Transportation – The Road to Nowhere

Macroeconomic indices have shown that for many growing economies, the value added by transport to the economy accounts for 3 to 8 percent of GDP while employment in transport sector ranges between 2.5 and 11.5 percent of total paid employment. For a struggling economy like Nigeria, intensified investment in transport will not only create millions of jobs, but also stimulate critical sectors of the economy, facilitate the safe and efficient movement of people and goods, promote economic development, competitiveness and even strengthen security – on which the federal government alone plans to spend, and waste about 3 billion naira every day, including weekends in 2012.

Reflecting on the histories of successful nations, economic growth, prosperity and opportunity for everyone have followed investments in transport infrastructure. Investing in the sector is the basic foundation for governance and economic growth. A key example is the US where between 1980 and 1991, almost one-fifth of the increase in productivity in their economy was attributable to investment in roads – interstate highways and municipal link roads.

Efficient highways, rail systems, airlines, airports, harbors, and waterways will not only provide the backbone to grow our economy by moving people and goods around seamlessly, cheaply and safely, it can also employ millions of workers to generate substantial share of economic output the country. If well exploited, transportation can actually contribute in excess of 10 per cent of our total domestic product annually compared to the current levels of informality and low contribution. In addition, an effective transportation system can have direct and significant effect on the daily lives of our people. Properly targeted and managed investments in transport facilities will mean effective travel that could save time, fuel and reduce pollution; lives will be saved and fewer delays and less hassle for the average Nigerian.

Over the years, as Nigeria’s population grew, demand for freight and passenger transport, particularly by road and air have also grown to about 2 times faster than the GDP while the transport infrastructure and system remain the same, or actually declined. Hence, logistic costs for our goods and services are now typically more than 20 percent of sales from the global average of 2 percent, of which in Nigeria, transport costs alone can be as much as 15 percent.

It is imperative that Nigeria starts the process to opening up more of its roads (by making them usable), railways, and air and sea ports so we can mitigate the recurrent transportation crises that the country faces as well as ways of eliminating the present stagnation in economic activities to create opportunities for a true market driven economic growth by reduced cost of transportation and high quality services across the country. As the data below indicates, Nigeria’s transport densities and effective network access levels are much lower than that of comparable developing countries, this is unacceptable, implying an urgent need for large transport infrastructure investments.

On roads, we need to increase our road network length and also invest on road widening schemes to increase capacity through increased total lane length. Compared to the Republic of South Africa which has a population density of about 40 persons per sq km, with a total road network of about 754,000 kilometers that are well maintained, Nigeria with a population density of about 150 per sq km has only 108,000 kilometers of poorly maintained surfaced roads of which less than 20 percent are paved, which has been the cause of the high rate of traffic fatalities that we are now known for.

Infrastructure aside, passenger transport is equally important for our economy. For rapid economic growth, government must focus some of its investments on providing connectivity at the land-sea-air interface to eliminate barriers that the historical lack of intermodal transportation system thinking has created. Most importantly, focus should be on providing access for rural areas and small towns by any of the most convenient transportation means such as bus, train, boat or plane.

Government policies must aim to provide a functional and efficient transport system for our population and provide them affordable access.  Like China, Thailand and India, government should come up with a program for the transport system that will bring more than 90 per cent of our villages within 2 kilometers of an all-weather road. India has implemented a rural road program in the past few years that connected half of all its villages and towns to all-weather roads, up from 39 per cent in 1995. India now has almost half as many kilometers of roads as the United States. Perhaps, we should emulate this program with the coordination of federal, state and local governments envisaged in the National Transportation Master plan approved by the Obasanjo administration.

There must also be in place the appropriate policies that will ensure personal mobility can be properly managed. Investment in roads must keep up with the country’s rapid pace of motorization, which could lead to extremely high vehicle densities (vehicles per kilometer of road). Higher personal mobility levels would increase national competitiveness and economic efficiency. Equally important will be improved urban mass-transit schemes.

