• Friday, June 14, 2024
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Nigeria’s estimated N200bn logistics, supply chain industry reverses

Nigeria’s logistics and supply chain industry

Nigeria’s logistics and supply chain industry suffered setback in the last two years according to the 2016 Logistics Performance Index, a World Bank Group bi-annual metrics.

The N200 billion strong industry, which ranked 90 out of 160 countries in the 2016 report, had ranked 70 in 2014.

Nigeria has continued to consistently underperform and remain in the fourth percentile on World Bank’s Logistics Performance Index reflected the poor rankings on: time delays in international shipment, poor tracking and tracing capabilities, poor logistics quality and competence, efficiency of customs clearance process, quality of trade and transport related infrastructure, ease of arranging competitively priced shipment, quality of logistics services, ability to track and trace consignments, frequency with, which shipment reach the consignee within the scheduled time.

Obiora Madu, CEO, MultiMix Academy, a logistics expert, said “the Logistics sector is estimated at well over N200b and grows at an annual rate of 10 percent. Deregulatory pressures and investment have led to increased professionalism and modernisation of the haulage and logistics companies with most heavy manufacturers outsourcing the transportation of their products and the government concessioning out large maritime (ports) and inland assets.”

Logistics performance both in international trade and domestically is central to the economic growth and competitiveness of countries, and the logistics sector is now recognised as one of the core pillars of economic development. Policy makers not only in the best performing countries, but also in emerging economies, increasingly see the need to implement coherent and consistent policies to foster seamless and sustainable supply chain operations as an engine of growth.

This is particularly important because a lot of companies expanding into West Africa see Nigeria as a gateway to the region, even before Ghana. While Ghana’s main advantage is a stable democracy and thus a safe entry point for total newcomers to the African continent, Nigeria offers by far the largest market in the region, being home to over 170 million of the 250 million people living in West Africa.

Efficient logistics connects firms to domestic and international markets through reliable supply chain networks. Conversely, countries characterised by low logistics performance face high costs, not merely because of transportation costs but also because of unreliable supply chains, a major handicap in integrating and competing in global value chains.

Supply chains are complex, but their performance is largely dependent on country characteristics, especially the soft and hard infrastructure and institutions that logistics requires to operate well, such as imports, regulations, procedures, and behaviours.

France is among the highest performing economies in terms of logistics. This is a determining factor of their competitiveness. Logistics represent 10 percent of national GDP, €200 billion euro turnover, and 1.8 million jobs.