Nigerian SMEs’ low tech adoption stalls logistics growth

For the logistics landscape in Nigeria to meet up with its Western counterparts, experts and stakeholders delved into the need for technological adoption while stating that there is a need for a better regulatory framework, unification of policies and the establishment of good infrastructure in order to spur the logistics sector in the country.

Morolayo Igeleke, of United Parcel Service (UPS) Nigeria, Mbanefo Obiora, CEO of Yoris Africa Ltd, among other panellists spoke on these topics at the BusinessDay’s Technological Disruption in Logistics conference in Lagos.

In addressing the impact, Mbanefo Obiora, CEO of Yoris Africa Ltd, underscored a significant hurdle: a mere 10 percent adoption of technology among Nigerian SMEs, highlighting the pressing need for advancements in this vital sector.

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Obiora as well as other stakeholders at the “Technological Disruption in Logistics” conference organised by BusinessDay, further spoke on the prevailing infrastructure challenges that hinder the seamless integration of logistics as an independent third-party service.

Obiora said that despite being touted as one of Africa’s technological leaders, the industry grapples with hurdles such as concentrated smartphone adoption in urban areas, hindering logistics uptake due to payment issues.

In response to these challenges, he said ERS Africa, an infrastructure startup, is committed to addressing the pressing need for technology adoption. “By subsidising costs and decentralising logistics, they aim to bridge the technology gap by providing integration services for software, mobile apps, and websites.”

Obiora also said that entrepreneurs need to build the structure and it’s by thread structures that the government can set adequate regulations and policies.

Morolayo Igeleke, from United Parcel Service (UPS), highlighted UPS’s integration of robotics and AI at their data hub in Germany, streamlining package handling and minimising human interaction for enhanced efficiency. Despite the successes abroad and locally, Igeleke said challenges persist especially in Nigeria, notably in power supply and internet connectivity.

The sensitivity of robotic systems necessitates uninterrupted 24/7 power, posing difficulties in a country where power supply is inconsistent. Additionally, internet connectivity issues persist, particularly in remote locations with limited access to telecom services.

Igeleke pointed out significant opportunities arising from the ongoing telecommunications expansion in Nigeria. Despite the current statistics indicating that only 68 percent of rural dwellers use online payments, there is a growing demand for this service. He says the key lies in creating awareness, informing people of available alternatives, and encouraging them to embrace the convenience of online services.

Igeleke also said that the shift in awareness presents opportunities for telecom companies and FinTechs to innovate continuously. As people realise the potential of handling tasks like sending packages to distant locations with a simple app click, the demand for FinTech applications and telecommunications services is on the rise.

The logistics industry plays a pivotal role in facilitating the movement of goods and services, serving as the backbone of global trade.

In the aspect of streamlining regulations to enhance the logistics industry’s viability, Olusola Obabori said that logistics is often hindered by an excessive regulatory framework that impedes its growth and efficiency.

In particular, the courier service segment faces a complex licensing and taxing structure involving multiple layers, including “thugs,” which adds unnecessary bureaucracy and administrative burdens to businesses. This fragmented regulatory landscape stifles innovation and hinders the sector’s ability to adapt to evolving market demands.

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Morolayo Igeleke said there is an urgent need for a robust and comprehensive registration system for logistics businesses. This system should employ a combination.

He said the current system often relies on reactive measures, such as periodic audits and spot checks, which fail to comprehensively identify and address unregistered or non-compliant businesses.

“This lack of proactive enforcement allows unlicensed operators to operate in the shadows, potentially compromising the quality of services,” Igeleke said.

In conclusion, the panellists expressed optimism for the future of Nigeria’s logistics sector. With the government’s commitment to infrastructure development and increasing awareness of technological possibilities, the nation is poised for a better-connected and technologically advanced future.