Improved South African performance on tax collection coupled with increased commodity prices are resulting in a turnaround in public finances, ... Moody’s lead analyst for South Africa Aurélien Mali tells The Africa Report.
When Lagos-based Miftah Adediran broke ground on his cashew and other cash-crop businesses in Ibadan about five years ago, he banked on the government’s promise of a railway that would help haul his crops to Lagos, whence they could make their way in trucks to the congested Apapa port for export. Next year, Adediran might finally get to export his crops from Ibadan, via a railway that goes all the way to the port.
On 25 January, China Civil Engineering Construction Corporation, the contractor handling the $1.6bn Lagos-Ibadan railway project, announced that it had linked the Lagos-Ibadan rail tracks to the Apapa port.
The link ‘has become an important transportation passage for the import and export of goods, and now serves as a significant guarantee with regard to the comprehensive operational efficiency of the railway,’ the Chinese construction company said in its statement.
Extending a new standard-gauge railway line to Apapa to ease the maddening gridlock around the port sounds like a smart business idea, says Adediran.
“I’m very optimistic with this level of development because the business community will be one of the biggest beneficiaries. It means that our export commodities no longer have to go by road, so commodities will get to the ports in record time for their outward journey overseas,” Adediran said from Ibadan, the capital city of Oyo State.
Through its National Integrated Infrastructure Master Plan (NIIMP), the Nigerian government is stepping up investments in infrastructure development. Transport and other infrastructure are needed to help Africa’s second-biggest economy move away from its oil dependence. Although Nigeria has one of the most extensive national rail networks in Africa, second only to South Africa in length, it has fallen into disrepair.
While the NIIMP estimates that Nigeria will need to invest $2.9trn over the course of 30 years to develop the necessary infrastructure, a series of billion-dollar projects in the transportation sector are already set to boost the economy in the short and long term. The government launched a new public-private partnership fund called InfraCo in February with N1trn ($2.6bn) in initial capital from the Africa Finance Corporation, the Central Bank of Nigeria and the Nigeria Sovereign Investment Authority to get more money going into road and rail investments.
Fidet Okhiria, managing director of the Nigerian Railway Corporation, says the Lagos-Ibadan railway project will “bring a great boost to our economy in the sense that it is linked to the port. The value of commercial activities in Apapa has basically gone down because of the traffic problem.”
He continues: “Let’s say just three trains from Apapa in a day, and we are talking about [removing] close to a hundred trucks [from the congestion in] Apapa. While trucks will still be busy, they will be going to the train station in Ibadan or Kano, and still get their work done. So the train will be a great relief to the road users, and in terms of timely delivery of either finished products or raw materials to industry.”
Similar rail projects in the works, including Ibadan-Kano, Port Harcourt-Maiduguri and Port Harcourt-Calabar standard-gauge lines, should deliver significant growth to the struggling economy. Work on a $2bn rail line to link the country to Maradi, in northern neighbour Niger, was launched in February. The $3bn Port-Harcourt-Maiduguri line will connect the oil-rich southern city to one of the regions worst-affected by the Boko Haram insurgency.
These projects are part of the government’s attempts to “grow all the sectors of the economy that would improve and increase production,” according to Nigeria’s transportation minister, Rotimi Amaechi.
The Ibadan-Lagos trail line will benefit both freight and passengers, says Tola Adenubi, a transportation analyst. According to him, “rail movement of cargoes will change business dynamics in so many ways. First, it will crash the cost of haulage. As of today, truck movement of cargoes is a major factor behind the very high cost of cargo clearance from Nigeria’s ports of Apapa and Tin Can.
“With so many artificial bottlenecks [security checkpoints] littering our highways and the ports’ access roads, the cost of moving cargoes has quadrupled in recent years, making Nigeria’s ports some of the most expensive in the world to do business in,” Adenubi continues. “With rail, all this will disappear. The over-reliance on road haulage has also led to our roads becoming dilapidated. With rail, the pressure on the roads will reduce.”
For passengers, rail travel offers greater security, Adenubi says: “With banditry and kidnapping plaguing our highways, rail movement of passengers will address this because it will be extremely suicidal for anybody to mount checkpoints for a train moving at over 120km per hour.”
Ibadan on the rise
For Ola Alabi, a real-estate investor who moved to Nigeria from London a few years ago, the railway line promises a “tremendous” opportunity in terms of demand for property.
“A functional interstate rail system will encourage developers to invest in other states aside from Lagos. It will also encourage new developers and local distributors,” he said from Ibadan, where the promise of the Lagos-Ibadan expressway, as well as the rail line, have guided his investments.
“We have started working on projects in Badagry and Ibadan. Access to these locations will be a lot easier in the next three to five years. The construction of the rail network will allow more people to invest in Ibadan and we are definitely going to be a beneficiary of the growth,” Alabi says.
He adds: “Ibadan is peaceful and developing very fast. More people will decide to live in Ibadan and do business in Lagos. You can travel to Lagos in the morning and return home to Ibadan in the evening. Trust me, you will even get home quicker than someone who lives in Lagos because of the traffic.”
Adenubi, the analyst, says Lagos road congestion could be eased if the Lagos Red and Blue metro lines were completed.
In addition, “a rail line should be considered for the Lekki port. Another Apapa gridlock looms in Lekki if the port commences operations, as expected, next year and there is no rail connection to the port. But so far there is nothing on the ground. [On his last] visit to the Lekki port, Amaechi said: ‘Maybe after 2023.’ This is a calamity in the offing.”
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