$300bn infrastructure gap dampens non-oil capacity

An infrastructure gap estimated at $300 billion is limiting the capacity of Nigeria’s non-oil sector from creating sufficient jobs and diversifying an economy reeling under heavy crude oil market shock.

Nigeria lacks well-developed light rail and road infrastructure which  should make the movement of goods from manufacturers’ factories to the market easy.

Farmers in rural communities struggle to access urban markets, while non-oil exporters still complain that it is cheaper to move goods from Nigeria to Cape Town in South Africa, than from Lagos, Nigeria’s commercial city, to Yobe State, due to the absence of well-developed rail system.

Poorly developed Tin Can Island, PTML, Brawal and Liliypond ports, which are major ports in Nigeria, are characterised by gridlocks which occur in the form of ship congestions at port approaches, harbours and terminals. 

“Light-rail infrastructure and port development are critical to support commercial ecosystems and should be prioritised at a time of fiscal consolidation,” says The Economist in its latest research report on Nigerian SMEs.

Exporters say their products are often delayed at ports, just as manufacturers lament slow delivery of imported raw materials to factories, owing to port protocols and gridlock.

The Lagos Chamber of Commerce and Industry recently noted that one of the major shortcomings of the investment environment in the country was the speed of cargo clearance at the ports, given that the 48- hour target set by government was far from being achieved. 

‘’Major problem areas are delays in the positioning of cargo at the port terminals,  inadequate equipment for cargo handling high incidence of cargo block-stacking, as well as poor access roads to the ports,” a statement signed by Remi Bello, president, LCCI, said.

‘’Others are poor network and quality of roads within the ports, frequent breakdowns of the server of the Nigerian Customs Service, delays in cargo release from shipping lines, and tight deadlines for the booking for cargo examination, which is currently 10am for AP Moller, 12 noon for other”, the statement said.

Nigeria spends over N2 trillion annually only on personnel costs, leaving barely N2.5 trillion budget for infrastructure and other recurrent expenditures. The country’s capital expenditure annually has consistently been less than 30 percent over the last four years,as salaries and other recurrent expenditures make up over 70 percent.

On a per capita basis, Nigeria ranks 132 out of the 188 countries worldwide measured by FAO / United Nations in terms of the number of tractors in the country. The country has fewer tractors than Serbia & Montenegro, (with 400,000), Pakistan (320,000) and Uzbekistan with (170,000).

“The fact that Nigeria has only one tractor for every 4,100 farmers is ridiculous,” Richard Hargrave, managing director at Dizengoff, leading tractor dealer in the country, told BusinessDay.

“Each tractor is farming 1,013 hectares of arable land. We simply are yet to have anything like enough tractors necessary to work our fertile arable lands, and so truly produce enough food we need to survive,” Hargrave  said.

“It is about time we face up to the facts if we as a nation are serious about producing the food we eat ourselves,” he added.

“We have all the farmers we need as well, at around 12.3 million, making Nigeria 14th in the world, but we simply will not equip them,” he observed.

The energy sector is yet to transmit 4,000 mega watts. The business community, especially players in the real sector, spend fortunes on gas and diesel as power supply in industrial zones dwindles.

“This cost is burdensome and could lead, if not checked, to massive shake-up in existing factories. It could hinder potential investment in the sector, especially as the majority of manufacturing companies are under the SME category,” Frank Jacobs, president, Manufacturers Association of Nigeria said.

ODINAKA ANUDU