The Nigerian Postal Service introduced new charges that would cause an increase in the costs of licensing for logistics and courier service providers which resulted in major outrage all over the internet and rightly so.

According to the Vanguard, International courier services like DHL and UPS were expected to pay N20M for a new license and N8M annually while national service providers were to pay N10M for the license to operate and N4M for annual renewal. As for the logistics companies operating within regions, they were to pay N5M for license and N2M annually while firms operating within states got N2M for licence and N800,000 for renewal. Courier firms within municipalities were to pay N1M license fee and N400,000 annually and for SMEs, the license was set at N250,000 while the annual renewal is N100,000.

Reportedly, the General Manager, Corporate Communications, Franklin Alao, said in a statement that the new regulations were not planned to frustrate ease of doing business rather they aimed to promote growth of MSMEs. He said, “It is part of the strategies to ensure effective service delivery as consumers would know the capacities of the operators they are dealing with… Kindly note that consumers of the courier service would be better off as this will drive charlatans out of the industry. Genuine and serious operators would come back to celebrate this move.”

Fortunately, all through last week, the backlash NIPOST got especially online from SME proved enough to get the attention of the Federal Government because as the Premium Times reported, on Saturday, Isa Pantami, the minister of communication and digital economy rejected the proposed increment on the fees for courier services companies by the Nigerian Postal Services (NIPOST).

Pantami said in a tweet, “Our attention has been drawn to an increase of license fee, which was not part of the regulation I earlier approved for you… Your Chair and PMG were yesterday contacted to put the implementation on hold and send a report to our ministry by Monday. Best Wishes”. Pantami also said “I know the economic challenges of NIPOST. However, looking at the economic hardships of our citizens, we need to suspend any move.”

This could have been really bad

The increase in charges would affect three main industries in the economy: e-Commerce, SMEs and ride-hailing.

1. On Tech Round Up, we discuss time and again how the e-Commerce growth in Nigeria is directly propositional to logistics. As a statement of fact, an e-commerce firm’s level of functionality is heavily based on the strength of their logistics abilities. In essence, e-commerce will not work without the backing of an effective logistics structure.

With Covid-19 came a boom in the Nigerian e-commerce space. Last week, we discussed the increasing interests in M&A deals as MumsVillage and Baby Bliss merged to form the Bliss Group. Also, many consumers had since the lockdown, become dependent on online shopping- this without a doubt will affect these groups of individuals if the government should let this charge increase happen. It will without a doubt increase the prices of goods online and eventually, the boom in online shopping culture may drop drastically.

2. Small businesses are the backbone of our nation and the same can be said for most economies around the globe, this kind of outrageous increase on charges will only further discourage these already struggling businesses from operating. This increase in fees, if the minister had not interfered would have only made the entire situation of our economy worse. Allegedly, NIPOST had already started seizing delivery motorcycles and demanding fees up to N250,000 from some businesses. This is a lot of money right now especially with most of these small businesses and companies moving their operations online and using logistics to delve into untapped audiences.
3. The Ride-Hailing Businesses too since the beginning of 2020 has had to readjust, restructure and reevaluate a lot of their offerings. For those firms who have delved into the logistics space full time, these charges may have completely ruined their already slim chance of surviving.

It is a struggle out in these streets. Nigerians and the Nigerian economy has suffered severely in these last few months due to the pandemic- businesses, companies, industries and individuals have been left to bear some great losses and it seems the not so great news keeps on coming.

Another reason why this agenda to increase fees appeared fishy was because they seemingly announced this right after the NIPOST had purchased a fleet of delivery motorcycle- so was it their intent to intimidate or maybe strong-arm the competition and monopolize the sector? Maybe we will never know but it definitely did not sit well with many Nigerians, hence the outrage on the internet.

Even if these charges do get implemented, the NIPOST needs to allow enough time for the economy to stabilize rather than implementing an outright increase that could result in the shutdown of operations of those involved in logistics. There are smarter more mutually productive ways to coexist. These governmental bodies need to figure these out and implement them, it is important for governments and industries to work together to manage the changes that will improve our economy.

Across the globe, there is a pervading awareness that things will never be the same in the post-pandemic era. Already, some business ventures that were once considered the ‘crème’ of the global economy have taken serious hits in unimaginable measures, and some of the little ones which were regarded as below the rung, are fast rising to match up.

With the new social rules in place, some businesses have come to the sad realisation that they may have to remain closed for much longer than they expected. Even for those businesses that have been allowed to reopen their operations as the world enters a phased and gradual reopening, obvious adjustments still have to be made – including limited physical contact, among others.

In a recent interview, the President of the Manufacturers Association of Nigeria (MAN), Engineer Mansur Ahmed, noted that these new developments have added significant complications to the manufacturing processes and operations.

READ MORE: Manufacturing: Activity levels pick up albeit readings still below water

For one, the 8-week nation-wide lockdown kept most manufacturing companies shut, or at best operating at significantly lower capacity for the best part of Q2. The result of this was reflected in the sector’s indices, both in terms of output and employment.

Resuming operations after the lockdown, the manufacturers have had to deal with the challenges of a completely changed system of operation–one which we now commonly recognise as the “new normal.”

A major change in operation can be seen in the sourcing for raw materials. Besides having to deal with the immediate impact of the border closure on operations, there is now the uncertainty of foreign exchange and its impact on the costs of importation (or smuggling of materials when borders are closed).

