The logistics industry has a significant global value, with market size of more than $8 trillion. As a result of the pandemic and lockdown, the industry experienced slow growth in 2020, but it is quickly regaining value in the post-COVID era.

The Nigerian logistics industry’s growth is being hampered by challenges, and recent global events have worsened the situation.

Because of the logistics industry’s contribution to every other sector, resolving these challenges will have a ripple effect on the country’s economy.

So, what are those difficulties? Let’s go over them now:

Government policies 

To begin with, various government policies have caused significant problems for the industry over the years. The Ministry of Communications and the Digital Economy issued guidelines in 2020, one of which was the new licensing fees for courier and logistics companies in the country.

Although it was widely condemned by the public and instilled public distrust in the government, forcing the government to reverse the order, it demonstrated that this sector was vulnerable to government intervention at any time.

These guidelines and regulations may or may not be valid, but they are currently causing major problems for an industry with a lot of potential. 

Solution 

Government laws and policies are put in place to benefit the general public and there is basically nothing any company can do to force the government to make favorable policies at all times.

One thing you can do in this situation is to get in touch with a legal team that can interpret these policies in the simplest way so that you can adhere to them and never get into trouble.  

Poor infrastructure

Certain areas in Nigeria have poor road networks.

The country’s infrastructure is also lacking, further complicating matters for the logistics sector. In the country, we have bad roads, power outages, and poor transportation systems, which are causing problems for the sector. To promote its logistics sector, any country must ensure that it has adequate infrastructure in place to support modern-day logistics needs and requirements.

In Nigeria, the government has made significant budgetary allocations to infrastructure in comparison to other sectors, but this is insufficient to address the country’s infrastructure crisis, it appears that private sector funding will also be required to make a significant change. 

Insecurity

The growing insecurity in various parts of the country is also a problem for the country’s logistics operations. Kidnappers, bandits, robbers, terrorist attacks, and inter-communal clashes are on the rise. Despite the fact that these are different people and things, they all contribute to insecurity in various parts of the country.

Any vehicle transporting goods can easily become a victim of these things, resulting in a significant loss for the company. This insecurity makes supply chain and logistics operations in affected areas of the country difficult. 

Solution 

Kwik is always concerned with safety and we have made efforts to make sure that our drivers’ operating hours are strictly adhered to. We established rules to ensure that they do not work at night or face serious consequences.

Generally, riders are advised to never go into anyone’s compound or house for deliveries. For their safety, we always tell them to make deliveries in open areas. 

Multiple taxes and unstable economic conditions 

Nigeria’s economy is unstable, and as a result, logistics companies must pay multiple taxes, the majority of which are unofficial.

To operate their logistics operations in the country, logistics companies must pay community levies, company income tax, and several information taxes.

This makes it difficult for businesses to operate in such a country where the economy is unstable and especially if they must pay so many taxes. 

Solution 

While there is literally nothing you can do to solve multiple government taxes, it is best to maintain good relationships with suppliers to ensure that they continue to provide you with the best products during an economic meltdown.

Furthermore, it is best to stick to a few of your vehicles until the economy improves. Assuming you have four bikes and two cars, you can stick to using two bikes and one car until things improve. 

Lack of trustworthy drivers 

Unfortunately, we see that many people behave badly. As a result, there are many untrustworthy drivers, making it difficult to run a logistics company.

Of course, no man is an island, and you do not expect to run your logistics business on your own. You need a team of riders or drivers to assist in making the deliveries possible.

But what happens when these drivers are questioned? We occasionally see these drivers steal the company’s bikes and vehicles and more.

The increasing frequency of such atrocities has become alarming, leading to the closure of many logistic companies. Furthermore, it discourages the owners of these businesses because they believe that such an accident will only repeat itself and that there is no need to continue running the business. 

Solution 

To reduce the high number of untrustworthy drivers, make sure to conduct checks such as obtaining their credentials and personal information. Naturally, some people may wish to falsify these documents. However, you can double-check them before hiring anyone.

You should also make sure that they provide guarantors who would be held accountable if anything goes wrong, and you should be willing to go out of your way to confirm these guarantors before selecting any applicant. 

Conclusion

As an organization that is passionate about business owners and their businesses, we are always looking for ways to solve problems that business owners face.

The goal is to make it easy for business owners to conduct their various transactions. If you own a logistics company, make sure to implement the solutions we’ve highlighted to reduce the losses your company will face.