An Overview By The Oxford Business Group, 2023, On How Nigeria Aims To Boost Multi-Modal Transport Integration In Nigeria.

The transport sector has become increasingly integrated with Nigeria’s general economy. With a fast-growing population of over 218.5m people as of July 2022, and the need to move huge amounts of natural resources and merchandise to support mining, agriculture, energy and manufacturing activities, one of the greatest challenges facing the sector is expanding transport infrastructure to keep pace with growth. Addressing gaps in strategically important infrastructure, particularly related to road and railway transport, has long been a policy priority.

To help the country fulfil its economic potential, successive governments have allocated funds to transport infrastructure projects. Governance challenges have often made it difficult for these investments to be fully leveraged, and the country’s current budgetary constraints have restricted its ability to spend on new roads, railways, and maritime and river transport routes. Despite this, several large-scale projects have added to Nigeria’s capacity to move goods and people between inland rural communities and growing coastal cities.

Addressing Gaps

In late 2020 credit ratings agency Moody’s reported that Nigeria’s infrastructure development was behind that of other emerging economies, projecting the country would require approximately $3trn in investment over the next three decades to address the deficit. The total included investment in areas such as the power sector, energy pipelines and the potential expansion of renewable capacity (see Energy chapter). However, the limitations of the existing infrastructure continue to weigh on the movement of goods.

Transport shortfalls make business operations more difficult, impacting several key sectors. “Commerce is significantly affected by the infrastructure gap,” Samuel Odewumi, professor at the School of Transport and Logistics at Lagos State University, Ojo. told OBG. “Moving goods from one place to another can be time-intensive in parts of the country,” he added. This leads to losses when bringing agricultural goods to market, or manufacturing stoppages because of transport delays for machinery or raw materials. Part of the challenge is due to the lack of adequate connections between existing transport modes. “The modes of transport in the country are not functionally integrated in terms of multi-modality or inter-modality,” Bamidele Badejo, professor of transportation and maritime studies at Olabisi Onabanjo University, told OBG.

Oversight

The sector is managed by the Federal Ministry of Transport. The ministry comprises dedicated bodies such as the Nigerian Railway Corporation, the Nigerian Airspace Management Agency, the Nigerian Ports Authority, the Nigerian Civil Aviation Authority, the Federal Airports Authority of Nigeria and the Nigerian Shippers’ Council. The Federal Ministry of Works and Housing manages the construction of related infrastructure, with some exceptions.

The sector’s expansion and development plans have been centralised under the Nigeria Integrated Infrastructure Master Plan (NIIMP) 2014-43. The master plan has established goals for the short-, medium- and long-term development of infrastructure across all sectors. For the transport sector in particular, the NIIMP maps out specific revamping and expansion plans for airports, railways and the country’s road network. Notably, it also aims to reform and improve the legal and institutional environment for the sector, as well as accelerate the multi-modal integration of transport linkages.

Securing sufficient investment remains a key priority for the sector’s development plans. “Our debt repayment costs are 80% of our revenue. We are now borrowing to fund current expenditure, which means we will have to find creative ways to fund transport infrastructure development,” Odewumi told OBG. Expanding the use of public-private partnerships and utilising tax credits to encourage private participation in infrastructure development are set to drive improvements in the medium term.

Roads

The national road network remains central to the transport sector and accounts for 90% of all passenger and freight traffic within the country. Although there are federal, state and local roads totalling over 200,000 km, transport activity does not take place equally on all of them; federal roads account for 18% of the road network but handle 70% of all traffic, according to the NIIMP.

Given the country’s large territory, diverse geography and less-connected hinterlands, developing roads requires balancing the parallel needs of expanding the network and ensuring its maintenance. The upkeep of the road network became especially challenging following massive rainfall and flooding in late 2022. “Many of the roads built by the federal government were washed away as a result of the recent flooding,” Odewumi told OBG.

The government has remained committed to a $457m plan to build and rehabilitate the road network, approved by the Federal Executive Council in 2019. This investment has been earmarked for a total of 14 projects across the country, including road and bridge construction, renovation and widening. One of the most important projects is the ongoing expansion of the 35-km Apapa-Oshodi-Oworonshoki-Ojota Expressway in Lagos, which links the city’s largest port to the Ojota district and has long suffered from congestion. Work on the expressway has increased the number of lanes and revamped links to other arteries, with the expansion ongoing as of March 2023.

Another key project, the 43-km Obajana-Kabba link in Kogi State, was completed in January 2021. It is Nigeria’s longest concrete road and links the north and south of the country. In January 2023 Babatunde Fashola, the minister of works and housing, announced to local media that the reconstruction of the Ibadan-Lagos Expressway, partly delayed by flooding in late 2022[EO1] , was slated for completion in the first quarter of 2023.

Railways

Increasingly, rail transport is viewed as a pivotal alternative to the road network[EO2]  for moving both passengers and freight. However, improving the strategic value of rail will require significant investment in the network. The existing railway system still reflects the legacy of the colonial period, during which railway tracks were mostly laid on north-south corridors. “There are no east-west railway connections in Nigeria,” Badejo told OBG. “The current design of our railway networks does not favour a deep economic integration of the country.”

