A Restructured Transport Sector To Advance Connectivity And Economic Growth

Infrastructure & Transport

A Restructured Transport Sector To Advance Connectivity And Economic Growth

Balanced policies seek to upgrade, rehabilitate and maintain roads, rail lines and ports while private sector investment and cost-sharing public-private partnerships (PPPs) are seen as the best way to accelerate implementation.

Over the past years, Nigeria has seen much of its transport network fall into disrepair following decades of underinvestment in critical transport infrastructure. Nigeria’s transport and storage sector is comprised of six activities: road, rail, pipeline, air, water transport, transport services, and postal and courier services. Combined, the sector has grown significantly (by 38.5% year-on-year) with its overall real GDP contribution equalling to 1.3%.

Recognising transport as the lynchpin to unlocking new and non-oil economic growth and trade, the government of Nigeria has heavily emphasised transport investment, particularly from the private sector, in recent economic development plans. While rising passenger and cargo demand continues to strain nearly every segment of Nigeria’s transport sector, 2018 saw the nation make commendable progress in alleviating urban congestion, investing in critical infrastructure projects and increasing private sector participation in the development of transport arteries.

Abuja’s long-awaited light rail service began operations in July 2018, with Lagos set to welcome its own rail mass transit system once the first line of its metro line, currently under construction, is complete. The Ministry of Transport has also adopted several important measures aimed at boosting private investment in the roads sector, including a tax incentive scheme and the formation of new tollbooths on major highways.

In addition to roads and transit, Nigeria is home to 853 km of Atlantic Ocean coastline spanning seven southern states. Most ports in the country derive the majority of their activities and income from the oil and gas industry in the Niger Delta, with three of the country’s six largest ports located in this region. In a bid to ensure a healthy competition among existing ports and the ongoing construction Lekki Deep Sea Port and Badagry Deep Sea Ports, a port development master plan is under implementation in an effort to boost revenue generation through the provision of infrastructure and technologically up-to-date equipment at the ports. A pillar for the diversification of the economy to break the over-reliance on oil, the current efforts are meant to reposition the ports industry to play its key role as the gateway to the nation’s economy.

With the Economic Recovery and Growth Plan (ERGP) targeting development, the plan lists that Nigeria will need to invest US$ three trillion into infrastructure over the next 30 years. It calls for US$30 billion of short borrowing to close its infrastructure deficit, as well as cost-sharing financial frameworks and new fundraising tools to be supported by the private sector. These include public-private sector partnerships (PPPs), as well as infrastructure bonds, diaspora bonds and value-capture financing. With rising public and private investment in the critical rail, road and ports segments, the country should see the transport sector become a key enabler of diversified non-oil growth, supporting the Economic Recovery and Growth Plan targets as well as an ongoing macroeconomic recovery.

Although financial shortages and project delays remain a worry, the country is making steady progress in expanding its transport network, which should support an ongoing economic recovery and significantly bolster the ease of doing business in the near future.