By Nnamdi Oragwu, Sharon Juwah and Onyinye Odita
Introduction
Logistics business has long been in existence. However, the outbreak of COVID-19 and the stay-at-home lockdown order prompted an increased need for the logistics industry, thereby making it more lucrative and it can be said to be one of the most profitable businesses in Nigeria today.
Logistics generally relates to the procurement, maintenance, and transportation of material, personnel and even facilities[1]. There are various types of logistics with the most popular being sales logistics that moves products from the products from the producer to the customer[2].
Sales Logistics
Sales logistics is the process of fulfilling an order as it moves through a company’s supply chain. It includes forecasting demand, ordering inventory from suppliers and making sure that products are delivered to customers on time for retail sale or distribution. The most common form of sale logistics is motorcycle delivery/usually known as dispatch delivery.
Regulatory Framework
The Courier and Logistics Services (Operations) Regulations 2020 (the “Regulations”)governs logistics business in Nigeria in line with Section 62 of the NIPOST Act. The new guidelines identifies smaller operators within the Small Medium Entrepreneurs (SMEs) capsule, particularly largely unknown as startups. [3] The objective of the Regulations is to provide a regulatory framework for effective and efficient Courier and Logistic Services licensing processes and procedures and the regulation of the Courier and Logistics industry in Nigeria[4]
Categories of Licenses
To achieve this objective, the new regulation provides for the following categories of licenses:
| Category | License Fee (N) | Renewal Fee (N) | Scope of License |
| International Courier License | 20,000,000 | 8,000,000 | Logistics services across international borders |
| National Courier License | 10,000,000 | 4,000,000 | Logistics services nationwide |
| Regional Courier License | 5,000,000 | 2,000,000 | Logistics services within a geo-political zone in Nigeria e.g. south-west geo-political zone |
| State Courier License | 2,000,000 | 800,000 | Logistics services within a State |
| Municipal Courier License | 1,000,000 | 400,000 | Logistics services within a particular city |
| Special SME Courier License | 250,000 | 100,000 | For Logistics services that operate within a particular city and having not more than 5 motorbikes/motorcycles |
According to the regulation, ‘Courier’ is defined as the door-to-door, time-sensitive and secured service and includes delivery of documents parcel, merchandise, cargo whose total weight is not less than 0.5 KG and not more than 50KG[5]. On the other hand, ‘Logistics’ is referred to as “services which include haulage, conveyance, dispatch or delivery of items or goods weighing not less than 50kg.
Requirement for Registration
It is important to note that no person is to operate a courier service in Nigeria unless the person is a registered company under or pursuant to the companies and Allied matters Act and is licensed as a courier service operator[6].
Application for Licenses
To be licensed under the Regulations, the entity seeking a license shall: Pay a mandatory inspection and administrative fee which will be determined from time to time and levied by the Minister on the recommendation of the Postmaster-General and this shall be a pre-condition for the grant of such license. Secondly, the entity shall apply to the Minister through the Postmaster-General for a grant of a license to operate Courier and Logistics Services in the manner specified in FORM A in the First Schedule to the Regulations. The application shall be accompanied by documents such as; Evidence of Payment for the specific category of License as may be prescribed by the Minister from time to time, Evidence of Leasehold Interest in Real Property, and a Business.
The applicant is also expected to submit evidence that all existing regulations relating to Expatriate Quota[7] have been complied with, where non-Nigerians are to be employed by the applicant company and a Courier and Logistics Services (operations) Manual which shall contain a list of prohibited or restricted courier/Logistics articles and items, transit and delivery times, information on products, services, tariffs, vehicles and warehouse or storage facilities, and other relevant information [8]. Upon receiving an application for a grant of license, the Postmaster General can recommend the applicant to the Minister for a license to be granted.
Timeline for Granting the Application
According to the Regulations, the timeline for determining whether the application will be granted or refused is within 30 days of receipt of the application16.
