Nigeria’s logistics sector is in disarray because of disruptions caused by the lockdown of three key cities – Abuja, Lagos, and Ogun – in the wake of the coronavirus outbreak. While in other countries, businesses deemed as “essential services” are allowed to function amid the embargo on movement, logistics players in Africa’s biggest economy are faced with operational constraints.
Though the Nigerian government identified businesses in healthcare, food production, and distribution, petrol distribution, utility, etc, as essential and granted them exemptions, logistics operators are confused. The lack of a clear exemption for them is fueling uncertainty in the sector with many of their drivers opting to park their trucks over fears they will be harassed by law enforcement officials in the states under lockdown.
As a result, many local logistics companies are currently in limbo even as the country nears the end of the lockdown. For instance, over 3,000 truck drivers on Kobo360, a logistics platform with 23,000 trucks in five African countries, have stopped working since the lockdown began on March 30.
With the curb on movement set to expire on April 27 and all signs pointing to further extension, many market sources are keen to find clarity on what is and is not allowed during the lockdown. Particularly, Kobo360 has been intent on keeping the country moving during the pandemic considering disruptions to crucial supply chains could result in other crises such as food shortage.
In an interview with Ventures Africa, the company’s Vice President for Global Operations Tayo Oyegunle speaks on the effects of the lockdown on producers, manufacturers, and merchants, how the startup is engaging with the relevant government bodies in Nigeria to keep Africa safe and on the move as well as what it will take to turn the tide on the coronavirus-led gloom in the economy.
Can you give a general view of how the domestic manufacturing supply chain is being affected by this unprecedented crisis?
Most African manufacturers and producers are heavily reliant on China for the importation of raw materials and products. Although the ports are re-opening after being on lockdown since February, shipments will still take over two months to arrive in Africa, meaning we won’t receive imports from China until at least June.
However, at Kobo360 we are constantly speaking to our clients who are faced with this issue to make sure we can deliver enough raw materials for them to produce over the next two to three months. We are also looking at ways to keep costs low for our clients in this difficult time.
With many drivers having abandoned their trucks, what do you think is required to solve this problem, particularly on the lack of clarity among law enforcement agencies over exemptions from the lockdown?
Our drivers are law-abiding citizens who want to avoid breaking the law at all costs. They are unsure of the government’s directives on the movement of truck drivers due to the response from law enforcement, who believe they are acting within the remit of the restrictions. Our drivers have therefore stopped working in order to avoid being arrested or have goods impounded.
We are asking the Nigerian Government to give a clear directive to all parties involved, which states that with the correct ID, drivers transporting essential goods can do so freely, in order to keep goods and important services moving across the continent. This is a critical time for food security and trade, we cannot afford to stop all trade or drastically disrupt and up-end the supply chain.
Is this problem with Nigeria alone or is it the same across the regions where Kobo360 operates? And how are you engaging with the government to resolve this issue?
At Kobo360, we adhere to the policies set by the governments in each of the markets we operate in as they all differ from one another. For example, a curfew has been set in Kenya which has its own effects on the logistics industry. This particular challenge is just in Nigeria at the moment. We have reached out to the relevant government bodies in Nigeria to request a public statement of intent and support for Nigeria’s truck drivers and transporters, to publicly inform them that they are safe and able to move between States.
Can you give a breakdown of the losses, in figures, Kobo360 has suffered due to COVID-19 and how are you navigating through the crisis?
So far, there have been severe delays at ports and borders across the African markets that we work, which has resulted in an increase in cost per trip; it is costing us more to run each trip. Across Africa, approximately 70 percent of vessels have delayed their arrival time by as much as 40 days and the volume of goods moved across the continent has reduced by 30 percent.
Due to the lockdowns across major African nations, there has been an increased demand in FMCG (fast-moving consumer goods) produce by at least 20-30 percent, as more people are at home and in need of food and other essential items. However, we have seen the biggest drop is non-essentials such as cement, by at least 50 percent.
How would you assess the government’s move to shut down the economy in response to the pandemic? Some consider it extreme and think a partial lockdown would have been more appropriate.
The safety of Nigerian citizens is of the utmost importance. I believe that the government has considered all possible options and have made the decision that they feel is best in order to guarantee the safety of Nigerians. As long as people stay at home, adhering to the NCDC and WHO guidelines on safety during the pandemic, we will come out of this sooner than later.
How can we respond to minimize supply chain disruptions and the fallout from lockdowns and other restrictions?
We are constantly looking at ways to reduce the cost of logistics for companies in order to keep the cost of commodities as low as possible.
We have also launched our Global Logistics Operating System [G-LOS], which is a blockchain-enabled platform that provides remote access to the supply chain, allowing for business continuity during the pandemic. The platform will facilitate a steady stream of trips for truck owners and manufacturers alike. It also covers funding for trips, subsidized fuel, tyres and spare parts for maintenance. The building of G-LOS has been in the works for some time now, however, we had to push the launch forward in response to the global pandemic.
Lastly, in your opinion, what will it take for the economy to find its feet after being hit by COVID-19?
As a whole, governments and businesses in Africa and beyond need to work on more solid contingency plans in order to get ahead of any future crises such as the one we are currently experiencing. There’s also a need for better infrastructure such as more solid road and rail networks, as well as more favorable trade laws, especially with the advent of the AfCFTA (African Continental Free Trade Agreement).
Due to our heavy reliance on imports from China, we felt the impact of the COVID-19 pandemic way before the first cases were announced in Nigeria and the rest of Africa. For African economies to grow, we need to trade more amongst ourselves and become less dependent on imports from outside the continent.
