“Logistics are the lifeblood of international trade, and trade, in turn, is a powerful force for economic growth and poverty reduction.” Those were the words of Mona Hadad, Global Director for Trade, Investment, and Competitiveness at the World Bank, in the World Bank’s Logistics Performance Index (LPI) 2023 Report.
The LPI Report, which covers 139 countries, measures the ease of establishing reliable supply chains within a country and the structural factors that make it possible, such as the quality of logistics services, trade and transport-related infrastructure, and border controls.
In this year’s Logistics Performance Report, India stood out as one of the biggest global supply chain winners. Over the past five years, the country jumped six places from 44th in 2018 to 38th in 2023. The World Bank has recognized India’s improvements in infrastructure, international shipments, logistics competence, and supply chain modernization and digitization efforts, amongst many others.
The report highlights that the average time for containers to be stored in India and Singapore was three days, as opposed to the seven and ten days container dwell time in the United States and Germany, respectively.
While many developing countries, like India, were noted to have made significant progress in their homeland supply chain efforts, the same cannot be said of Nigeria, Africa’s largest economy. Nigeria had a subpar LPI score of 2.6 points out of 5, and was ranked 88th out of the 139 countries surveyed, placing lower than many peer African countries like South Africa, Botswana, Egypt, Benin Republic, Djibouti, Namibia, and Rwanda.
In my discussion with Ladi Williams on Channels TV, I shared my view that Nigeria ought to have scored lower and gotten fewer points because of the myriad of existential supply chain challenges that are prevalent in the country. Of course, I want Nigeria to perform better in the area of trade, logistics, and supply chain, but we have to call a spade a spade. There’s still so much to be done as the report suggests.
Efficient and smooth trade flows is one of the pathways to poverty reduction in Nigeria because trade enhances investment, technology transfer, and job creation. In this article, I’d like to share some ways Nigeria can improve its logistics, and ramp up the favorability of its economic fortunes.
1. Extensive road infrastructure
Transport systems are fundamental to the outcome of national economic input. While high transport costs can cause spatial disparities in economic activity by impeding access to isolated regions, investment in transport infrastructure can shorten regional inequality and improve national economic growth prospects by facilitating trade. The US Interstate Highway System and the Golden Quadrilateral Highway System in India are just two of the ways in which countries have used seamless transport infrastructure to augment national economic prosperity.
The quality of the country’s road networks could be better for Nigeria. While the World Bank confirms that there are 160,000 Km of state and rural roads in Nigeria, the Director-General of the Infrastructure Concession Regulatory Commission (ICRC), Mr. Chidi Izuwah, clarifies that 135,000 Km of road networks in Nigeria are untarred. Nigeria’s President, Muhammadu Buhari, has confirmed that Nigeria needs $1.5 trillion to fix its road infrastructure deficit over the next ten years.
Let me emphasize that Nigeria must invest strategically in interconnected road networks to boost trade and smooth logistics processes. For this purpose, interlinking roads, corridors, flyovers, and roads in tandem with urban and regional planning purposes are necessary. The government must tackle the challenges associated with road construction and development in Nigeria. Some institutional barriers to road development in Nigeria include corruption in awarding road contracts, lack of contract monitoring, and inefficient governance, amongst many others.
2. Smooth and integrated ports systems
Nigeria remains beset by long-running seaport cargo challenges which threaten to run the country’s logistics and trade base aground. An overview of these challenges includes poor digitalization of port operations, port congestions, high container dwell time, high turnaround time of vessels and trucks, inadequate port facilities and berths, flawed integrated ports transport system, insecurity on the waterways, lack of standard ports facilities, amongst many others.
The trade frictions associated with port operations in Nigeria have undoubtedly led to a decline in the number of vessels calling at ports in Nigeria, as opposed to those calling at the ports of neighbouring countries. Nigerian ports have been described as the most expensive and inefficient ports in the West and Central Africa sub-region.
Specific reforms will have to be carried out to improve the handling capacity of many ports across Nigeria.
These include rehabilitating dilapidated port access roads, ending port congestion and perennial traffic gridlock on the port access road through enforcing an Electronic Call-up system, installing navigational buoys, and acquiring tugboats to help eliminate vessels’ delays and improve ports efficiency.
3. High-end warehousing capacity
Warehouses are central to the smooth flow of trade processes. Through top-level warehouse capacity, inventories can be stocked, repackaged, and transported across various transit points.
In July 2022, the Nigerian Export Promotion Council (NEPC) licensed four new Domestic Export Warehouses (DEWs) to fast-track the timely delivery of non-oil exports from Nigeria and bolster Nigeria’s trade competitiveness. The DEWs were to serve as a one-stop transit facility/terminal where pre-shipment activities like packaging, labeling, aggregation, and pre-shipment inspection on non-oil exports are carried out in preparation for transportation and eventual shipment at respective export destinations.
Introducing DEWs into the Nigerian logistics is a good step in the right direction and the Nigerian supply chain industry stakeholders must double down on this initiative. Through well-catered warehouses, Nigeria’s trade position can receive a boost, and the country’s logistics sector can begin to perform more optimally.
The World Bank LPI Index 2023 disapproves of Nigeria’s trade processes. However, all hope is not lost in the prospects of the Nigerian logistics. Through comprehensive investment in key infrastructural inputs like interlinked road networks, smoother port systems, and high-end warehousing structures, Nigeria’s supply chain industry can veer off decadence and become high-performing and efficient.