Overview    

Table: Total Market Size Logistics Sector, Unit: USD Millions

Data Sources: Total Local Production: Estimates from Industry Contacts
Total Exports: National Bureau of Statistics
Total Imports: CEIC Data 
Imports from U.S.:  UN Comtrade

As of 2024, Nigeria’s logistics and supply chain sector has seen substantial growth, driven by the expansion of e-commerce, enhanced transportation infrastructure, and improved cross-border trade relationships. The market is currently valued at $2 billion, with expectations of reaching $3 billion by 2029, growing at a compound annual rate of around 4 percent (2024-2029).  This growth has accelerated as investments in rail and port infrastructures help overcome previous logistical challenges, while digital innovations and logistics applications streamline delivery networks. The rise of prominent logistics companies such as A.P. Moller-Maersk, JOF Nigeria Limited, and GIG Logistics highlights the industry’s dynamism and gradual improvement in efficiency and service range. This combination of steady market growth, technological adoption, and gradual improvement in trade policies indicates a promising future for Nigeria’s logistics sector, albeit one that requires further infrastructure and regulatory support fo

Challenges 

Nigeria’s logistics sector faces substantial challenges because of its widespread infrastructure deficit, flawed government policies, and high operational costs. U.S. companies considering entering this sector often struggle with cumbersome customs processes and poor road conditions. These issues have pushed Nigeria to 88th place on the World Bank’s Logistics Performance Index. Addressing these barriers requires significant infrastructure investments and improved government policies to sustain growth. Poor road networks, unreliable electricity, and outdated seaport and customs systems severely hinder logistics and supply chain efficiency. The Lagos Chamber of Commerce and Industry (LCCI) estimates these inefficiencies cost Nigeria $8 billion annually, including $5.8 billion in corporate earnings lost by companies reliant on major ports like Apapa, where logistics costs continue to rise steadily.

Foreign logistics companies with better resources to absorb these costs are generally better positioned to survive and remain competitive in Nigeria’s market. Local operators may find it challenging to meet financial obligations, leading to higher costs passed down to consumers and limiting the operator’s competitiveness. Furthermore, issues with port efficiency due to manual customs clearance processes significantly delay goods and further increase operating costs.

As of 2023, the Nigerian Postal Service (NIPOST) still regulates and operates postal services, although pending legislation aims to separate these roles. Proposed reforms intend to address this regulatory overlap and alleviate sectoral issues, such as double taxation and monopolistic tendencies, but concerns remain within the industry about the potential impact of these changes. Reforms may significantly affect private logistics and courier companies, as NIPOST aims to expand its role in the sector. Industry players fear unfair competition if NIPOST benefits from government subsidies or preferential treatment, potentially stifling innovation and competition.

International agreements, like the African Continental Free Trade Area (AfCFTA), offer Nigeria increased access to African markets, which could boost growth of the logistics industry. The success of this expansion, however, depends on Nigeria’s effective implementation of AfCFTA which has not been robust. Alongside AfCFTA, Nigeria’s participation in regional initiatives, including the Economic Community of West African States (ECOWAS) and the African Growth and Opportunity Act (AGOA), could drive logistics growth and facilitate trade with neighbouring countries, contingent on consistent policy execution. 

Lagos, as the logistics hub of Nigeria, hosts the majority of warehouses due to its industrial parks and proximity to seaports and airports. Over 97 percent of Nigerian exports are waterborne, with key routes passing through Apapa Port, which handles around 42 percent of imports, underscoring the reliance on seaports. Despite these strengths, the sector is impacted by an infrastructure deficit, especially in road networks, that escalates logistics costs and hinders competitiveness. Foreign logistics firms often withstand these challenges better than local companies due to more substantial financial resources, though inefficiencies in customs processes and port operations continue to slow down the entire sector.

The Nigerian government’s decision to restrict foreign exchange on 43 products has also shaped the sector, aiming to support local manufacturing and reduce reliance on imports, which requires a reliable logistics framework to effectively distribute domestically produced goods.

