Recently, as part of the effort towards restoring sanity to the logistics industry, the Minister of Communications and Digital Economy, Dr Isa Pantami, approved new regulations for courier services. For instance, it pegged a fee of 2 million naira, and an insurance bond of 500,000 naira for the licensing of local firms to operate within a state. In this interview with The Industry, the Managing Director of One 2 One Limited provides his perspective on these new regulations, the future of the logistics industry, and the financial losses by logistics companies during COVID-19, among other issues. Excerpt
Your assessment of the logistics industry, pre-COVID and post-COVID eras
Nothing fundamentally has changed from the pre-COVID to the post-COVID eras. Before COVID-19, everything was okay, as business was moving on smoothly but COVID disrupted a lot of activities because businesses were not open. There was complete sit-at-home, except for those who were delivering essential services like health care and food. In this industry some of us concentrate on a particular area. We don’t do food because of its attendant challenges. We deal with mails, parcels and packages. So, during the COVID era, it was a downturn for most courier services because businesses did not operate. They could not make any meaningful delivery. Even, for those operating online, their items still needed to get to their customers. But, as they are not essential or emergency items, they could not be delivered to the customers.
Financial loss by logistics companies during COVID-19 lockdown
To be conservative, over 5 billion naira was lost by the logistics companies during the Covid-19 lockdown.
Your take on NIPOST’s new regulations
The issue is not about coming up with rules, but about implementing them. So, we are told we must register with NIPOST, but nothing was said about the penalty for failure to register with NIPOST. I am very okay with the new regulation. The idea of getting courier service companies to register is excellent. If the industry is well organized, then the government can confidently regulate and track the logistic companies, and ensure that they pay their levies, registration fees and taxes.
The government cannot do this alone. For the implementation of the regulations and enforcement of the necessary laws, the courier regulatory arm of NIPOST should outsource to private companies, and partner with the Nigerian Police. One thing is to make rules, and another thing is to enforce them. Do you know how much NIPOST is losing by its failure to register these companies? My conservative estimate is that there are about 200,000 illegal operators in Lagos. If you multiply that by N2 million each, you get around N400 billion.
Your association’s position on the new regulation
Presently, my association lacks the ability to effectively tackle some of the major problems of the industry. It is pre-occupied with the registration of members and other mundane things. It should condemn and fight quackery in the sector. It should push for the creation of a department in the Police Force to implement all the stipulated regulations in the courier services because the quacks are breaking the law, and it is incumbent on the police to come hard on them.
The menace of quackery in the industry: the causes, effects and solutions.
In the first place, before talking about quackery, we need to understand that logistics business or courier service is a very wide and lucrative industry. Before now, it was an all-comer affair but NIPOST has ensured that every courier company in Nigeria is registered under the courier regulatory agency which is a department of NIPOST. Registration requires a lump sum payment of N2 million and a N500,000 insurance bond, and with the company having offices in 6 geopolitical zones. Once these conditions are met, and with evidence of the company’s registration with CAC, it will be granted a license. And when they grant you this license, they give you orientation and all that.
That was the initial effort by NIPOST to sanitize the industry. But having sanitized the industry, it failed in its responsibility of monitoring the industry. This neglect of monitoring allowed for the influx of quacks into the industry. Some of us that registered from the beginning with NIPOST and got licensed feel shortchanged. We feel ripped off by NIPOST because they have not been able to protect us. I paid N2 million to NIPOST officially, and did all the legal things whereas NIPOST is not protecting me. The quacks just go and buy motorcycles and start the business. They have ruined the industry and are now eating deep into our own area. These people are not responsible or liable to anybody.
It is important to note that quackery destroys the business, as they are not professionals. These people are not trained and recognized. The question is, why do you have to get registered with NIPOST? You get registered with NIPOST because you want to show responsibility. So, if I am a registered courier company and if anything happens, the customer can complain to NIPOST because customers must be protected. And that is part of the insurance that they insisted that we must have because if customers’ goods are destroyed or they lose it, the insurance covers that. Now these people, I mean, the quacks, didn’t register and so they are operating freely. Anybody, who has N400,000 to buy motorcycle, will buy it, and start the business.
This has its own risk because if anything happens to the customer, they cannot seek redress from anyone. Secondly, the riders are not trained, and are, therefore, unprofessional. It is the local governments that issue rider’s card. Whether you know how to ride a motorcycle or not, once you go there, fill out a form and pay your statutory N4,000, you are issued a rider’s card. This issued rider card neither certifies nor ensures that you know how to ride a bicycle. Not surprising that there are so many accidents involving these unprofessional riders. A courier rider is different from normal Okada rider. A courier rider ought to go through proper training and testing before being issued a rider’s card. Lamentably, it is not so. As far as I am concerned, the rider’s card should be issued by NIPOST, the regulators of the industry. So that once one is given a riders card, his identity will be there in the NIPOST system,and this will be a deterrent for him to defraud the system.
Then, there is the challenge of multiple taxations. The local government serves you notice to pay local government charges. After you have paid them, local government officials will stop your bike somewhere demanding that you pay Ok paper and a variety of other charges. So, in three months, you find out that you need to pay up to about N30,000 in different forms of local government charges. Still, it doesn’t stop there. The state government will again demand that you must do MOT, and then demand another card worth about N3,000 and another one N4,000, and it keeps increasing, and then, you now think it is over. But, as you venture to make a delivery to a customer in Akute, agents of Ogun State government will tell you that you have no right to come into Ogun State because you lack the necessary papers to make a delivery in Ogun State. Then, you pay for the Ogun State papers, and pay the fine to release your bike. The multiple taxations and all these duplications are not helping the industry at all
NIPOST as regulator and operator in logistics industry
It is not true that NIPOST cannot be a regulator, and, at the same time, an operator in the logistics industry. In England, there is Paso Force. Paso Force is owned by Royal Mail. Royal Mail is the NIPOST of United Kingdom. Paso Force is the courier arm of Royal Mail. So, I don’t think it is wrong for NIPOST to be involved in operations and also be the regulator. For example, take the NNPC issue. I want to ask you, where do you and I like to buy fuel. Is it not at NNPC stations? We prefer the NNPC stations because we think the NNPC would not adjust their meters like others do. It is a free market. NIPOST can operate while it is also regulating.
I can tell you that I am more efficient than NIPOST. NIPOST does not do pick and deliver but I do. Whereas there are bigger boys like Tranext who are the biggest indigenous courier company that reach every nook and cranny of the country. I don’t reach every nook and cranny. NIPOST is the largest, and has the widest coverage in the country because you find post office in all the villages. The question is, how effective is NIPOST? It has not been very efficient because it is government owned.
The future of NIPOST with the advancement of technology in courier services
In most places in Europe and America, they know that physical mail is no longer feasible. NIPOST must evolve with the time. It has to evolve a way of electronically doing things. Time has gone past when the Post Master General would just sit down and do physical mail. NIPOST can decide to concentrate on the courier aspect of bulk delivery. People want to do delivery from east to west and from west to north. The question is, does NIPOST have the capacity to do that?. If they do not, they will be muscled out of business. The problem is that they are government employees, and are complacent, and cannot think outside the box. It is a fact already evident in their regulation of the industry.
Logistics industry in the next 10 to 20 years. My projection is that it’s going to be massive, as the online businesses continue to flourish. Most businesses and sales are now done online. Increasing interaction between people and businesses online necessitates increased demand for logistics. If well organized, the logistics industry has a great future. This will, in turn, create increased employment opportunities for the teeming population of unemployment youths.