The Director General of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Mr. Charles Odii, has disclosed that the agency is collaborating with the Nigeria Postal Service (NIPOST) to provide cost-effective and efficient Logistics solutions for the small and medium-sized enterprises (SMEs) in the country. Odii explained that many SMEs in Nigeria have found it difficult to manage the high cost of logistics. This is because, in certain situations, the cost of delivery is much higher than the cost of the goods purchased. Due to these difficulties, local stakeholders find it challenging to meet their financial obligations, which causes SMEs to bear the heavy cost.
Odii promised to reveal outcomes of this relationship, which will help small enterprises, in the next few days. The SMEDAN Director General emphasized the need to lower delivery costs for business enterprises in the country, pointing out that the SME industry’s trading volume has been impacted by logistics issues. Encounters with small businesses on a variety of forums, such as cooperative meetings and town halls, have often revealed logistics to be a significant roadblock impeding Trade volumes and revenue.
Demand for last-mile delivery services have increased.
Customers are often discouraged in situations where shipping costs are higher than the cost of the goods, therefore limiting the business’ ability to grow. This is why the SMEDAN Director General engaged with NIPOST on how they can capitalize on the organization’s wide network and Infrastructure to offer small businesses a credible, affordable solution. Odii went on to say that both parties have committed to working together to resolve trust-related problems and provide small companies across the country with a desirable option through a collaboration that would boost their potential revenue, guarantee customer pleasure, and broaden their marketing network.
One of the major obstacles for businesses has been the cost of logistics, which frequently accounts for a large amount of their total operating costs and impacts their level of competitiveness and profitability. The demand for last-mile delivery and logistics services has increased due to the expansion of domestic online shopping, giving SMEs the chance to specialize in this field. Nevertheless, SMEs still incur high costs to meet customer expectations in the absence of specialized infrastructure for e-commerce like real-time tracking and other advanced technology.
There is room for the industry to grow and flourish.
Within the industry, a variety of domestic and foreign businesses offer a wide range of services. These businesses include DHL, a global leader in logistics with significant foothold in the country, Maersk Line, a global leader in container shipping, GIG Logistics, a subsidiary of GIG Group, which offers both domestic and international services, ABC Transport, a major player in the domestic industry, and Red Star Express, one of the top firms in domestic industry. The industry has room to grow and flourish, as evidenced by the participation of both domestic and foreign businesses—as long as the current obstacles are addressed.
Nigeria was placed 110th in the Logistics Performance Index (LPI) and 131st out of 190 nations when ranked based on ease of doing business in 2020. Logistics costs for SMEs in Nigeria are disproportionately high due to a number of issues, including inadequate infrastructure, high fuel prices, numerous taxes and levies, Security concerns, and corruption. The combined effect of these issues is having a significant impact on small enterprises’ operational activities and making it challenging for SMEs to stay competitive, especially when competing against larger, more resource-rich firms.
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Nearly 60 million people were employed by 41.5 million MSMEs in Nigeria, according to a 2017 National Bureau of Statistics research. These businesses account for approximately 96 percent of all enterprises in the country and 46.31 percent of the country’s GDP. Although they still require improvement in a number of critical areas, the supply chain and logistics sectors are among Nigeria’s fastest-growing industries. The estimated value of the industry is $10.2 billion in 2024 and expected to grow at 6.70% to $15.05 billion by 2030.