Our seaports and airport infrastructure are not growing. Port container traffic hasn’t grown as it should due to bottlenecks at our seaports. Nigeria was the 9th most populous  country in the world and last year, it accounted for about 15 per cent of the GDP of Africa but negligible percent of the world container throughput. Our seaports have fallen behind international standards in terms of the quality of facilities and operations. Combined, our ports in Lagos, Port Harcourt and Calabar can only manage just about 8 million tons of cargo each year.

We have nearly 8,600km of waterways – along the Niger River and its tributaries; along the Benue River, Niger Delta and along the coast from Lagos Lagoon to sea border with Cameroun, but these potentials are hardly put to meaningful uses. An efficient Inland Waterways Transportation System can be developed to serve as a cost-effective and energy efficient means for transporting not only persons but commercial goods, especially bulk commodities like grain, coal, and petroleum products across the country.  These activities can be integrated into state and local economies and job creation efforts.

The benefits of inland waterways transportation system are numerous. Barges moving on waterways are safer, more fuel efficient, and less polluting than other means of transportation. One 15-barge tow on a river can carry as much cargo as 216 rail cars or 1,050 large trucks. More than twenty states can be directly served by the Inland Waterways Transportation System, and this can result in hundreds of millions of tons of cargo of trillions of naira annually. Facilities in our ports are old, and delays (nearly a month to clear a container against 30 minutes in Singapore) and congestion  increase transportation costs.  Effective inland water transportation will make commerce more competitive and our economy more vibrant.

Well structured, the aviation sector can be a key growth engine for our economy. An efficient and modernized aviation sector, with regulations and incentives for the private sector can make air travel an essential form of transportation, create economic growth and jobs. For example, in the USA aviation generates $1.2 trillion in annual economic activity and support over 11 million jobs and moves almost 800 million passengers annually.

In Nigeria, aircraft departures still remain low and have on a per capita basis, even reduced compared to the 1970s. In Indonesia and South Africa departures have grown faster than Nigeria, albeit from a low base (like Nigeria), by about 12-times. South Africa, with a population of less than 50 million has sixty-two airlines, making 274,000 aircraft landings and carrying 16.5-million passengers (counting departures only), 10 standard airports and a national carrier – South African Airways (SAA), that is by far the largest air carrier in Africa, with connections to more than 20 cities across the continent and 18,100 flights daily. By contrast, Nigeria with a population 162 million has less than 10 airlines, less than 10 million air passengers annually, less than truly 10 functional airports.

There are hardly any intercity railway services in Nigeria. The Abuja Metro contract signed in 2007 would have been completed in 2010 and given Nigeria its first intra-city light rail system was canceled by my successors at the FCT. The $43 billion ten year national program to build a multi-phase, brand new, twin-track standard gauge railway that was conceived and began in 2005 with the Lagos-Kano line was suspended by the Yar’Adua-Jonathan administration, and is now largely in the mortuary. Our nearly 3,550 kilometer of narrow-gauge rail system is almost obsolete and unutilized at a time when South Africa can pride itself of having an extensive (narrow-gauge) rail network of about 21,000 kilometers – the 14th longest in the world – connecting with national networks in its sub-region. Our railway networks were engineered by the British to serve their economic interests and are difficult to adapt to our present rail transportation needs.

Nigeria needs to leverage on transport infrastructure development urgently to eliminate the avoidable logistic costs that are, at least, 50 percent higher than what is normal for operations in all spheres of our economy. Such a program would create millions of jobs and open up the entire country to rapid economic and social development.

But what do we have?

An administration that has spent our entire national savings and revenues on itself,  plans to spend nearly a billion naira to feed the president in 2012, while borrowing an average of 100 billion every month since December 2009 when President Jonathan effectively took over.

In the 2012 budget, it earmarked only 6 percent of the entire budget for the  works, transport and aviation ministries , while the each of the Police and Defence ministries have bigger budgets than the three transportation ministries combined. So we are not investing enough in our transportation infrastructure. No wonder, all our roads lead to nowhere.

Nasir Ahmad El-Rufai



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