• Friday, April 19, 2024
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Why the railway system has failed in Nigeria

Railway freight: Container haulage struggles despite $1.6bn investment

The near-collapse of the railway sector in Nigeria has over time been attributed to the failure of operators to properly manage the required capital intensity, structural complexity, and intellectual expertise required for not just its build but profitable and sustainable maintenance. Against this notion, however – and from the experiences of experts, regulators, and government, investors – including multilateral financiers and associated players, the drawback to full-fledged and functional rail transportation in Nigeria has essentially been a lack of clear hindsight in policy direction and the willpower to see through to the essence of the sector to serve not just Nigerians but support key productive sectors in the economy.

More profoundly, the history of railways service in Nigeria was founded on the quest to move mining outputs to ports for the greater economic welfare of the citizenry. Tracing the trajectory of the railway system in Nigeria, the Infrastructure Concession Regulatory Commission (ICRC) says “The development of railways in Nigeria started from Lagos Colony to Ibadan in March 1896, by the British government. The Lagos Government Railway began operations in March 1901 and was extended to Minna, Niger State, in 1911, where it met the Baro–Kano Railway Station that was built by the government of Northern Nigeria between 1907 and 1911.

Following the discovery of coal at Udi, the Eastern Railway was built to Port Harcourt between 1913 and 1916. This railway was extended to Kaduna in 1927, connecting the Eastern Railway to the Lagos–Kano Railway. The Eastern Railway was extended to its northeastern terminus of Maiduguri between 1958 and 1964 by the administration of Sir Abubakar Tafawa Balewa.”

As of 2019, Sub-Saharan Africa (SSA) had a total rail network of 65,760km spread across 32 countries, based on research by the World Bank.

If run as an enterprise and not just a social good or capital, the success factors for the railway system will be static around three major baselines – the ability to coordinate a multi-faceted network service from the centre, and by no means not just a central government but an ownership structure that unarguably reins strong control on the industry, assuring returns on investment and a profitable enterprise that recovers an initial capital outlay in a short time, and lastly the branch out of the pillars of the railway operation to support local commodity, mining and natural extraction industries and agriculture.

A fourth success factor – a low-hanging one – which in essence is an extension of the augmentation of ownership structure is the modular unification of regional governments in sub-Saharan Africa to pursue mutually beneficial trade under the guidelines and auspices of well thought out and promulgated regulations.

The ICRC believes that “The decline experienced in terms of passenger and freight movements over the decades was as a result of differed investments for both the locomotive and rolling stocks.

“Obsolete locomotives and rolling stocks have reduced the capacity and utility of the rail system as reflected in the passenger and cargo traffic data 1964-2003. By early 2013, the only operational segment of Nigeria’s rail network was between Lagos and Kano. Passenger trains took 31 hours to complete the journey at an average speed of 45 km/h.”

There currently exists a 25- year strategic roadmap for the revival of the railway system in Nigeria

“The strategic railway plan, which includes the rehabilitation of all the existing narrow gauge rail lines, construction of new standard gauge line and their operations and maintenance in the country. This would require potential huge resources much of which are envisioned to be resourced through private sector investment, to give the Nigerian people a modern railway system comparable globally. The sole aim of the strategic vision is to connect all the 36 States and the Abuja FCT and to provide rail links to the nation’s airports and river port terminals thereby reducing pressure on Nigeria’s road network which at the moment handles more than 80% of passenger and cargo traffics.” The ICRC notes.

By and large, the vehicle for the conveyance of the rail arguments has finally berthed and is currently stationed at the middle ground in the ongoing global quest for the reduction of carbon emissions, clean environment, renewable energy, and altogether climate change consideration.

Q: The non-profitable railways have made it practically impossible to attract the right investment into bridging the infrastructural deficit needed for its restoration

Infallibly, relative to conventional transport systems like road transportation, the railway system has in fact proven to be safer and environmentally sustainable globally. It is no surprise therefore that governments are setting in motion the requisite machinery to usurp the norm and revive an erstwhile abandoned and dilapidated industry which ideally should lead the charge for affordable commuting, social prosperity, and wealth creation in Africa and Nigeria in general.

