Understanding the Transport sector in Nigeria
Welcome to the 3rd series of my free Infrastructure Development and Financing Masterclass :):) . Today we will be expanding our knowledge on the transport sector in Nigeria and the role of the Government in providing such infrastructure. This knowledge can be duplicated in any African country. I’m excited about this and the next few articles; it should be a fun ride, hopefully. :)
Overview of transport infrastructure in Nigeria
Transport infrastructure referred to typically compasses of the following;
Roads and bridges
Car parks and bus stations (e.g Bus Rapid Transit ‘BRT’)
An efficient transport system is a key factor in the socio-economic development of a nation and improving Nigeria’s transport infrastructure will be a necessary pre-condition for achieving the Government’s 2020 Vision, which is 6 months away. It is government’s social responsibility to ensure that there is an efficient and effective transport system serving its citizenry.
An efficient transport network, in my opinion, is a intermodal or integrated transportation system (the accessibility of inland transport through a combination of various transport modes) which most developed countries like Hong Kong have adopted. Unfortunately, the transport system in most of Africa is yet to achieve such robust system. I was initially hopeful for the Lekki Toll Road project which was meant to be an integrated project (both road and coastal access); a near intermodal system.
A well developed transport system provides the following:
allows manufacturers and/or producers to access raw materials or international markets at minimum cost and with minimum delay.
commute travel time is drastically reduced and this improves the life expectancy of the citizens. A good measurement for road projects is the time efficiency that it achieves and the volume of vehicle experienced pre and post project.
middle-income families benefit from more affordable housing options outside of the costly city depending on the location of the project.
higher-capacity road, rail etc implies less environmental pollution resulting in a cleaner environment, and better health for the people.
New projects generate direct jobs during construction as well as at operation phase.
In planning an all encompassing transport system, the government of any country must also anticipate economic and social development of the country to ensure that future demands (as population grows) are considered.
Due to the significant social, political, and environmental impacts of transport, and the high cost of providing a national transport infrastructure. The Government has an important role in providing, managing, and regulating the national transport network, and this article hopes to set out recommendations on how all levels of government in Nigeria should work together to meet the goals, and to engage the private sector, where appropriate, to deliver the aspirations of citizens.
‘‘Africa’s pronounced “infrastructure deficit” is holding back per capita economic growth by 2% each year, reducing the productivity of firms by as much as 40%’’ - Africa Infrastructure Country Diagnostic
Current barriers that the government should consider in addressing the country’s transport infrastructure deficit, and provide the investment to meet the target of Nigeria becoming the world’s 20th largest economy.
lack of financial investments,
institutional failings (policy, legal and regulatory frameworks),
lack of an enabling environment,
lack of accountability.
Some possible recommendations in addressing the above listed challenges include
reform of the existing institutions that are responsible for managing, regulating, and planning the transport network;
define policies and strategies for transport development at both the state and federal level, working closely with practitioners;
adequately address how greater efficiency can be achieved through better planning of investment to create a more integrated/intermodal transport system (this is a type of transportation model involving the multiple mode of transportation like air, water, land via aircraft, ship, rails and trucks;
deliberately create economic certainty that attracts the private sector, whose involvement can be used to manage risks more effectively and provide greater transparency of cost and accountability for the quality of service to the user.
Provide leadership in monitoring implementation progress of on-going transport projects
Several options available to delivering the transport deficit
Basic infrastructure needs are typically catered for by the government, via budgetary allocations but as we discussed here, the government is unable to meet the growing demand and required capital expenditure. For this reason, the involvement of the private sector is crucial in achieving an developmental outcome.
The private sector usually gets involved in viable, bankable projects, and/or conditionally viable projects predicated under a Public-Private Partnership (PPP) arrangement with the public sector. Underlying this is the project finance concept in infrastructure development and financing.
Please read up on the other lecture series (here and here) to get a good grasp of the theory before I dive deeper into the practical. The next article will be on PPPs using Lekki Toll Road Project (Lekki Concession Company) as the case study.
Nigeria Transport Infrastructure in Global Context
Nigeria has remained behind in terms of its transport infrastructure across all sub-sectors. Population has constantly grown beyond the growth rate of deployment of capital on transport development.
90% of all people movement in Nigeria and 70% of goods freight is roads-based
Nigeria currently has around 193,000 km of roads - only circa 29,000 km (15%) are paved. 30% of the paved roads have been assessed as being in poor or failed condition
Current neglect implies an N80 billion loss of network value and N35 billion additional operating costs each year. These numbers could be higher or lower depending on the calculations and assumptions