The supply chain industry in Nigeria, estimated to be worth billions of dollars, is vital to the nation’s Economy as it facilitates the flow of goods and services across numerous industries. With solid growth rates and a significant 2.6 overall Logistics Performance Index score as well as a 2.3 score for logistics competency and quality in the World Bank’s Logistics Performance Index for 2023, the logistics and supply chain industry is growing rapidly. This growth is primarily driven by notable developments in infrastructure, increased global trade, thriving manufacturing, expanding Export markets, and the pervasive use of e-commerce platforms.
Positioning itself as a crucial catalyst of economic growth, the sector is evolving as a result of greater investment, changes in consumer behavior, and technical improvements. One of the most prominent trends is the utilization of technology, such as blockchain, artificial intelligence (AI), and big data analytics, to improve transparency, streamline processes, and cut down on inefficiencies. Cold chain logistics are becoming more and more important in Nigeria, especially for the pharmaceutical and agricultural industries. Furthermore, as businesses try to satisfy consumer expectations for quicker delivery times, last-mile delivery services are growing in popularity, particularly in urban areas.
Experts predict 10% annual growth in the industry.
With industries including manufacturing, oil and gas, and Agriculture depending significantly on strong supply chain networks to move goods both domestically and internationally, Nigeria spent ₦300 billion (which is equivalent to $725 million) on logistics in 2022. According to a reports, the Nigerian supply chain and logistics industry was estimated to be worth $60 billion in 2020, underscoring its enormous economic importance. Nigeria, with a population of over 200 million, is a regional economic engine whose growing middle class has contributed to the industry’s rise.
According to a Agility assessment on developing markets logistics in 2022, Nigeria was ranked 12 in terms of domestic logistics opportunities, with the nation demonstrating a significant room for development given the rising demand for services like freight forwarding, warehousing, and transportation. The industry has enormous potential, particularly in light of the rising demand for products and services in the country as well as throughout West Africa. Industry experts predict that the sector could grow at a 10% annual pace over the next ten years with appropriate investments in infrastructure, technology, and talent development.
Supply chain industry is poised to thrive with investments.
This would strengthen its standing as a vital tenet supporting the country’s quest to diversify its economy. The Nigerian government’s Economic Sustainability Plan (2021–2024) places a strong emphasis on developing robust supply chains to sustain homegrown Manufacturing and agriculture, which are regarded as important engines of Economic Stability and employment creation. Prominent economist Muda Yusuf, a former director-general of the Lagos Chamber of Commerce and Industry (LCCI), claims that Nigeria can fully realize the potential of its supply chain industry, which is poised to thrive, by addressing these problems and making investments in logistics infrastructure.
Notwithstanding its potentials, the industry faces numerous obstacles given the severity of the nation’s economic downturn. The country’s reliance on road transportation is being strained by rising transportation costs, which are mostly caused by unstable fuel prices and poor infrastructure. This has a major impact on firms’ operating expenses. Inadequate Infrastructure presents a major impediment to Nigeria’s logistics systems. Supply chain efficiency is threatened by stockouts and high holding costs, which make maintaining just-in-time inventory systems more difficult, especially for perishable goods.
Related Article: Nigeria to modernize its Logistics services
Yet, there is hope for the foreseeable future as the supply chain industry has enormous potential to boost economic expansion, encourage export diversification, and strengthen the nation’s standing in regional and International Trade networks. The industry is expected to expand as a result of the Lagos Free Trade Zone, modifications to the customs procedure, and investments in innovative technological solutions. Nigeria would be positioned as a major logistics hub in West Africa with the expected implementation of the Africa Continental Free Trade Agreement (AfCFTA), which would further boost the sector’s value. Through increased transportation efficiency and reduced business expenses, these measures would increase Nigeria’s appeal to international and local enterprises.