Validity of a License
If a license is granted it shall be valid for one year and may be renewed not later than 3 (three) months before the expiration of the license.
Renewal of an Expired License
Failure to renew a license within the stipulated timeframe will attract a penalty of 50% (fifty percent) of the prescribed renewal fee in addition to the renewal fee17. The procedure for renewal is the same procedure that was used to obtain the license.
Refusal of Application
If the Minister believes that from all evidence and information supplied, a company is not suitable to operate in the Sector or public interest supersedes the company’s application, the company shall not be licensed18.
Operations of Courier and Logistics Businesses
The Regulations also re-emphasizes that the Courier and Logistics Regulatory Department under NIPOST shall carry out the full intent of the Regulations. The Regulations set a benchmark for courier and logistics services which they must maintain to operate under the new regime19. The Regulation also requires that an operator in the courier and logistics Sector will contribute a sum equal to 2% of its total annual revenue to the Postal Fund for the development of postal services in rural and underserved areas according to the NIPOST Act.
Veto Power of the Minister
Furthermore, the Minister can request any licensed courier and/or logistics service through the Postmaster General to effect free delivery for Universal Postal Service obligations or any Social Service Delivery for the interest of the Nation[9].
Signage and Branding on Vehicles in Lagos State
For companies that intend to use branded vehicles in Lagos State, must have a Mobile Advert Permit which allows signage and branding on vehicles for advertisement in the State. An application for a Mobile Advert Permit is to be submitted at any of LASAA’s offices with the following accompanying documents: a duly completed mobile advert form; Photomontage or photograph of the vehicle showing its registration number; A copy of the vehicle’s license; and Evidence of payment of permit fees.
The applicable fees for obtaining a mobile advert permit are as follows:
| VEHICLE CATEGORY | FULL /WRAP AROUND | PARTIAL |
| TRUCK/TRAILER | N49,900 | N9,900 |
| COASTER/CIVILIAN | N49,900 | N9,900 |
| BUS/PICK-UP | N39,900 | N7,900 |
| SUV | N39,900 | N7,900 |
| CAR | N19,900 | N3,900 |
| MOTORCYCLE | N19,000 | N1,900 |
| TRICYCLE | N19,000 | N1,900 |
| BICYCLE | N19,000 | N1,900 |
| PUSHCART | N19,000 | N1,900 |
Operating Commercial Motorcycles
In addition, if the Company will be operating with motorcycles in Lagos State, it must not only register the motorcycles with the state and local government, but it must also ensure that the riders have a rider’s card issued by the Lagos State Motor Vehicle Administration Agency (MVAA).
For Additional Information
The decision to start a logistics or courier business in Nigeria is a great decision, however, there are certain regulatory hurdles that must be crossed to enjoy smooth operations and avoid harassment by law enforcement officials.
PUNUKA Attorneys and Solicitors brings to bear a wealth of expertise and experience in corporate affairs and regulatory matters for companies with local and foreign participation. We also have a dedicated team of Maritime and Transportation experts that can brave the regulatory breast tapes involved in starting such a business in Nigeria. We offer highly professional and tailored-services in rendering legal advice and opinions for complex and non-complex corporate matters involving incorporation of new businesses, and non-business organizations, obtaining of requisite licenses, business permits and expatriate quota, and other regulatory registrations as well as post-incorporation filings and corporate due-diligence whilst maintaining confidentiality.
[1] Oxford English Dictionary
[2] https;//www.keyence.com/ss/products/quto_id/logistics/basic/field.jsp
[3] https://www.financialtechnologyafrica.com/2020/07/29/nipost-reworks-regulations-for-operations-of-courier-and-logistics-services-in-nigeria/
[4] Regulation 12
[5] Regulation 8 (1) Regulation 12
[6] Section 43 of the NIPOST Act
[7] Expatriate Quota is a permit given to a company to enable it engage a foreigner as an employee or director
[8] Regulation 3 (2)-(4)
[9] Regulation 8 (6)
