Business

Somuyiwa: Nigeria’s logistics potential remains untapped

Professor of Logistics and Transport Management, Department of Transport Management, Ladoke Akintola University of Science and Technology (LAUTECH), Adebanbo Somuyiwa, in this interview with BAYO AKOMOLAFE, speaks on impact of corruption and poor logistics, among others, on the maritime sector

 

What is your assessment of the economy and the transport sector?

The relationship between economic development and transport is theoretical, especially when viewed within the classical and neo-classical theories because transport of any mode enhances spatial interaction, induces locational changes and integrates various regional spaces. In other words, transport is the trajectory or perhaps the hallmark of economic development in ensuring that those functions are achieved.

 

Hence, there is a positive and linear relationship between transport and economic development. However, in Nigerian scenario, the concept of transport remains untapped, unexplored and unexploited. This, in turn, has negative impact, not only on the general development, but precisely on the economic sector. This is due to the unplanned, unregulated and unprofessional approaches to the transport sector.

 

For instance, the planning is poorly done, the operations and implementation of transport sector are in haphazard manner. It is interesting to note that transport is on concurrent list, hence planning of this wheel of civilisation ought to have been designed from local, state/regional and national levels in an harmonious and holistic manners, such that the ultimate objectives will be attained.

More importantly, based on the fact that environmental features that are not homogeneous, the planning of transport should be done in relation to morphology of the environment that will dictate the modes of transport that will be pronounced in particular region, which will equally foster intermodalism that tangentially promote efficiency, effectiveness and trade growth, which are all indices of economic growth.

 

Arising from improper planning, the transport sector of the country remains chaotic and awful in management, control and operations. Similarly, due to the reactive nature of our system, the politics and policy involved in transport sector is not only unethical, but diametrically antithetical to the tenets of economic planning, hence, undermine the potentiality of the link between transport and the country’s economy.

 

The long and short of the argument is that if transport sector is planned accordingly, the country’s economy will be buoyant, society will be vibrant and environment will be friendly.

 

How much do you think the logistics industry can fetch Nigeria if properly explored?

 

The fundamental presuppositions of logistics revolve around timely positioning of resources in a cost effective manner, without consequence on the environment, in a bid to satisfy customers’ service/ satisfaction and enhance comparative advantage. Suffice it to say that it is anchored on 8Rs that are: right product/ service, right quantity and  quality, to the right place, at the right time and cost, using right mode of transportation and to the right customers.

 

In other words, these are utilities functions that logistics serves. It is equally of importance to stress that logistics is applicable to spectrums of socio-economic and environmental activities such as health, agriculture, education, administration, governance and other human endeavours, which can be strengthened by application of logistics architecture that are institutions, information layer and intermodal/multimodal principles that all embedded in supply chain management.

 

While the institutional layers involve agencies, parastatals and other relevant organisations that are responsible for the formulations, implementations and enforcement of policies regarding logistics within the purview of coordination of various segments/stakeholders that are involved in the logistics activities in a complimentary manner, such that any like hood of disruptions along the logistics chain can be mitigated, if not avoided, and ultimate objectives of the value chain can be enhanced.

This, in turn, can be achieved through adequate, accurate and timely information system along logistics chain that will propel the engagement of inter-modalism or multi-modalism, whichever one that is applicable and subject to availability of infrastructure, that will facilitate timeliness in customers ‘satisfaction.

 

What are the major logistics challenges in the country?

 

Logistics remains untapped and unexplored in Nigeria due to poor planning, politics and other related factors. It is a concept of transportation using more than one mode of travel in such a way that all parts of the transportation p r o – c e s s are  effectively connected and coordinated.

However, if the generic concept of logistics is to be fully tapped, the benefits, apart from revenue generation and employment opportunities, will include promotion of trade and increase in trade volume. Countries within and outside the continent will engage with Nigeria in trading activities. Similarly, it will encourage involvement of expertise and professionalism, especially in the various components of logistics activities in which there would be specialisation and proficiency.

 

For instance, there would be people manning areas that are contained in information, infrastructure and institutions layers, relatively to their level of competence. This, in turn, will usher in collaboration with institutions in the area of research and development that will increase the knowledge and productivity levels of employees, enhance human capacity development and industrial growth.

 

Apart from these, it will promote standardisation of products and services, which will place Nigeria in a global vantage position in relation to economic a n d social development among comity of countries. Moreover, in the case of intermodal, this is an underpinning factor in logistics. It is safe and environmentally sound and offering flexibility.

 

This will not only ensure effective mass movement of passengers and cargoes, but in an efficient manner that will reduce congestion, hence time and cost saving. For instance, if government could do the needful by making provision for enabling environment in the area of infrastructure such as dredging of waterways, that can aid navigation and accelerate transportation through barges, coupled with improvement of rail network particularly in urban and industrial areas of the country, it will reduce substantial quantum of containers and trucks that often obstruct ease of movement on our highways and ultimately promote efficiency, effectiveness and seamless transportation system. Logistic systems enhances development, integrates various regional spaces and induces location changes.

 

Shippers, terminal operators, warehouse providers and freight forwarders are also facing challenges in the industry.  What is responsible for this?

The freight forwarders and shippers are the main stakeholders in multimodal transportation system that involves documentation called inco terms. The basic problems they have is the faulty planning ab initio. We believe in ad hoc approach in this country, we are not proact i v e , b u t r e – ac- tive. You cannot build anything on nothing, hence, we approach issues as it appears.

 

There is no effective or clear cut roadmap to guide the operators. This gives room to clumsy environment. Closely similar to this is the chaotic transportation challenge in the port area. Also, economic challenge that subsumes international freight tariff, unstable currency exchange rate, custom duty, export regulations and license, trade protection mechanism, custom clearance and transit time of cargoes.