Concerns surrounding service reliability have led to decreases in passenger and freight numbers, and the authorities have recognised that railways need rehabilitation before they are able to operate efficiently. As part of the NIIMP, the authorities aim to connect Nigerian cities and major ports through high-speed train networks by 2043. The renovation and expansion of existing railways in the intervening years is set to cost $75bn, underlining the need to establish profit-generating models that can finance renovations or attract private investment.

The authorities launched a $41bn railway development programme in 2017. Flagship projects included a 1100-km railway between Lagos and the northern city of Kano, and a coastal 1400-km railway that links Lagos to Calabar, in eastern Nigeria. The projects were estimated to cost a combined $20bn. Additionally, a new railway link connecting Kano to Maradi in Niger was expected to begin operations in May 2023, with the $1.8bn railway project projected to drive commercial exchanges in the Sahara region.

The start of 2022 saw an uptick in railway traffic. Over the first quarter of the year passenger figures in Nigerian railways rose by over 124% relative to the same period in 2021, to 953,099 people, according to the National Bureau of Statistics. Similarly, freight volumes on the network rose by more than 254% over the same period to 32,139 tonnes.

Performance fell, however, after an attack on a train on the Abuja-Kaduna rail in March 2022 caused the NRC to shut down the route until December 2022. “Because of the recent attacks on the railway system, people are avoiding travelling by rail,” Badejo told OBG. “Security has become a major concern, increasing the cost of commercial and social interactions across the country.” In the short term, this has affected the sector’s ability to generate cashflow for operations and expansion work. From an average of N500m ($1.2m) before the attack, monthly railway revenue fell to below N50m ($119,000) by February 2023, according to local media reports.

Ports

Railways are also being revamped to connect to port infrastructure and stimulate multi-modal transport. Container port traffic has been growing gradually, with the volume of traffic expanding from 1.2m twenty-foot equivalent units in 2010 to 1.5m in 2020, according to World Bank figures. Total cargo experienced a slight drop in 2020, to 78.4m tonnes, down from 80.2m tonnes in 2019, according to figures from the Nigerian Ports Authority. Although the decrease was likely due to the Covid-19 pandemic, it also underlined the relatively minor impact that the pandemic had on the economy. The port sector has benefitted from the privatisation of activities, and investment in infrastructure, such as the 2022 completion of the Lekki Port in Lagos State, is expected to reposition Nigeria’s maritime transport sector regionally (see analysis).

Air

Nigeria has six international and 11 domestic airports. After falling during the pandemic, passenger numbers began to improve in 2021. According to figures from the Federal Airports Authority of Nigeria, passenger numbers rose by more than 70% to nearly 16m in 2021, up from 9.3m the previous year, with domestic travellers accounting for the majority of traffic, at 13.6m. Although air traffic has increasingly been seen as a safer alternative to road travel, Russia’s invasion of Ukraine in February 2022 – and resulting higher inflation – has caused many airlines to increase ticket prices in an attempt to make up for a depreciating naira and rising fuel costs. As of August 2022, according to media reports, the eight airlines operating in Nigeria were doing so at a total fleet capacity of 38.7%. Despite this, continued investment in aviation infrastructure points to a medium-term recovery in the segment.

Urban Mobility

Linking regions and cities across the country through road, rail and air is set to remain a priority for the incoming administration in 2023. However, Nigeria’s urban areas present equally significant transport challenges. Lagos, the country’s commercial capital and largest city, was home to more than 15m people in 2022, a figure projected to reach nearly 25m by 2034. On a daily basis, 5m personal cars and an additional 200,000 commercial transport vehicles cross its roads, according to estimates by the African Cities Research Consortium (ACRC). This amounts to an average of 227 vehicles per km of road, as per ACRC calculations, underscoring the urgency for policymakers to design options that can reduce congestion.

The government has opted to invest in rail mass transit networks to improve urban mobility, and has stated its goal to equip cities with over 1m people with urban rail systems over the next 10 years. One project to help meet these goals was the commissioning of the first phase of the 27.5 km Lagos Rail Mass Transit Blue Line in January 2023. The first phase has the capacity to move 200, 000-250,000 passengers a day. Once complete, the line will include 13 stations with a journey time of 35 minutes. The project had been slated for completion by April 2023, but was delayed as of May that year.

Ride-hailing services have also had a notable impact on urban mobility. Indeed, revenue from ride-hailing and taxi services is forecast to grow at a compound annual growth rate of 4.4% between 2023 and 2027, reaching $53m, one-third of which will be generated by online sales.

Outlook

As the sector undergoes major changes, ongoing infrastructure development will make logistics operations leaner in the medium term. In order for transport to serve as a lever for economic growth, allocating adequate financial resources to expanding and maintaining road, rail and air links will be a priority. Similarly, optimising transport networks connecting the hinterland, cities and ports will require further addressing security challenges[EO3] .

 [EO1]Flooding? Which of the sections?

 [EO2]If adequately developed, the rail sector can contribute significantly in taxes, at federal and state levels, wich can help in building schools, pave roads, etc. Freight rail lines can significant economic footprint in the development of the country. It reminds me of what JF Kennedy said – “As our frontier moved westward, it was the railroads that bore the great tide of Americans to the areas of new opportunities and hope…”

 [EO3]The govt can’t do it all. The private has to be brought in in some form – variations of PPP exist!