It was early on Sunday morning, but Halimat was already at her wits end. Rather than having an easy Sunday morning, she was on the phone, placating a justifiably angry customer who was yet to receive the hair extensions she had ordered, after two weeks of making the purchase.
The client had paid for hair extensions amounting to N150,000, and did not quibble overpaying the delivery fee of N2,000; Halimat had been pleased to have made such a huge sale from one customer. However, two weeks later, she was still running after the delivery guys, wondering why the parcel had not been delivered. Eventually, she was informed that “the package could no longer be found,” and they stopped taking her calls afterward.
“Where do I even start from?” she lamented. “So, I paid them N2000 to help me misplace products worth N150,000.”
Sadly, many small business owners have experienced varying degrees of disappointment after hiring delivery services to convey products to customers.
A new day for delivery service providers
In the early 2000s, no one thought much about courier and delivery services. It was a business with low patronage, and even lower turnovers. By the turn of the first decade of the 21st century, the narrative had started a gradual change. Logistics and delivery services were becoming much sought after; even businesses in other sectors started branching out into delivery services.
With the introduction of new government policies geared towards promoting the ease-of-doing-business, the number of people going into delivery businesses has quadrupled. Operating both a B2C and B2B model, the market is quite large, especially with recent evidence showing an increase in online transactions and demand for home deliveries.
With as little as N400,000, one can start a small-scale delivery business by purchasing a despatch bike, and securing a license or logistics permit from the state’s ministry of transportation. The need for an office space could be optional, and even when one chooses to have one, it could be a shared space. Of course, a social media handle is now considered essential for the purpose of getting clients and establishing an online presence.
Challenges for business owners
In spite of the ubiquity of delivery services, getting a good delivery service is still a hard nut to crack. Stories abound of people who have had their deliveries delayed for days and even weeks. There are also stories of parcels destroyed, or even lost without getting to the recipient, and so for these small businesses, the problem remains finding a delivery service that can guarantee and deliver just as promised.
For Oluwatobi Ibukun Abiola, who runs ATJ Creations hub, getting a good delivery company is quite difficult, and sometimes small business owners eventually have to settle for alternate options, like using friends and siblings to make their deliveries.
As a producer of organic hair and skincare products, Oluwatobi’s deliveries are often booked days ahead and she has to get the entire schedule sorted out. For her, it can be summarised in a sentence.
“The cheaper the service, the more certain you are that it will disappoint. So, it is often better to ignore the cost and go for the more reliable options.”
Some delivery businesses require registration fees from business owners who intend to use their services regularly. This fee could range from N5000 to N25,000, depending on the size of the business. Oluwatobi explained that based on her experience, using such delivery options, one is less likely to get disappointed.
There are also delivery businesses that only require one to call and book the time and date for pickup and the location for delivery. However these often disappoint; sometimes failing to turn up to pick the parcel, or even delaying the delivery for a couple more days.
Brenda Nwafor, owner of Nebdesigns, a business that specialises in making customised bags agrees that indeed, delivery businesses and despatch riders often disappoint.
She pointed out that the most difficult part of handling them is when they refuse to explain the true reason for delayed delivery. After failing to deliver a package as scheduled, they could end up refusing to pick calls for the next couple of days until they have successfully delivered it, and this sometimes leaves the sender at a loss over what explanation to offer to the receiver.
“To deal with them, I have to book a date that is earlier than the agreed date, so that all the delays can be factored in. If they eventually deliver it on time, I end up with a satisfied customer who is pleased to have received his package a day or two before the scheduled date,” she explained.
While this option is possible for people in the business of non-perishables like beauty products and fashion items, it is not obtainable for those in the business of consumables. Best runs a food and small chops business from her home, preparing and packaging chops, and foods for her clients.
In her line of business, same-day delivery is key but even then, she has to put up with delays. In some extreme situations when they fail to show up, she has to get a taxi and go handle deliveries herself, with help from friends when deliveries have to be made in multiple locations.
“Deliveries that should get to the customers by 1pm or 3pm sometimes get to them as late as 9pm, and I have to appeal with them to microwave the food,” she told Nairametrics. But this is not the worst scenario.
