It is very important for Nigeria to leverage its huge population size (over 200million) to harness the opportunities available in the transport, logistics and E-commerce sector to grow the economy.
While the sector’s contribution to the nation’s GDP increased from $642.927 to $720.241 million in the third quarter of 2019, the e-commerce market is estimated at approximately USD$12 billion
It is important for the Government to prioritize the sector for development as this would rapidly increase the economy’s growth, create more employment opportunities, and add more value to the lives of the citizens.
For the sector to increase its value to the growth of the economy, the government needs to invest more to overhaul and upgrade infrastructure, policy, and methods of operating the sector.
This is because the sector is the gateway to the growth of the economy and it has a great potential of overturning the economic challenges facing the nation if well managed and structured.
Developing the sector would also make it more resilient to climate change as well as enable continuity and longevity, while creating more employment and business opportunities.
Nigeria’s freight and logistics market has experienced slow growth for many years despite the nation’s huge population while the sector is yet to fully harness its potential.
The sector is expected to grow at a compound annual growth rate (CAGR) of around 4 % in the coming years.
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Some of the reasons attributed to the slow growth are poor infrastructure, unfavorable custom procedures, high traffic and congestion, stale policies, bad roads, insecurity, increased corruption etc. They are also responsible for its low ranking.
While in 2018 the sector was ranked at 112 in its logistics performance index, it also ranked 145 out of 190 economies in its ease of doing business Index.
This tide has recently improved somewhat because of the upgrading of the railway and aviation sector by this administration in addition to recent strategic partnerships with other nations, which has brought growth to the sector and economy. However, more work still needs to be done.
The advent of COVID-19 pandemic also opened more business opportunities for this essential sector for movement of goods and services (to and from) different parts of the nation and the world due to lockdowns and restrictions of movement.
Personal and consumer freight that would have otherwise been moved by travellers during their trips are now routed solely via logistics and courier agents – and this looks like it has come to stay.
Additionally, it made stakeholders to realize the importance of seamless urban movement of goods and service thereby increasing the E-Commerce market revenue amounting to US$ 4.88 billion.
It is expected to grow further at a compound annual growth rate (CAGR) of 20.5% in the period of 2019-2023 and would result in a market volume of around US$ 10.29 billion by 2023.
While other sectors were shrinking, COVID-19 pandemic increased the growth of the sector due to our reliance on imported goods and people’s preference for online shopping in areas such as food, toiletries, clothes, electronics and gadgets, furniture etc. It also made the sector to maximize available opportunities in public-private partnerships within the sector.
However, in 2019, Nigeria’s market’s largest segment was Fashion with a market volume of US$ 1.76 billion and user penetration was 52.2%. It is expected to reach 75.2% by 2023 due to ease of payments with mobile money and debit cards, which has increased internet penetration.
The current scenario has proven seamless, secured, and safer; thus, the industry is expected to grow further.
Also, with the booming logistics and ecommerce industry in Nigeria, delivery providers such as DHL, FedEx, EMS, UPS, Jumia etc. are all experiencing steady growth in profits and revenues as the population increases.
No wonder Jumia Co-Founder and Co-CEO, Jeremy Hodara on the company’s 2020 agenda for Nigerian market, highlighted the huge opportunities for e-commerce business in Nigeria and stated that he foresees a faster expansion of e-commerce in Nigeria than other parts of the world.
The future of logistics market in Nigeria is very promising, however, for Nigeria’s transport and electronic commerce (eCommerce) sub-sector to grow exponentially and add more value, there needs to be more support from the government to create the enabling environment for growth.
Therefore, restructuring the sector policies would open the market, attract new investors, birth more small and medium enterprises (SME’s) as well as make it easier to do business in the sector.
The sector needs to also be given the needed attention in its areas of challenges such as infrastructural deficits, stale policies, insecurity, high corruption rate, lack of freedom of expression, closing the knowledge and skills gap etc.
Within the industry there needs to be increased adoption of the use of modern technology, communication, and security systems to monitor and regulate the sector.
In conclusion, leaders in the sector need to urgently organize a national stakeholder summit to brainstorm on better strategies of developing the sector as well as closing of all gaps in the sector as already mentioned and proffering solutions.
Okotie is chief executive officer, Bernard Hall Nigeria Limited, www.bernardhallgroup.com, [email protected], [email protected]
