• Sunday, December 03, 2023
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E-Commerce in Nigeria – resolving legal challenges of last-mile delivery

Why e-commerce in Nigeria remains unregulated despite market growth

The advent of e-commerce has revolutionised the retail industry worldwide. As online shopping has imbibed a greater level of ease and flexibility into its system, a relative increase has also been seen in the number of its consumers. More people are choosing to make purchases from the comfort of their homes, offices, and for some, even while on the go. This has created an almost insatiable demand for e-commerce. Statistics from Straits Research (2023) reveal that the last-mile delivery market in Africa, which was worth $1.1 Billion in 2021 is projected to generate over $2.3 Billion by 2030, with great prospects for Nigeria as a key leader in the market.

However, the success of this fast-growing industry largely hinges on timely and efficient last-mile delivery, which is the final stage of the supply chain which involves the movement of goods from fulfilment centres to the customer’s doorstep. In Nigeria, as in many other developing countries, the legal challenges and infrastructural constraints associated with last-mile delivery pose a significant threat to the growth of e-commerce. In this editorial, we will discuss the impact of e-commerce on the last-mile delivery sector in Nigeria, the legal challenges facing this industry, as well as solutions to improving it.

E-commerce transactions can be quite tricky hence, the need for well-defined regulations. While regulations which specifically address these areas are unclear on one hand, on the other hand, disputes arising from these transactions end up building distrust in customers, for the industry.

A glance at the state of e-commerce in Nigeria
The growth of e-commerce in Nigeria has been quite impressive. In 2022, the Federal government, through the Minister of Industry, Trade and Investment, revealed that there will be a dramatic increase in the number of online shoppers in Nigeria, from the estimated 76.7 million in the previous year to 122.5 million by 2025.

This growth has been and continues to be driven by several factors, including the increasing penetration of smartphones and the internet, a fast-paced urban development, and of course, a growing middle class.

However, a major drawback to the exponential success of this industry has been the lack of adequate delivery infrastructure to meet its growing demands, leading to several bottlenecks in the last-mile delivery process. For instance, poor road networks happen to be one of the biggest challenging factors affecting last-mile delivery in Nigeria. Roads are in such a state of disrepair, that they are hardly motorable, making it difficult for delivery vehicles to access certain areas. This has, in turn, resulted in delayed delivery of goods, and increased transportation costs, the effects of which are usually borne by customers.

Yet another challenge is the lack of a proper street addressing system in many parts of Nigeria, making it difficult for delivery companies to locate clients’ addresses easily and accurately. Lack of mutual trust between buyers and sellers must also be taken into account. Many people are reluctant to make online purchases because they fear that the goods may not be delivered, or that they may receive substandard products. On the other hand, some sellers are hesitant to sell online because of the high risk of fraud and theft. This mistrust has created a need for reliable payment and delivery systems that can guarantee customer satisfaction and build trust between buyers and sellers.

Next, we consider one of the biggest impediments – the inadequacy of extant legal frameworks – to last-mile delivery.

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Regulatory and Liability Issues

E-commerce transactions can be quite tricky to deal with, hence, the need for well-defined regulations that will address potential issues as they crop up. While regulations which specifically address these areas are unclear on one hand, on the other hand, disputes arising from these transactions end up building distrust in customers, for the industry. Consequently, as the number of transactional incidents increases, questions relating to which party bears the liability as well as the prevention of future occurrences become pressing.

To address liability issues in last-mile delivery, companies must ensure appropriate measures are put in place. These companies can start by ensuring the safety and security of delivery personnel and the packages they deliver. Stricter security measures can also be developed. For instance, real-time tracking and surveillance can be utilised in preventing thefts and identifying potential safety hazards. Another way to address liability issues is to ensure that delivery companies have appropriate insurance coverage in place. These insurance policies should cover liability for accidents, thefts, and other incidents that may occur during delivery.

Privacy Concerns
Privacy concerns are a significant legal challenge in the context of last-mile delivery in e-commerce. With the collection and use of personal data during the delivery process, concerns are raised about the security and protection of personal data. Generally, personal data collected are used in ensuring that the package is delivered to the correct recipient and to communicate with the customers, the delivery process. However, this data can also be used for other unapproved purposes, such as marketing or data analytics.