 

Indeed, port activities are not well coordinated, to the extent that other issues emanated include insecurity regarding personnel and cargoes, inadequate seamless cooperation and integration among the stakeholders, due to ineffective Information and Communi cation Technology (ICT), there no information sharing, lack of transparency and high degree of corruption, especially illegal charges, lack of standardisation regarding dwell time of cargoes, which is 21 days, as against other ports in the continent that is seven days, physical examination of cargoes that will take time instead of sophisticated modern scanners and inadequate infrastructure, poor connectivity of ports to the proposed Inland Container Depots (ICD).

 

Only the holistic approach through effective planning and inbuilt monitoring mechanism of operational, technical and environmental challenges will assist in making ports in Nigeria significant in the region.

How is the country competing on transit export cargoes in the global market?

Nigeria is just hawking in the global market. In Kenya, between 500,000 and 600,000 tonnes of agro- produce leave the country every night to the global market. Here in Nigeria, we cannot boast of 20,000 tonnes a week where $250 billion agro-export produce waste away.

 

All the airlines that come to Nigeria depart empty because it is cheaper for them to leave the country empty than carry cargoes. They are trying to avoid being charged $35,000 in fees and taxes. On the same trip in Ghana, it is less than $4,000. How do you want to compete with your agro- export in the same global market?

 

Why is it difficult for regulatory agencies to control the industry?

 

This will be difficult and as pointed earlier, there is no road map that will guide the implementation and coordination of the industry, which stems from poor planning system in relation to infrastructural development and provision of services.

 

Also, there is no informed, logically implementable and socially acceptable policy in this regard. S i m i – larly, there is no political will that ought to strengthen the organisations or parastatals saddled with the responsibility in enforcement, management and control of feeble plans available. The political climate has been cloudy, obnoxious and inconsistent, which made government not to treat people equally.

 

For instance, selected few were given weavers without concomitant contributions to the society in terms of corporate social responsibility, aside donations to political parties. Above all, there is no pragmatic public service with patriotic zeal. People are employed in most of these agencies based on qualifications and not certification, hence constrained them to do what is right and how it should be done. The engagement is purely on favouritism and tribalism.

 

However, if all these are adequately controlled in terms of informed plans, fearless policy, ethical politics and pragmatism in public service, the potentials of logistics industry would be harnessed and the country will be socially vibrant and economically viable.

 

Why do you think state and Federal Government are neglecting the sector?

 

The sector is not neglected, but ad hoc approach is being adopted at all levels because of our reactive nature to issues. This is predicated on the fact that something is missing ab initio, which is ineffective planning. In other words, there is no roadmap regarding transport sector, coupled with the fact that what is employed is mostly at variance with what is on ground. In appropriate politics is involved at all these levels because of selfish interest of individuals that are involved in decision making.

 

Regrettably, there is no effective or clear cut roadmap to guide the operations, for this reason, it gives room to clumsy environment. Closely akin to this is the issue of public service that has to do with professionalism and cer t i f i cat i o n . Surprisingly, personnel are employed in various transport sector without recourse to these two attributes, which makes wrong person in right place. Also, there is no established relationship bet w e e n town and gown regarding t r a n s – p o r t sector.

 

F o r i n – stance, there is no state in the country where transport studies/management or education is not undertaken. This ought to have encouraged human capacity development in the area of competence, character, capability and courage to discharge accordingly in the field of transport, which will usher development in transport sector and economy in general.

 

Do you believe public private partnership system can assist in developing the supply chain system in the country?

 

The concept of PPP will assist in a great deal, especially when professionalism is incorporated. Government will only provide enabling environment, while private and professionals at various modes of supply chain will profess their competency and capability within the framework of sustainability of the concept that is predominantly on the interrelated organisations, resources and processes that create and deliver products and services to end customers. In other words, supply chain is a system of suppliers, manufacturers, distributors, retailers and customers where materials flow downstream from suppliers to customers and information flows in both directions.

 

Suffice it to say that it is a network of facilities and distribution options that functions to procure materials, transform these materials into intermediate and finished products and distribute these finished products to customers. The importance of supply chain involves the acquisition of raw materials, conversion of these raw materials into specified finished products and delivery of these final products to retailers. It is interesting to state that each segment of the supply chain ought to be handled by private organisations and professionals in order to ensure standardisation, efficiency and trade development because the concept of supply chain is no longer local/national but global, especially in a country like Nigeria that is import dependent. Supply chains exist in both service and manufacturing organisations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

 

Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organisations along the supply chain operated independently or in isolation. These organisations have their own objectives and these are often conflicting. Many manufacturing operations are designed to maximise throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts often negotiated with very little information beyond the buying patterns.

 

The result of these factors is that there is no single, integrated plan for the organisation. Clearly, there is a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved by using appropriate technology. Coordination between the various players in the chain is key in its effective management.

 

Supply chain management is like a wellbalanced and well-practiced relay team. Such a team is more competitive when each player knows how to be positioned for the hand-off. The relationships are the strongest between players who directly pass the baton, but the entire team needs to make a coordinated effort to win the race.

 

This, no doubt, emphasises on professionalism. In furtherance to this, the incorporation of professionalism will not only enhance capacity building, but able to provide professional advice to disruptions/bottlenecks along the supply chain which will encourage value chain and equally foster economic development, when the decisions are within strategic, tactical and operational. In summary, an integrated and well-coordinated supply chain by private and professionals plays an important role in healthy competitive strategy that will propel the economic, social and environmental development of the country.

 

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