Nairametrics wrote about a recent CNBC interview where Partner and Head of Consumer & Industrial Markets at KPMG Nigeria, Obi Goodluck, stated that most Nigerian manufacturers had been compelled to source raw materials locally or risk being shut down completely.

READ MORE: COVID-19: The ‘New Normal’ for Nigerian aviation industry

Goodluck explained that prior to the pandemic, most of the Nigerian manufacturing companies imported a significant percentage of their materials from China, but the pandemic had disrupted that supply chain thus compelling them to look for alternatives.

“Specifically from the Nigerian point of view, we will no longer reply on importation of raw materials. As it were, this pandemic started from China and over 80% of Nigeria’s raw material imports come from China and the Asian countries. With the lockdown even in China, that became an issue. As such, companies had to come up with alternative and innovative means of raw material sourcing. Those who already imported raw materials prior to the lockdown relied on their stock until they ran out…”

These alternatives are not just intended to serve as an immediate alternative but can forestall the possibility of such in the future.

Manufacturing companies have also had to rethink the way they transport goods to their customers, in view of the non-pharmaceutical safety rules put in place. One of the regulations in place presently is ensuring minimal physical contact in the processes.

By implications, companies have to rework the way they move their products to the consumers and this has largely impacted on the logistics costs. It also means that deliveries and logistics is ‘the next big thing’ in the Nigerian market.

READ MORE: Innoson reacts to FG order to relocate manufacturing plant to Lagos, Kaduna in order not to lose license 

Having to deal with all these changes at a time when thousands have lost their jobs and primary sources of income is even more of a difficult situation. People generally have less purchasing power now than they did before the pandemic, and so weighing of priorities and opportunity costs will always come to play.

Worse still, they would be paying even more now for the same items, given the extra factors at play in the production process. For instance 1kg sachet of Dangote granulated sugar which sold for N250 before the lockdown, now sells between N800 and N900 per unit, while the 250g sachet which sold for N100 before the lockdown now sells between N250 to N300.

Right now, the manufacturing sector is in that small space between the rock and a hard place, and manufacturers are going to have to make some difficult decisions going forward.

One suggestion that comes highly recommended among experts in the industry is backward integration. At the CBN roundtable discussion in April this year, Nigeria’s richest man, Aliko Dangote had also suggested in his keynote address that backward integration was about the surest way to hasten the long-awaited diversification of the economy.

READ ALSO: CAC: Certificate of incorporation will now be delivered via email or courier

There were concerns about how fast the industry could integrate with the agricultural sector so that more of the local produce went into the industries, but the manufacturers were optimistic that this could be worked out in time to enable them enjoy waivers and benefits in the African Continental Free Trade Agreement (AfCFTA).

It was agreed that the backward integration would require some support moves from the government in creating the right financing and regulatory environment for industries, so that they could integrate more local input in their processes and products and strengthen the supply chain.

READ ALSO: Analysis: Nestlé strong but exposed.

The MAN president had already assured that the CBN promised that investment in the sector would go towards supporting manufacturers to go into backward integration. If the financial sector could also review its regulations to capture current realities and the needs of the manufacturing sector, more could be achieved in less time.

The Economic Sustainability Plan of the federal government also captures quite a lot to show that the manufacturing industry has a place in the government’s plan, but a seamless implementation remains to be seen. The struggle to ensure that Nigeria produces what Nigerians consume is still on.

In light of new realities, the Unified Exchange Rate proposed by the Central Bank of Nigeria (CBN) could also help to create some stability in the FX. Once the exchange rate is more certain and stable, businesses and investors can make definite plans on imports and exports.

Instead of the current situation where the manufacturing sector contributes less than 10% of the GDP, Nigeria is definitely capable of having a manufacturing sector that contributes as much as 25% or more to her GDP, and this should be the target.

China has vowed to fight against the US’ desperate attempt to force Chinese technology firm, ByteDance, (TikTok parent’s company) into selling the company’s US operations to Microsoft.

An editorial piece on China Daily Newspaper, which is state-owned, was straight to the point when it declared that the “US administration’s smash and grab of TikTok will not be taken lying down.” The piece then went ahead to describe America’s moves against TikTok as a “theft” and said the government would respond in due course.

READ MORE: Microsoft acquires CyberX to beef cybersecurity 

“After vowing to ban the popular short-video sharing app TikTok in the United States on Friday, the White House is reportedly weighing the advantages of allowing Microsoft to purchase its US operations. Such shilly-shallying is a tactic the US administration employed during the trade deal negotiations with China,” the editorial explained.

Why the Chinese are angry: Some hours ago, President Donald Trump gave the world’s most valuable software maker (Microsoft), tactical approval to go ahead with the acquisition of TikTok. Consequently, China, through its state-backed paper, disclosed that it had “plenty of ways to respond if Trump’s administration carries out its planned smash and grab.”

READ ALSO: Microsoft shares fall, despite impressive Q2 2020

The Backstory: Recall that Nairametrics reported that the world’s biggest software maker, Microsoft, was in talks with ByteDance, the Chinese owners of TikTok, over a possible acquisition of its US operation.

The offer by Microsoft seems to be an escalation of President Trump’s recent attacks on TikTok and other Chinese tech startups. President Trump, in June, had raised security concerns about TikTok’s entry into the world’s largest economy.