Unlocking Nigeria’s supply chain gridlocks

Unlocking Nigeria’s supply chain gridlocks

Nigeria is a complex country with unique challenges. In the Nigerian governments’ efforts to diversify its economy away from an unhealthy reliance on oil production, the Nigerian supply chain will play an integral role.  

By Leon Louw owner and editor of WhyAfrica

Although Nigeria has huge potential, the country is currently faced with severe infrastructure constraints that hinder the exploitation of the rich natural and human resources that could stimulate its development.

There are many opportunities in the Nigerian agricultural and mineral space that, with the right policies, regular power supply, adequate training and capacity building and improved infrastructure, could translate into significant economic growth. But the absence of critical infrastructure continues to impact negatively on the cost of doing business, investment, and capital inflow into the country.

To complicate matters further, global lockdowns during Covid-19 had a devastating impact on Nigeria’s supply chain and logistic companies, which already faced an uphill battle even before the onset of the global pandemic.

According to Aisha Ali-Ibrahim, a Fellow of the Chartered Institute of Logistics and Transport in Nigeria, the pandemic’s adverse effects will continue to have an impact in 2022. Nigeria’s ports were hard hit in 2020 and 2021. Ali-Ibrahim says that during the pandemic there was a total lockdown with skeletal services at most ports across the country and few vessels entered or left the ports.

Road transport and aviation were as badly affected. “Aviation came to a standstill as aeroplanes were not coming in or out, borders were locked down and staff were laid off. Factories were shut down and inflation worsened with unbearable exchange rates and many companies were forced to close. Business is gradually returning to normal, but the effects will linger,” she says.

Ali-Ibrahim has 37 years of working experience in the logistics and transport industry in Nigeria with most of her time spent in the maritime sector. Prior to her retirement in 2020 she was the first female General Manager Marine and Operations from the Nigerian Ports Authority and was a Port Manager of the Lagos Port Complex (LPC).

Lack of infrastructure hinders development

Ali-Ibrahim tells WhyAfrica in an exclusive interview that a lack of infrastructure has hindered the Nigerian governments’ desire to diversify its economy, especially into the mining space. Despite the efforts to encourage mining activities, and although several new projects in the coal, iron ore and lime sectors, for example, have come on-line recently, a lot still needs to be done to improve the operating environment in Nigeria.

Ali-Ibrahim says that the main challenges include, amongst others, inadequate infrastructure, insufficient funding, high risks and health hazards, a lack of well-equipped laboratories, low productivity, weak regulation, illegal practices of stakeholders and Inconsistent policy and inadequate legislation.

“On the other hand, the Federal Government has done quite a lot over the last three to four years to attract more private investment into the mining industry. For example, more ports are being dredged to accommodate bigger vessels, several roads are being rehabilitated and the railway lines are being changed from narrow gauge to standard gauge.

“In addition, barge operations are on the increase to reduce the pressure on our roads, while regional and continental collaboration like the African Free Trade Agreement (ACTFA) is ongoing. Once completed, the Leki deep seaport will add additional capacity to the efficient Onne port, which will increase the number of large vessels that will be able to enter and leave Nigeria,” says Ali-Ibrahim.

The railway transport system seems most suitable for mining activities and the government recently invested a significant amount of capital into the Lagos-Calabar railway in addition to the Lagos-Ibadan expressway to connect western and eastern parts of the country.

Challenges facing Nigerian seaports

According to Ogochukwu Ugboma, Head of Department of Transport Management and Operations, School of Transport and Logistics in Lagos State University, Ojo, Lagos, Nigeria has three major cape-gauge rail lines in the country. The Western line connects Lagos on the Bight of Benin to Nguru in the Northern state of Yobe; the Eastern line connects Port Harcourt in the Southeast to Maiduguri in the North-eastern state of Borno, close to Chad border and the Kano-Maradi line. There are several other branch lines and standard gauge lines running across the country. Nigeria boasts about 195,000km of roads with about 36,000 km of federal roads. Nigeria has six major seaports: Tin Can Island and Lagos Ports in Lagos State; Rivers Port and Onne Port in Rivers State; Delta port and Calabar port.

