Why digitalisation is crucial to Nigeria, Africa’s supply chains

• Startups seek improved operating environment

To meet increasing demands for goods and services in Nigeria and other African cities, Regional Head of Integration and Business Growth, Maersk, Mr. Darryl Judd, has charged the Nigerian government and leaders across the continent to improve investment in modern digital solutions to tackle emerging inefficiencies in supply chains.

Judd, who spoke, yesterday, on ‘Logistics 4.0: Accelerating Africa’s Digital Revolution’, on the sidelines of the Africa CEO Forum in Abidjan, explained that with COVID-19 disruption of the market in Nigeria and others, there was need to build resilience through integration of digital solutions to help supply chains function.

Africa contributes about $2.7 trillion to the global economy from 54 countries that are part of the African Continental Free Trade Area (AfCFTA).

However, intra-African trade only corresponds to 14 per cent of the total trade, owing to high tariff and non-tariff trade costs. For instance, agriculture contributes to 15 per cent of Africa’s Gross Domestic Product (GDP) and 60 per cent of Africa’s employment. The use of mobile apps, digital payments and an increase in e-commerce are levers that could improve intra-African trade from agricultural produce and substitute imports.

Judd said in today’s supply chains, customers want transparency, understanding when inventory is set out, and how best to connect to the market via the ocean, air or road. Such integration, he noted, will go a long way in improving global competitiveness of the Nigerian market if rigorously pursued.

Findings show that it is more expensive to ship goods from South Africa to Nigeria due to supply chain complexities. A major challenge in Nigeria and the continent’s logistical sector is delay, due to various customs regulations, poor road networks, slow processing and clearance of goods, and inadequate storage. But Judd said these could be eliminated through improved digital technology.

He said digital solutions, like block chain initiatives, trade lane, artificial intelligence and others would provide needed visibility of the market.

The Area Managing Director, Central West Africa, Maersk, Mr. Thomas Theeuwes, said a major challenge for the industry in Nigeria is high cost of moving logistics from one point to another.

Theeuwes said if the cost of moving goods can be reduced, it would make goods cheaper for consumers. He observed that the Apapa port in Nigeria has been on digitisation journey for some years. He said there have been some improvements but the challenge is still hinged on the state of infrastructure around the port, especially, getting in and out, which remains difficult.

MEANWHILE, a group, under the aegis of African startups, yesterday, urged leaders in Nigeria and the continent to address challenges making it difficult for startups to operate efficiently and scale their businesses.

It identified lack of access to capital, inadequate infrastructure, such as unreliable electricity, poor Internet connectivity and transportation, limited access to talent and bad government policies, as forces limiting the growth of startups/firms.

The young entrepreneurs made the plea at the closing ceremony of the CEO Forum in Abidjan. The number of startups in Nigeria was estimated to have exceeded 3,360, as of 2022, the highest in Africa, followed by Kenya and South Africa, which counted approximately 1,000 and over 660 startups in the same year. Other key African markets for startups were Ghana, Morocco, Tunisia, and Rwanda.

The Chief Executive Officer, Duplo, Yele Oyekola, said the challenge of startups in Nigeria is not about talents but exposing the young population to quality education.

Oyekola said: “Lagos, being the largest city in Nigeria with its large population of young people, with a high level of education, already makes it a prime market for startups. Abuja has been coming up over the last couple of years with a number of top startups domiciled there. Other cities, like Port Harcourt, Enugu, Ibadan, Abeokuta, Jos, and Kaduna, have great potential as well.”

He noted that in addition to steps taken by government, individuals and startups could also play their part in fostering a better ecosystem. African startups have raised just over $2 billion in the past two years, according to data from Briter Bridges. However, Oyekola said the fund is not enough; hence, government needs to increase its support for startups with grants, tax breaks and other incentives.

Co-founder and Chief Executive Officer, Jetstream Africa, Ghana, Miishe Addy, said startups are not just building companies but also contributing immensely to the socio-economic ecosystem.

She said startups in the continent have to collaborate to build customer base and improve efficiency. According to her, operators are challenged by lack of access to funds to expand their businesses.