To address privacy concerns in last-mile delivery, companies need to ensure that they have appropriate data protection measures in place to protect the privacy of clients’ personal information. This may include implementing security measures such as encryption, firewalls, and other safeguards to prevent unauthorised access to personal data. There is also a need to obtain appropriate consent from customers for any data collection or use beyond what is necessary for the delivery process.

Labour and Employment issues
The growth of E-commerce has also created several employment and labour law issues that need to be addressed. A major legal issue, for example, is the classification of delivery drivers as independent contractors or employees.

Independent contractors are not usually entitled to the same legal protection and benefits employees enjoy, such as minimum wage, overtime pay, and workers’ compensation. This classification has been the subject of legal disputes between delivery companies and their drivers, with many drivers arguing that they should be classified as employees.

Another legal challenge is the lack of protection for delivery personnel. Delivery personnel are often exposed to danger, for instance, in areas with high crime rates. In light of this, delivery companies must provide adequate insurance coverage for these personnel, ensuring that they are adequately compensated in the event of accidents or injuries.

It is no news that the nature of last-mile delivery work can be physically demanding, and drivers may be required to work long hours or in adverse weather conditions. Hence, delivery companies need to also ensure that they provide a safe working environment for their drivers and comply with all relevant health and safety regulations.

Additionally, there are existing labour law challenges relating to the right to unionise and collective bargaining. Naturally, delivery drivers may seek to form unions or engage in collective bargaining to improve their working conditions and wages. Companies need to ensure that they are compliant with relevant labour laws, providing a safe working environment for their drivers, as well as respecting their workers’ right to organise.

Addressing the Challenges
To address the challenges facing last-mile delivery in Nigeria, several solutions can be implemented and we have provided some of them below –

One such solution is the use of technology to optimise the delivery process. For instance, the use of drones can help deliver goods to areas that are inaccessible by road, thereby reducing delivery time and costs. For example, in the United States, Amazon implemented a smart delivery system that engaged the use of drones as a transportation system.

Technology can also be used to automate the regulatory requirements for the last-mile delivery sector. With the increasing need for regulatory compliance in the sector, the compliance process can be complicated and time-consuming. Automation of regulatory requirements can simplify the compliance process by leveraging technology to automate compliance tasks and reduce the risk of errors. Specialised software, for instance, can be used to automatically calculate taxes and generate tax reports, reducing the burden of tax compliance.

Notwithstanding the dearth of laws and regulations in this sector, companies that aim to establish businesses in the last-mile delivery sector must adhere to extant regulatory requirements, by obtaining necessary licenses and permits from regulatory authorities. For instance, the Nigerian Communications Commission (NCC), the regulatory body for all electronic communications and transactions in Nigeria, mandates that all companies engaging in E-commerce services must comply with their regulations and guidelines. These regulations require e-commerce companies to ensure the security and privacy of every customer’s personal information during last-mile delivery services. Also, companies must also provide clear and accurate information about their delivery services, including delivery timeframes and costs, to customers. They are also not exempted from complying with the regulations set by the Federal Road Safety Corps (FRSC), the body responsible for road transportation and safety. In summary, legal compliance is of utmost importance and it will be instrumental to the company to seek legal expertise and recommendations for the most effective ways to keep up with the regulatory demands, so as to avoid being in the wrong.

In conclusion, the impact of e-commerce on last-mile delivery services has resulted in various legal challenges that need to be addressed in order to sustain the growth of e-commerce while safeguarding the interests of consumers, logistics companies, and regulatory agencies. There are quite a number of issues that require proactive solutions, including liability, privacy concerns, and labour & employment law issues.

Companies must implement delivery-friendly options, embrace automation of regulatory requirements, invest in insurance coverage, and apply for the licence to operate within the legal framework provided by regulatory agencies. These actions will ensure that last-mile delivery services continue to meet the international standard requirements for operation.

Chiemeka Ohajionu is an Associate in the Firm’s Dispute Resolution Department, while Kolajo Onasoga is an Associate in the Firm’s Transportation Sector.

Stren & Blan Partners is a full-service commercial Law Firm that provides legal services to diverse local and international Clientele. The Business Counsel is a weekly column by Stren & Blan Partners dedicated to providing thought leadership insight on business and legal matters.

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