Best told Nairametrics that she had an issue in May where the despatch rider got to the client by 9pm with an empty plate, explaining that the food poured while he was trying to navigate the traffic from Oshodi to Iyana-isolo. While apologising to the client, he had pleaded with them to accept some frozen chicken (he bought to take home to his family), in place of the ordered “sautéed gizzard and dodo.”
Another business owner, who preferred anonymity, told Nairametrics that she recently had to refund over N80,000 to her clients after the despatch rider died in a road accident on his way to make her food deliveries.
Are business owners being penny wise pound foolish?
And this raises the question of insurance. Why go for a delivery service that does not give any insurance over your parcel.
Most of the business owners who spoke to Nairametrics agreed that despite knowing the risks involved, they opt for these despatch riders because they are cheaper and less cumbersome. One of them explained that she had tried one of the big logistic companies, even downloaded the app and uploaded a picture of the product to be delivered.
“It was too expensive; there was no way I could take it. Imagine paying N2,000 as a delivery fee on a product of N3,000. Clients are already unwilling to pay extra charges for delivery so we have to look for the cheapest option for them,” she explained.
A despatch rider who simply gave his name as Nurudeen told Nairametrics that sometimes, they failed to turn up when it became obvious that there wasn’t much profit to be made from that delivery.
“I can accept the booking, in the hope that other bookings will come to justify the trip. But if there is none, I cannot end up making a trip because of two deliveries worth N2000 total. It will be a total loss for me,” he said.
A holistic solution
Samuel Ajiboyede, CEO and Founder of Zido Logistics, Africa, and expert in the logistics business, recommends a holistic logistics solution for SMEs, rather than randomly calling a despatch rider whenever they need to make a delivery.
“You can’t just wake up and call them to say come and pick this up tomorrow. With such a structure, disappointments and delays are bound to happen since they cannot operate at a loss. Instead have a holistic solution that handles everything and gives you the needed insurance,” he said.
With such a solution, he noted, the business owner could collaborate with a logistics company that would take his parcel, along with other parcels going to the same location and move them all at once. Depending on the arrangement, the logistics company could give one assurance of delivering on the same day, all parcels registered before 9am, and delivering the rest the following day. With this approach, the business owner could spend much less on the unit cost of delivery.
Ajiboyede encouraged business owners to work with those logistics brands that provide covering and insurance for the goods, even if their services may be more expensive. There are two kinds of insurance which this arrangement gives the business owner.
Fidelity insurance protects you from losses that could result from events like the driver/rider running away with your goods or losing your goods, while Goods on transit insurance prevents losses you could get from having your goods defaced, tampered with or completely defaced. This explains why their costs could be slightly higher and their processes cumbersome, but it reduces your worries at the end of the day.
For same-day food deliveries however, he recommends that the business owners have despatch riders dedicated to their business. In the event that the business owner is unable to meet up with such, he could opt instead for ‘cluster plans’ where orders would only be taken in one or two locations depending on what is feasible.
Irrespective of the hassles, a despatch rider is less likely to disappoint you if you have as much as 20 food deliveries going to one location, as against when you have the same 20 deliveries spread across 6 locations.
As a small business owner, the onus is on you to pick the solution that works for you, bearing in mind that even when the cheapest option does not offer client satisfaction, the most expensive may not offer that either since the clients are always trying to keep their money in their purse.
Nigeria signs African Trade Insurance Agency agreement
The African Trade Insurance Agency was launched to provide risk solutions for investors.
President Muhammadu Buhari has signed the instrument of accession agreement for Nigeria for the establishment of the African Trade Insurance Agency. This was announced by the Federal Government on Monday night.
President @MBuhari has signed the instrument of accession of the agreement for the establishment of the African Trade Insurance Agency; sequel to the directive of the Federal Executive Council (FEC), that the instrument be prepared and forwarded for execution.
— Presidency Nigeria (@NGRPresident) August 10, 2020
The agreement is coming after the Federal Executive Council ordered that an instrument be prepared and forwarded for execution.
The African Trade Insurance Agency was launched in 2001, to provide risk solutions for investors, after the East African economic Union (COMESA) executed a World bank funded study to discover why Africa does not attract more Foreign Direct Investments.
