involves the carriage of people from one destination to another for a fee. It can be interstate or intra-state. Common examples include motorcycles, tricycles also known as “Keke Napep”, buses, car hailing (Uber, Bolt), taxis, etc.
2. Haulage or Freight Transport
This type of road transportation involves the transportation of goods, raw materials, and other commodities from one location to another, either within a State or outside a State. This often involves the use of trucks, vans, trailers, vehicles, buses, and motorcycles. Example: Dangote cement or fuel truck, Coca-Cola trucks, etc.
How to start a Road Transport Business in Nigeria
a. Identify your niche: You must decide where to niche down in the industry, whether as a passenger road transport service, haulage or freight, courier/logistics, or luxury transport.
b. Choose a location for the operation of your transport business: In determining the location for the operation of the business, it is better to opt for locations with easy accessibility to passengers or an operational base or park. Also, it is advised that the location should not be obscure or too remote in order to ensure visibility.
c. Set clear financial expectations: It is one thing to have a budget or capital to start, but it’s another to set clear financial expectations. To achieve this, one must carry out a feasibility study and market survey when starting any kind of business, including a road transport business. This will help you to not only understand your projected performance, but also prove the viability of your business to banks and potential investors.
d. Create a business plan: Starting a road transport business in Nigeria goes beyond just acquiring vehicles and hiring drivers; it requires careful preparation. At the heart of this preparation is a well-structured business plan. A business plan serves as the roadmap for your transport venture. It clearly defines your vision, mission, objectives, and strategies while outlining the operational structure, financial projections, and marketing approach. For a transportation business, it helps you determine the cost of vehicles, fueling, maintenance, union fees, permits, and expected revenue per route.
e. Register your business with the Corporate Affairs Commission: Most customers and passengers are inclined to patronize registered businesses. This helps to secure customer trust and loyalty, investor confidence, and most importantly, to steer clear of the wrong side of the law and to avoid being penalized, hence the need to follow this step. Ensure that you register your road transport business with the Corporate Affairs Commission (CAC). This allows for legal recognition, shields your brand, and enables access to grants, loans, and other incentives.
f. Obtain a tax identification number from the Federal Revenue Service for tax compliance: This is important for your business for filing necessary tax returns as required.
g. Register with relevant authorities and obtain transport and vehicle-related licenses and permits: To operate a road transport business, it is necessary to obtain licenses and permits from both federal (such as the Federal Road Safety Corps (FRSC), Vehicle Inspection Office (VIO), and National Union of Road Transport Workers (NURTW), State, and even local authorities. Unlike many other industries, transport companies face stricter requirements because they deal directly with passengers, goods, and other valuable cargo. For instance, freight businesses must meet Department of Transportation rules, which depend largely on the weight and size of what’s being hauled. Some common permits and licenses include:
i. Proof of ownership
ii. Roadworthiness certificate
iii. Commercial Driver’s License: For operating certain vehicles.
iv. Commercial Vehicle Registration: For fleet operations with red commercial plate number(s)
v. Fuel Carrier Licenses: For transporting fuel.
vi. Oversized or Heavy Load Permits: For goods exceeding standard limits.
vii. Third-party Insurance: To cover drivers, passengers, and cargo.
Trucking and logistics firms must meet these strict standards to avoid fines, delays, or even shutdowns. Getting the right permits from the start not only keeps you compliant but also builds trust with customers and regulators alike.
h. Acquire or Lease Vehicles and Hire Staff: It is generally advised to choose a vehicle for a road transport business. It is important to start with a reliable, fuel-efficient option, such as HiAce, Coaster, Sienna, or luxury coaches, depending on your targeted clientele. Alternatively, vehicles that offer higher mileage with low maintenance are available. Buying outrightly provides ownership, while leasing or hire purchase reduces upfront costs. Additionally, if you wish to operate a fleet or freight transport business, it is important to hire reputable and qualified staff. Drivers must have valid licenses, clean driving records, and ideally customer service skills, especially if serving passengers. It is essential to seek expert insights, evaluate your financial capacity, and carefully examine the details of each option before selecting the one that best supports your business goals and objectives.
i. Ensure Vehicle Safety and Regular Maintenance: Operating a transportation business requires planning. Even with new vehicles and equipment, continuous use will inevitably affect safety and efficiency. To boost profitability and maintain continuous patronage and safety, it is important to conduct regular maintenance on the vehicles to minimize breakdowns and uphold safety standards. Ensure port-bound trucks complete safety audits, such as checking the truck head, brakes, lights, belts, and fire extinguishers. Additionally, you can install vehicle trackers for real-time monitoring and driver accountability.
h. Stay Legally Updated: Keen attention must be given to the area of renewing licenses and permits at set intervals, as some do not last forever. Staying current with these compliance requirements not only ensures compliance with regulations but also promotes seamless business operations. To avoid oversights, companies should implement automated reminders or assign a compliance officer to monitor renewal schedules.
Conclusion
Starting a road transportation business in Nigeria is a profitable endeavor requiring strong legal foundations, strategic investment and planning, and ongoing compliance. Also, bear in mind that there may be additional license requirements depending on the state you intend to operate from, hence it’s advisable to get a legal opinion in this regard.
By registering with the Corporate Affairs Commission (CAC), Federal Inland Revenue Service (FRS), National Union of Road Transport Workers (NURTW), other relevant regulatory bodies, State and local government authorities, securing relevant licenses/permits, maintaining safety and quality, as well as deploying smart marketing, entrepreneurs can navigate this complex terrain and steer their business toward profitability and scalability.
For enquiries on how to start a road transport business in Nigeria, you may reach out to us by completing this form, through our contact information by clicking this link, or through the WhatsApp icon on this page, and we’ll respond to you.