Ugboma tells WhyAfrica that port congestion, inefficient processes and procedures, multiple tariffs and checks, extortion and illegal payments and port access gridlocks are only a few of the challenges that face Nigeria’s seaports. “What we really need to do is to adopt better technology and automate most of the current tedious processes and there should be better collaboration among various departments, agencies and stakeholders,” she says.

According to Ali-Ibrahim, Nigerian ports underwent a major overhaul with operational management being converted to a landlord model in 2000. As a result of public-private partnerships (PPPs), Deloitte reports that terminal operators made a combined 200-billion Naira (USD646.6-million) of investment in new port infrastructure in 10 years including major outlays such as rubber-tyred gantry cranes, mobile harbour cranes, trucks, buildings, quays, inland container depots, terminal lighting, automated tracking systems, generators, plants, and machinery. “However,” she adds, “a number of key challenges remain, and there is also a need to improve both marine and landside access to ports.”

According to the Nigerian Civil Aviation Authority, Nigeria has 20 airports, 23 active domestic airlines and it is served by 22 foreign carriers. Two of its largest airports in Lagos and Abuja accounts for over 60% of total passenger and aircraft movements; other international airports lie in Calabar, Kano and Port Harcourt.

Roads and railroads need to be rehabilitated

Nigeria’s railway network is dilapidated and vastly underutilised. The Nigerian Rail Corporation reports that the current network comprises of eight lines, 3 505km route of 1067-mm lines, as well as a 19km, 1067-mm gauge extension from Port Harcourt to the deep-sea Onne Port, and 277km of standard, 1435-mm gauge track running between Ajaokuta and Warri via Itakpe.

Nigeria has developed an extensive national network of roads and bridges which is responsible for more than 90% of domestic passengers and freight. Across the country, the general condition of the road network ranges from good, fair, and poor. Few areas remain unconnected to national backbones, and those are generally concentrated in the central, western, and eastern parts of the country. Nigeria’s regional connections are fair, connecting to neighbouring countries like Niger, Chad, Cameroon, and Benin, as well as coastal roads joining routes to Dakar in Senegal or Abidjan in Cote d’Ivoire.

“Nigeria has relatively advanced transport infrastructure networks that cover extensive areas of the nation’s territory. Although overall transport infrastructure is inadequate, the country has made progress since 2017 in alleviating urban congestion through investing in critical infrastructure projects and increased call for private sector participation in the development of transport arteries; especially in the road sector, a tax incentives scheme and the establishment of new toll booths on major highways,” says Ali-Ibrahim.

Opportunities abound for logistic and transport companies

The question is that in a country where there seems to be so many challenges in terms of logistics and supply chains, will there be space for companies from other African countries to fill the gap? Ugboma has no doubts. “Opportunities abound for any supply chain, logistics or transport companies of other African countries in a country with more than 200 million people, most of them young. They only need to look at the areas where there are challenges and work out a sustainable model to solving the problems,” she says. Ugboma adds that it is especially the agricultural sector in Nigeria that face challenges. “For example, the storing and distribution of perishable goods and temperature sensitive foods are inadequate as there is insufficient freezing infrastructure,” says Ugboma.

To be able to create opportunities though, the Nigerian authorities will need to improve its policies and regulations to ensure a smooth supply chain and streamlined logistics sector. “This they can do,” says Ali-Ibrahim, “by adopting a well-developed freight and logistics strategy which should be integrated and overarching. It should facilitate the safe and efficient movement of freight within the country and should integrate the country seamlessly within the West African sub region and beyond.”

“The plan should address sources of freight generation; commodity flows and associated database modelling. It should also cover the transportation and distribution industry and workforce, storage, and warehousing location principles and movement of bulk commodities, containers and general cargo through major ports, and airports. In addition, the plan should cover railroad access to allow efficient access of bulk freight to support agricultural regions, production clusters, local industries, business and customers,” says Ugboma.

Leon Louw is the founder and editor of WhyAfrica. He specialises in natural resources and African affairs.        

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