The Logistics Performance Index is an interactive benchmarking tool created to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance. It is the baby of the World Bank.
It is the combination of the weighted average of the country scores on six key dimensions: customs performance, infrastructure quality, ease of arranging shipments, logistics services quality, consignments tracking and tracing and timeliness of shipments as well as practical data measuring logistics efficiency.
It serves as an interactive tool for benchmarking, designed to assist nations in identifying their trade logistics challenges and opportunities, as well as strategies for enhancement.
This index is also utilized to evaluate the efficiency and effectiveness of a country’s logistics sector.
It assesses various aspects of logistics performance, including infrastructure, customs and border management, the ease of arranging shipments, the quality of logistics services, the tracking and tracing of goods, and the timeliness of deliveries.
Recently, the World Bank released the 2023 report, and Nigerian performed abysmally low. The report apparently confirmed the state of logistics in Nigeria as it affects cargo clearance and delivery.
In the report, Nigeria fell behind several African countries and landlocked nations in the latest global Performance Index ratings. South Africa, Egypt, Benin Republic are among African countries that beat Nigeria. Our nation ranked 95 out of 160 nations in the global rating.
For instance, South Africa ranks number 25 among the 139 countries assessed, while Egypt and Benin also performed significantly better, ranking at 57 and 80, respectively. Nigeria, on the other hand, is positioned at 95, indicating significant challenges in its logistics sector.
Also, checks by our correspondent revealed that some landlocked countries also outperformed Nigeria in the logistics rankings. Countries such as Rwanda and Uganda including Mali, despite their lack of direct access to ports, have managed to secure better rankings due to efficient logistics system and streamlined customs procedures.
For instance, Rwanda leveraged its strategic investments in infrastructure and regional trade facilitation to rank higher than Nigeria.
Nigeria’s total overall score of 2.6 is indicative of systemic issues that need urgent attention to enhance trade competitiveness and economic growth.
On Customs efficiency Nigeria scored 2.4, falling short of the performance of South Africa, which scored 3.3 and Egypt, which scored 2.8. Streamlined customs procedures are essential for reducing delays and costs in the logistics chain, and Nigeria’s lower score suggests a need for significant reforms in this sector.
Another parameter used in the ranking is the infrastructure, where Nigeria’s scored of 2.4 as against South Africa that boasts of 3.6, supported by its well-developed road, port, and rail infrastructure. Egypt, with a score of 3.0, also outpaced Nigeria, emphasizing the need for Nigeria to invest in modernizing its infrastructure to facilitate more efficient trade.
Also, the ability to handle international shipments effectively is measured under the ‘International Shipments’ parameter. Nigeria’s score of 2.5 in this category; again, lower than that of South Africa (3.6) and Egypt (3.2)
One of the greatest revelations of the LPI report is the fact that there is a direct relationship between the LPI/ report and poverty and wealth of nations.
The top 12 countries in the 2023 LPI, are among the wealthiest nations. It is a fact that Singapore, achieving a score of 4.3, secures the first position, which it has maintained since 2007 and 2012.
Among the top 12, Finland (4.2), Denmark, the Netherlands, Switzerland (4.1), Austria, Belgium, Germany, and Sweden (4.0) are from Europe. Additionally, Canada, the United Arab Emirates, and Hong Kong SAR, China, are frontline wealthy nations.
Sadly, and conversely, the bottom 10 countries are distributed across various regions and are predominantly lower-middle-income countries.
There is a correlation between the LPI performance of nations and the wealth of that nation. Countries that rank positively on the LPI, also rank positively on the Human Development Index of the United Nations Development Programme (UNDP).
Instructively, Nigeria is in the lowest rung of the ladder. The publication of the Logistics Performance Index for 2023 has brought to the fore, some of the reforms that are required by the Federal Government to quickly improve the business environment and economic competitiveness of the nation.
The LPI is therefore a framework that helps in understanding the condition and ease of a country’s business environment, Nigeria inclusive.
The latest report showcased how still flawed Nigerian ports in terms efficiency of port clearance and delivery processes are. Nigeria is a signatory to the 2017 Trade Facilitation Agreement (TFA) of the World Trade Organisation (WTO), which commits countries to implementing measures that enhance the flow and ease of trade across borders. Yet the nation failed to adhere to its dictates.
There is no doubt that the quality of trade and transport-related infrastructure such as ports, railroads, roads, and information technology, is an essential for efficient port operations. The quality of the nation’s interconnectivity and road infrastructure is poor.
We are saddened by the damming report, even though Nigeria did not fail woefully. It is said that whatever we gained in the previous assessments have been lost over the years. There was a time we competed favourably against countries like Ghana, Togo, and Cameroon; all in West Africa
In 2022, Nigeria moved up to rank 88 places out of 139 countries that were assessed, using then same parameters.
We agree with those who have postulated that there is need for infrastructure investment to address Nigeria’s logistics challenges. Yes, lack of domestic connectivity and an intermodal transport system is critical. In many countries, once a vessel docks, it can easily connect to rail transport. In Nigeria, this is a mirage. It was tried in Apapa port, but it is yet to effectively kick-off. Even if it works in Apapa, what about the remaining ports in Lagos, and the ports outside Lagos.
How does a nation transport about 95 per cent of its cargoes by roads that have also failed over tbe years, and expect to be rated well in the LPI test?
We are lagging in trade logistics infrastructure and the quality of logistics services, which are crucial for efficient operations.
From all that have been seen about the LPI, it is all about how fast and sand safe consignments get to their consignees, once the ship drops anchor with her cargoes. Our experience is that goods don’t get cleared as fast as they should, and they don’t get to their destination as fast as they should.
Nigeria needs investment in port productivity or modernising customs. There is need for policies targeted at improved port reliability as well as deployment of new technologies, such as supply chain visibility platforms. There is a dire need for investments in hard transport infrastructure
Nigeria needs core reforms and modernisation, especially in soft infrastructure such as customs, border management and operational procedures in ports.
In conclusion, the nation needs to boost its speed of trade by combining policy interventions in the LPI pillars related to infrastructure, customs, logistics competence, and tracking and tracing. There should be a combination of reforms to enhance port productivity; including enhanced private sector participation in terminal operations could improve the situation in outlier countries.
It is obvious that, it is not all the six dimensions of the LPI framework require government financial expenditure. A lot can be done through policy and policy implementation.
