The Logistics Sector in Nigeria

The logistics network in Nigeria is seen as complex and difficult to grasp due to the challenges and peculiarities of the Nigerian environment. It has made many individuals and businesses opt to outsource the logistics arm of their operations while concentrating on their core strength.

The crux for logistics is ensuring that products are delivered in the right quantities, to the correct location, in a cost-effective manner, at the right time. As easy as this may sound, statistics have shown that 67% of deliveries do not meet the above definition in Nigeria. This could be attributed to the global evolution of the traditional logistics structure and management framework, which has had little or no impact in the Nigerian market (e.g. tracking and real-time reporting). It can also be argued that certain factors have hampered digitisation in the supply chain. They include infrastructural issues, network challenges, poor regulation and ineffective digital solution in the Nigeria environment. Hence, the long-awaited disruption in the logistics and supply sector has not been able to revolutionalise the logistics industry in Nigeria.

According to a study carried out in 2019, the critical challenges for logistics operations in Nigeria include visibility, infrastructural decay, increasing customer demands dynamics, risk management, insecurity and cost optimisation. The competitiveness of logistics operations is determined by many different factors with attention to networks, knowledge management and environment. These components are either internal or external to the supply chain. They can be classified as belonging to the following realms of contributors to the functioning of the supply chain: Suppliers, Customers, Labour and Finance.

Nigeria businesses migrate goods and services across the entire nation; this is because each geopolitical zone specialises in a specific product due to their climate. Despite the importance of the logistics industry in the Nigerian economy, the focus on this sector is still insignificant. With the ever-growing demand, there is a limited number of large logistic companies that can meet this demand. In some cases, some industry does not have the right transportation infrastructure in place. A simple point in time will be the transportation of perishable goods from Maiduguri to Lagos, or Sokoto to Onitsha, on a regular truck as against a temperature-controlled truck.

To this end, there is a need for a massive investment in the logistics sector, and regulatory support is highly required to drive the desired improvement that will facilitate the long-awaited transformation in the Nigerian logistics environment.

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Phillips Consulting Limited (pcl.) is a leading business and management consulting firm serving clients across Africa. www.phillipsconsulting.net/