The organization said it added credit insurance to its portfolio in 2006 after its members identified global trade as a major pillar of growth in the continent which has seen it grow as a market leader for risk mitigation in Africa. The ATI also attracts funding from the African Development Bank and World Bank
Nigeria joining the agreement would provide Nigeria with the necessary insurance financing to increase investment inflows into the country and improve economic productivity.
BEWARE: Harmful products are on your local store shelves!
Consumers are to look out for the manufacture and expiry date before consuming a product.
Time was when the seal on a product bearing a NAFDAC registration number was considered the ultimate seal of authentication. Nowadays, not only are substandard and adulterated products dragging the market share with genuine products, some of them now falsify the NAFDAC seal of approval – registration number.
The National Agency for Food and Drug Administration and Control (NAFDAC) recently advised consumers to beware of some products with fake registration numbers being sold in stores and outlets. The agency advised Nigerians to always examine a product thoroughly (particularly food, drugs, medical devices, or packaged water) before purchasing. Consumers are to look out for the manufacture and expiry date before consuming.
The agency’s Director of Public Affairs, Dr Jimoh Abubakar, while speaking during a recent interview said: “examine the content of the product, the seal of authority or the approved registration number from NAFDAC which is sacrosanct; NAFDAC registration number is not just a number, it is not plate number of a vehicle.
“The number is a rigorous scientific elaboration of a product through our laboratory analysis and through certain compendium references, and after all these by NAFDAC, a product will then be certified for safety, efficacy and wholesomeness”.
In summary, the registration number from NAFDAC is a confirmation to consumers that the product (content and processes) has been examined and is now certified fit for human consumption. The certification process ensures first that good manufacturing practice has been followed, in the right location and environment, and with the right contents, before the product can be labelled.
A recent experience
I purchased a multi-vitamin from an online store recently, and the product was delivered four days later. I was about to break the seal and consume when I noticed there was a slight difference in the name.
I examined the packet closely and discovered that even though the product had been packaged in exactly the same orange-coloured package, the name was different and the details showed that it was manufactured somewhere in Lagos state (the expected product was supposed to be manufactured in the USA).
I wanted to return it outright but then I convinced myself on the need to patronise locally made brands as well if it could give me the same results. I typed the registration number into the NAFDAC verify page and this was the result; “Warning! This product is fake. – report product”.
The scourge of fake registration numbers
In as much as registration numbers are a key differentiator between approved and uncertified products, NAFDAC has admitted that there are fake registration numbers out in the market.
According to Abubakar, the agency is also on the lookout for perpetrators of this deceptive act, even as consumers have been urged to take an extra step in examining a product before consuming it.
He added that technology had made most things easier now and urged Nigerians to visit NAFDAC’s website to get more information about products.
He noted that some products are listed on the website, especially sachet water, as the agency’s staff strength is not enough to be everywhere or to police the country’s population.
“Public awareness and information are very cardinal for people to help themselves; NAFDAC leverages so much on public sensitisation. So, people must help themselves on the consumption of these products,” he said.
Harmful products alert!
Sometime in July, the agency sent out a public alert notifying consumers that the “Pure Tassie Organic Apple and Blackcurrant Juice originating from Australia” had been examined and considered unsafe for consumption, due to unacceptable level of patulin (a mycotoxin) which had exceeded the maximum limit in fruit juice.
The agency’s verdict had also been confirmed by the Centre for Food Safety (CFS) of Hong Kong’s Food and Environmental Hygiene Department, before the alert was sent out.
According to the notice, the level of patulin content in the juice is high enough to “induce liver, spleen and kidney damage”, and also toxic to the human immune system, causing nausea, gastrointestinal disturbance and vomiting.
In the alert, NAFDAC implored importers, distributors, retailers and consumers to immediately stop the importation, distribution, sale and consumption of the affected fruit juice, urging them to turn in all current stock of the product to the NAFDAC office, although no mention is made as to compensations for their losses.
A month before this, there was a similar alert from the agency about three cosmetic products namely “Sifu Kunyit Day Cream, Sifu Kunyit Night Cream and JJ Skincare Glowhite Night Cream”.
