In recent years, despite Nigeria’s population, the logistics market has experienced a slow growth rate due to certain challenges such as congested roads and customs issues. Hostile custom procedures, unfavourable government policies that adversely affect the ease of doing business, heavy traffic, poor road network, multiple taxations, and corruption are some of the reasons attributed to the slow growth of the logistics sector.
A study carried out in 2019 showed that the major challenges for the operations of logistics services in Nigeria are infrastructural decay, risk management, insecurity and increasing customer demands. The inefficiency of seaports is another major challenge, as well as slow customs clearance services at all ports of entry.
In more recent times, the COVID-19 pandemic has been a major challenge.
The pandemic impacted negatively on logistics in Nigeria and globally. The restriction of movement and lockdowns made it extremely challenging for service providers in the logistics and shipping industry to carry out their duties and render their services. There was also the mental and psychological effect of the pandemic on the providers of logistic services.
Another big challenge of the industry is the costs of transportation, which can easily go up to 50% of total costs, with the continuous increase in fuel prices.
These challenges, notwithstanding, the future of the logistics market in Nigeria is very promising. The market has a lot of potential for the country’s economic growth. The logistics sector’s contribution to the nation’s GDP increased from $642.927 to $720.241 million in the third quarter of 2019.
This goes to show that prioritizing the logistics sector will lead to speedy growth in the economy. There is also the potential for job creation.
The sector has an expected compound annual growth rate (CAGR) of about 4% in the next few years.
The government needs to pay attention to the infrastructural decay, insecurity and hostile policies affecting ease of logistics business. The importance of infrastructure to the logistics and supply chain objective cannot be overemphasized. Modern technology and communication systems should be adopted to regulate the logistics industry. This will help to open up the Nigerian market to the international community and subsequently cause potential growth in the sector.