As of the second quarter of 2024, Nigeria’s export and import transportation modes show continued reliance on maritime channels. Exports are overwhelmingly conducted by sea, with 99.1 percent of goods transported through maritime routes, amounting to approximately $11.7 billion in value. Air transport plays a miniscule role, handling 0.38 percent of exports (around $45 million), while road transport covers about 0.16 percent ($18.7 million), and other transport modes contribute 0.33 percent ($38.5 million). For imports, maritime transport also dominates, covering 94.94% of goods ($7.2 billion), followed by air transport at 4.66 percent ($334 million) and road transport at 0.4 percent ($30.4 million). 

With the Government of Nigeria’s increased focus on technological adoption, green logistics, and urban warehousing to support more sustainable and efficient logistics solutions, there are ample opportunities for U.S. companies to participate in this sector

Opportunities

There is a demand for modern logistics tech such as GPS tracking, real-time fuel management, and cargo management systems, which could enhance operational efficiency. U.S. companies specializing in logistics tech have significant potential to bridge these gaps and support Nigeria’s growth ambitions in this sector.

The recently operational $1.5 billion Lekki Deep Sea Port is a critical development that may help alleviate congestion at the Apapa Port. Additionally, the approval of the Lekki Lagos Airport construction around the Lekki Free Zone is expected to strengthen Nigeria’s logistics infrastructure further, supporting export logistics for manufacturers within the zone. The Nigeria Special Economic Zones Investment Company’s ongoing fundraising effort aims to further this growth by financing free trade zones in Katsina, Abia, and Lagos, potentially fueling regional economic development and creating smoother logistics networks within Nigeria.

The logistics sector plays a pivotal role in supporting Nigeria’s rapidly expanding e-commerce and online retail markets, creating significant opportunities for U.S. companies to participate. Improved logistics infrastructure, secure payment systems, and technological advancements have enabled e-commerce to flourish, reshaping consumer behavior and supply chain operations. The fashion industry, for instance, historically led Nigeria’s e-commerce market with a transaction volume of $1.31 billion in 2023 and continues to benefit from advancements in logistics that enhance delivery efficiency and reliability.

As of 2024, Nigeria’s e-commerce sector is projected to generate $8.53 billion in revenue, with an expected growth to $14.92 billion by 2029 at a compound annual growth rate (CAGR) of 11.82 percent. This growth is fueled by an expanding internet user base, increased smartphone adoption, and a rising middle class with disposable income. The logistics sector underpins this growth by enabling the movement of goods across Nigeria’s vast and often challenging terrain, from densely populated urban centers to remote rural areas.

Opportunities for U.S. companies lie in introducing innovative solutions for Nigeria’s logistics challenges, such as improving last-mile delivery, enhancing supply chain visibility, and implementing advanced warehouse management systems. Mobile payments, which are integral to e-commerce growth, also create demand for logistics solutions that seamlessly integrate payment and delivery processes.

The COVID-19 pandemic accelerated e-commerce adoption, highlighting the importance of efficient logistics in meeting surging demand for contactless shopping. Post-pandemic, this trend has solidified, with consumers increasingly expecting faster and more reliable delivery services. U.S. firms specializing in logistics technology, fleet management, and cross-border shipping can tap into Nigeria’s growing need for robust supply chain infrastructure to support the ongoing digital retail transformation. By leveraging Nigeria’s growing appetite for e-commerce and its reliance on efficient logistics systems, U.S. companies have a clear pathway to contribute to and benefit from the evolution of Nigeria’s retail ecosystem.

Data Sources 

Total Local Production: Industry contacts, Nigerian Postal Service, Nigerian Investment Promotion Commission (NIPC)
Total Exports: Industry sources
Total Imports: Leading importers, distributors, and industry associations.
For further sector information, e-mail: Ambrose Thomas, Commercial Specialist, U.S. Commercial Service, Lagos, Nigeria at: Banksharon.Nwaneri@trade.gov