The products were confirmed by the agency to contain hydroquinone, tretinoin, betamethasone valerate and mercury, all of which are targeted at lightening the skin and changing the pigmentation.
Given the quantity used in these products, NAFDAC confirmed that they can cause damage to the kidney, get absorbed into the blood circulatory system and increase the risk of skin cancer along with other ailments.
Apart from harm caused to the user of products containing mercury, NAFDAC confirmed that mercury can disrupt the brain development of unborn children when consumed by nursing mothers, and also inhibit brain development of young children.
This time around, the products originated from Malaysia and had been imported into Nigeria. Deducing from the notice, one can see that the product had already been banned by the Malaysian Ministry of Health before ever it was imported to Nigeria.
In April, it was a World Health Organisation (WHO) alert on falsified Chloroquine products in circulation in Africa, all originating from three African Countries are Cameroon, Democratic Republic of Congo and Niger.
Why would people buy banned products?
A trader who spoke to Nairametrics confirmed that it is possible for such products to still be imported despite being banned. Tolani, who manages a warehouse where she sells consumables (snacks and drinks ) in wholesale quantities affirmed that when supplies are being made, the suppliers sometimes introduce new products at ridiculously lower prices.
“Some of these brand names that we know are very expensive and their price continues to increase without regulation. So, sometimes when we make to buy new stocks, the supplier can show us a new and similar product that is even less than half the price of the popular brands we know, so we buy them as well.
“They are all imported products, and people like to try out foreign products so we know for sure that they will buy it from us,” she explained.
She added that there was no way to confirm at such times whether or not the product was original, imitated, safe or harmful since the traders are no experts.
“They are foreign products, and I believe that if they passed through customs officers and entered the market, then they should have been checked there” she added for emphasis.
Any synergy between NCS and NAFDAC
Consuming harmful products is bad enough, but exchanging hard-earned money for things that could be detrimental to one’s health is even worse.
NAFDAC already has to combat imitated or harmful drugs produced locally. Doing same for imported products means they have even more on their plate to deal with. The Nigerian Customs Service (NCS) is responsible for manning the borders of the country and monitoring what goes in or out, and if unsafe products still find their way into the country, it means that there are gaps that need to be sealed.
Tweets on the NCS twitter handle shows that much of the organisation’s activities have been centred around the impounding of smuggled bags of rice, kegs of vegetable oil, cartons of spaghetti/macaroni, bags of foreign sugar, cartons of soap, bales of textile materials, parcels of India hemp, NPK fertilisers and vehicles among others.
There is a striking absence of activities around the importation of fake or harmful drugs or other consumables, and all the focus has been on the more lucrative items contained in the import prohibition list such as frozen or live poultry, refined vegetable oils, cocoa butter, bagged cement, etc.
Even though pharmaceutical and consumable items make up 5 out of the 25 item list, it would appear that the list has not been updated recently in line with the recent public alerts from NAFDAC.
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Clearly, consumers will have to take precautions themselves as NAFDAC has advised because the agencies appear to be overwhelmed with the amount of criminal work going on in the space. Thankfully, some products now include a sealed number on the packet which the consumer is meant to text to the unique code and confirm the authenticity. Unfortunately, consumers are often in a hurry and not many are patient enough to wait for the confirmation message.
From creams to drinks, foods, drugs and other things that are used in or on the body, an extra minute for verification might just be the deciding factor at the end of the day.
How the newly amended CAMA affects your business
Some of the provisions of the amended bill and how it will affect businesses are explained below.
The Companies and Allied Matters Act, 2020 (“the Act”), repeals and replaces the extant Companies and Allied Matters Act of 1990. The new CAMA, now seen as Nigeria’s most significant business legislation in three decades, introduces new provisions that promote the ease of doing business whilst reducing regulatory hurdles and also bringing the provisions in tangent with the technological realities of the 21st century. This is expected to ultimately promote investments, create more jobs, and promote a friendly business climate in Nigeria.
Some of the provisions of the amended bill and how it will affect businesses are explained below:
Provision of single-member/shareholder companies
S.18 (2) of the new CAMA now makes it possible to establish a private company with only one (1) member or shareholder. This is good news for growing startups and young entrepreneurs because it has totally resolved business registration bottlenecks. A lot of businesses have been forced into unnecessary partnerships because prior to the new CAMA, to legally own a business in Nigeria, you needed to provide at least two or more people as co-owners of the business.
