No country in the world has ever attained an industrial status without a good transport infrastructure.
China is a classical example of a country that developed its infrastructure alongside industries in the early stage of development. The country has, today, gone beyond roads and railways to develop coastal regions and inland areas along major rivers.
It did not just get to this stage by chance. Plans were in place and execution was religious. Even as late as 1990s, the World Bank, in one of its reports, said the country lost one percent of its GDP to decayed and obsolete transport infrastructure. Less than 30 years after, it has gone past that and now focuses on water and energy. Early in the year, China’s top economic planner National Development and Reform Commission (NDRC) approved construction of seven infrastructure projects in energy and water worth $72 billion this year. This is more than twice Nigeria’s 2020 budget.
In Europe and the United States of America, the issue of roads is already taken for granted, and manufacturers and other businesses worry for bigger issues.
While it is a given that Nigeria is still at an inchoate stage of development, it must be admitted that federal and state governments have got the process of contract awards and execution wrong. From Imo to Abia, down to Jigawa and Osun, roads that were paid for are abandoned, with contractors receiving certificates of completion from the government.
Nigeria has about 195,000 km of road network, out of which about 32,000 km are federal roads and 31,000 km are state roads, according to data from the Infrastructure Concession Regulatory Commission.
Of these numbers, only about 60,000 km is paved, leaving 135,000 km of road untarred. Even those that are tarred, a large proportion of them are in bad conditions due to poor maintenance.
To show how deep the infrastructural deficit is, Nigeria would need to spend an estimated $300 billion annually, the African Development Bank (AfDB) noted.
Bad roads are turning Nigeria into a jungle of wasted economic opportunities as many economic actors cannot maximise their time and duly harness possibilities for business development because of ineffective transportation systems.
A 2019 survey carried out by the Chartered Institute of Project Management of Nigeria said that the value of abandoned projects across the country is N12 trillion.
Fifteen thousand projects are abandoned in the South-East; 11,000 in the South-South; 10,000 in the South-West; 6,000 in the North-West; 7000 in the North-Central; 5000 in North-East, and 2000 in Abuja, the report said.
A case in hand is a road linking Abia to Akwa Ibom—two states in the oil-rich South-East and South-South regions of Nigeria. This road has been in a state of disrepair for over 15 years. Aba shoe and textile makers now feel the pinch as they cannot reach the Cameroon market from there, as the case was in 1980s.
In the 1990s, Aba shoe and textile makers ferried their products to Akwa Ibom through the road. But the road now looks as forlorn as its passers-by. The Aba section is overrun by dirty water. The axis crisscrossing Umuokpo and Onicha Ngwa communities in Obingwa Local Government Area is broken, with grass growing in the middle of the road.
“They have abandoned us to our fate,” Nonso Obima, a shoemaker at Ariaria, who lives in Ogbor Hill area of the road,” told a BusinessDay reporter recently.
“They have cut off the section through which we supply our shoes and textiles to neighbouring states and Cameroon,” he cried.
The number of rural poor in Nigeria keeps soaring because they do not have access to markets. As a result, every year, unquantifiable agrarian products perish, thereby making life unlivable for many. And in an attempt to escape poverty, many unskilled youths migrate.
The gridlock in Nigeria’s busiest port has also made dealings between economic entities negligible. Fleeting congestion may be seen as a sign of economic growth, particularly when it is an indicator of an increase in mobility. However, perennial congestion like what we have in the Apapa axis is one of the unintended consequences of deficient road infrastructure that paralyses profitable business activities. The time it takes for freight to be conveyed from one point to the other within Lagos is too long, as it makes loss and damage inevitable.
That exporters and manufacturers of products cannot thrive with the state of ports in Lagos because roads leading into Apapa are a nightmare. A situation where trucks transporting produce to be shipped overseas spend weeks on the road before getting to the export terminal does not show the government is truly ready to diversify Nigeria’s monolithic economy.
In any economy, a good road network is seen as one of the basic and critical factors that shape the face of development, as it provides access to employment, market, health and education services, which are otherwise vital to any development agenda.
Experts say the transport sector remains a major determinant of a country’s economic development as a good transport system is necessary in moving goods and services around, and enabling a wider market reach.
Unfortunately, despite having the largest road network in West Africa, Nigeria’s road transport system are in terrible conditions as the roads are dilapidated and are also not secure enough.
Today, logistics cost to manufacturers is 20 percent—a strong disincentive after power/ energy.
The popular is axiom among manufacturers today is that it is cheaper and faster to move goods from Europe to Lagos than from Kaduna to Lagos.
Costs are piling up in the manufacturing sector, with attendant consequences on prices. Incidentally, manufacturers are selling to a population of people that are majorly poor.
In terms of income, Nigerians are becoming increasingly poorer, with 8,000 citizens jumping into the extreme poverty train on a daily basis, according to Brookings Institute’s 2018 report.
The report said last year that 87 million Nigerians lived in extreme poverty, amounting to about 44 percent.
The World Poverty Clock said this year that the number has risen to 98 million—which is almost half of the population. This has consequences on consumption.
Babatunde Ruwase, president of the Lagos Chamber Of Commerce and Industry (LCCI), said recently that infrastructure deficit was causing problems for business owners, especially in terms of transportation, adding that a functional and modern rail network would facilitate the movement of people and goods while reducing the cost of transportation and the total cost of production.
Mansur Ahmed, president of the manufacturers association of Nigeria (MAN), said at a recent forum that transport was important in the manufacturing value chain, adding that if the transport deficit was eliminated, it would reduce the total cost of delivery of products by 30 to 40 percent.
According to the Nigeria Infrastructure Guide report for 2017, budgetary allocations for the transport sector were N19.5 billion in 2015; N424.27 billion and N365.1 billion in 2016 and 2017 respectively.
Francis Meshioye, executive director, JMG Limited, said at a function recently that the deficit in the transport sector partly accounted for the snail-paced growth of the manufacturing industry, leading to a slow movement of goods from the manufacturers to the consumers.
“The government should make huge investments in the transport sector because doing so will reflect in the other parts of the economy. Adequate transport infrastructure will result in high employment rate, faster and competitive market reach, high income level, wider reach and connectivity for transaction purposes,” he said.
Paul Gbededo, group managing director, Flour Mills of Nigeria, said that private companies could form collaboration and aid the government by providing infrastructure. He added that the seaports are underutilised while the rails should be well maintained and structured for use.
The point being raised by development experts is that Nigeria should borrow to fund infrastructure projects, rather than pay wages. The 2020 budget has less than 20 percent allocation to capital projects which cannot support industrialisation.
“The total budget size is N10.3trillion. The recurrent component is N4.88 trillion, debt service is N2.45 trillion. Together, these two budget items amount to 7.33 trillion, which is 90 percent total revenue estimates. And from the track record of revenue performance, the percentage may be much higher when related to the actual numbers. All of these indicate that the hope for an impactful investment in infrastructure is dim and would remain so for some time to come,” Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry said in a statement released on Wednesday.
“This underlines the imperative of appropriate policy choices to attract domestic and foreign private sector capital for infrastructure financing. The government needs to look beyond tax credit in its quest for more complimentary funding sources for infrastructure. We should be looking more in the direction of equity financing. But for this to happen the policy and regulatory environment must be right,” he further said.
Odinaka Anudu, Michael Ani & Gbemi Faminu
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