Legal Requirements of Starting a Logistics Company in Nigeria

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. 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.

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.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

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. 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.

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 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. 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 application.

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 fee. 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 licensed.

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 regime. 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.

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.

Source: Punuka Attorneys