Introduction of Statement of Compliance
Section 40 (1): There is the introduction of Statement of Compliance (SOC) signed by an Applicant (or agent), without the need for a Lawyer or Notary Public to attest to Declaration of Compliance (DOC). SOC is a requirement of the law that indicates that the applicant has complied with the registration and requirements.
Replacement of Authorized Share Capital with Minimum Share Capital
Section 27: This section replaces ‘Authorized Share Capital’ with ‘Minimum Share Capital’. This implies that the promoter(s) of a business is not required to pay for or allocate shares that are not needed at the specific time of incorporation.
Procurement of a Common Seal is no longer a mandatory requirement
The procurement of a Common Seal is no longer a mandatory requirement according to S.98 of the new CAMA. With the amended bill, companies can now authenticate documents by other means other than a common seal. This means you don’t need to stamp seals on documents anymore. The world is digital so who needs those seals.
Provision for electronic filing, electronic share transfer and e-meetings for private companies
The new CAMA makes provision for electronic filing, electronic share transfer and e-meetings for private companies. You can now register your business from anywhere in the country via the e-registration portal. The new CAMA also provides for remote or virtual general meetings, provided that such meetings are conducted in accordance with the Articles of Association of the company. This will facilitate participation at such meetings from any location within and outside the shores of the country, at minimal costs.
Exemption from appointing Auditors
Small companies or any company having a single shareholder are no longer mandated to appoint auditors at the annual general meeting to audit the financial records of the company. S. 402 of the new CAMA provides for the exemption in relation to the audit of accounts in respect of a financial year.
Exemption from the appointment of company secretary
The appointment of a Company Secretary is now optional for private companies. According to S. 330 (1) of the new CAMA, the appointment of a company secretary is only mandatory for public companies.
Creation of Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs)
The new Act, introduces Limited Liability Partnerships and Limited Partnerships, which combines flexibility and tax status of a partnership with the status of limited liability for members of a company. This implies that Startups are not stuck with the option of setting up a Company, but also enjoy the benefits of partnership which a partnership agreement (including vesting agreement, and founders agreements) beyond the regular Articles and Memorandum of Association, whilst still protecting their personal assets from being sold in claims for debts, liability, or creditors.
Reduction of Filing Fees for Registration of Charges
Under Section 223 (12) of the new Act, filing fees for Registration of Charges payable to the CAC (Corporate Affairs Commission) has been reduced to 0.35% of the value of the charge. This is expected to lead to up to 65% reduction in the associated cost payable under the regime
Merger of Incorporated Trustees
The new Act extends merger beyond LLCs to Incorporated Trustees. Section 849 implies that two or more NGOs, social entrepreneurs with different registered organizations, with similar goals can merge to form one (1) single organization.
Disclosure of persons with significant control in companies
Section 119 emphasizes transparency in terms of control in a company. It requires that persons with significant control in a company disclose its shareholding to other shareholders. For example, anyone who has person(s) holding shares on their behalf as trustees or proxies, whilst being shareholders themselves in same company, are expected to disclose such relationship for transparency.
Restriction on Multiple Directorship in Public Companies
S.307 (1) of the Act prohibits a person from being a director in more than five (5) public companies at a time.
Business Rescue provisions for Insolvent Companies
The new Act introduces a framework for rescuing a company in distress and to keep it alive as against allowing such entity to become insolvent. Provisions were made with respect to Company Voluntary Arrangements (S.434 to S.442), Administration (S.443 to S.549) and Netting (S.718 to S.721).
Enhancement of Minority Shareholder Protection and Engagement
- 265 (6) restricts firms from appointing a director to hold the office of the Chairman and Chief Executive Officer of a private company.
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The Act certainly, is one of the biggest business reform bills which impacts the Nigerian business sphere. The amendments to the Act would have the overall effect of making Nigeria’s metrics of doing business more fit for today’s technological realities, encourage young investors to register companies, increase the influx of foreign investment and re-energize the private sector as the engine of growth in Nigeria.