There is an opening for stakeholders and regulators most especially to take advantage of recoveries from pandemic levels. As of the second quarter of 2021, the overall statistics of railway transport saw a sharp rise across all indices owing to renewed interest and incentives in the sector. According to the NBS, the number of passengers rose by 80 percent to 565,385 from 108,238 achieved in the corresponding quarter of 2020. The volume of Goods/Cargos (Tons) also rose monumentally by 80 percent in quarter 2 2021 from 42,782 to 8,691 in 2020. Revenue Generated from Passengers rose from just N320 million recorded in quarter 2 2020 to N1.083 billion recorded in the same quarter in 2021. The Revenue Generated from Goods/Cargos increased in quarter 2 2021 from 71,555,762.00 to 66,293,398 relative to the previous year (Q2).

Read also: Lagos acquires 3 trains for blue line rail

In previous years, the country was able to channel her fair rail network for the most auspicious services. Under the regulation of the Nigerian Railways System, the considerable change in the mode of operation of the service hinged visible on the sheer neglect of its infrastructure and more intricately on the failure of government ownership structure and the breakdown of further concessionary arrangements with the private sector.

Associated with the liberalization of the transport system in Nigeria that has largely accounted for the shift in usage especially the wide adoption of road transportation. A huge deviation from what was obtained in the 20th century when rail transport was the mainstay.

It is surreal that the Nigerian railway system still operates to its initial standards and capacities in an age when the introduction of aesthetics and capacity has been the norm, especially in emerging economies.

This notion has overtime accounted for the dwindling railway sector in Nigeria. The reality is that the more developed nations have their eyes locked on Africa’s most populous nation – Nigeria which possesses a landmass of 923,768 km² which easily affords her the opportunity to scale.

To a large extent, the tracks in Nigeria’s railway system are some as old as a septuagenarian. The rots are real and the lack of human knowledge and expertise holds sway. Low-speed locomotive standards are also noticeable.

And if the ever-increasing attention being paid to the road transport is done, recovery can only take effect on the back burners of concomitant investment of funds and mobilization of the right infrastructure for overhauling dilapidated repairs, construction, and maintenance like the road transport have enjoyed in recent years.

Whereas a key challenge with the moribund sector has been the falling of traffic on its services even when the concessionary arrangements held sway, the non-profitable railways have made it practically impossible to attract the right investment into bridging the infrastructural deficit needed for its restoration.

Lower road congestion, maintenance costs, fewer accidents, and reduced pollution and greenhouse gas emissions have ever been the benefits. However, for the most part, the government has had to bear the greater part of the funding for the sector with lower maintenance noticeable.

The rehabilitation of Nigeria’s railway system will thrive majorly on a sustainable business model, the right technology and innovation and an adaptive mode of operation that is better suited to the customers’ needs.

The political quagmire remains if the autonomy for the ownership of the railway’s system should reside within the government or a shared arrangement between government and states or a combination of both.

The World Bank says “Good governance for railways is governance that drives the railway to be (i) market-oriented, (ii) efficient, and (iii) financially sustainable and to (iv) manage the railway assets for the long term. This requires that:

”The railway be empowered to operate commercially, protected from those who would use its resources for personal or political gain. Too often the railway’s staffing is padded with political patronage jobs, rates are held below costs to win votes, customers can only access the railway through intermediaries that skim off revenue, or funds are outright stolen. The railways of SSA simply cannot afford such activities, moreover, they demotivate and distract railway management from operating commercially.

“Railway management must be incentivized to build traffic, operate efficiently, strive for profitability, and keep the railway’s assets in sound condition. This requires the government to implement a governance framework that creates balanced incentives to achieve the desired outcomes.”

Bernard Aritua of the World Bank says that “To attract this business back, railways must position themselves as the reliable, low cost service providers on key transport arteries and interact seamlessly with road carriers to deliver door-to-door service to the customer. The railway does not need to control the whole service—this can be done by 3PL companies or others. The railway does need to design its part of the service in coordination with the other actors and deliver on reliably. To channel traffic toward the railway, critical hubs must be developed to consolidate freight.”

Babajide Sanwo-Olu, the Governor of Lagos State, recently visited Milwaukee in the United States on Tuesday to finalize the purchase of two of Talgo’s Series 8 train sets for the Red Line rail project in Lagos State. We can look forward to more efforts and the right willpower for the aforementioned requirements that hold the essence of the struggle to re-position the railways’ system as the preferred means of transportation of both passenger, freight, legacy, and goods industry will rest solely on a concerted effort from both the government and private sectors.