insurads script
BusinessDay
Nigeria's leading finance and market intelligence news report.

‘Lagos loses about ₦4trn to traffic every year’

The average Lagos resident has a hunch the nightmarish traffic the state is known for has an economic cost, but cannot quite place a figure to it, a data problem like most other things in Nigeria. FRANCA OVADJE, founder and executive director, Danne Institute, in this interview with CALEB OJEWALE, speaks on the institute’s recent work, and the implications of findings for individuals and businesses. Excerpts:

Can you tell us about some of the work and research you’ve been doing?

Danne Institute was set up just a few years ago because, many times, what we find is that, in the environment, there is a lot of talk. These days, it is even webinar after webinar. When statistics or data is quoted at all, it is from the US or other western countries.

Not much research or data exists in Nigeria. So, we thought there’s a huge gap there for many research institutions to do research that provides evidence and can be used for decision-making. The focus here is to train competent managers who would lead Nigeria and Africa’s development. We have just started and it is a long journey. We did some work last year on working from home; remote work and its difficulties. We did that during the lockdown of Lagos and we even used Lagos as an example.

We have done a productivity and connectivity report, which was quite extensive. We are working on motivation in the public sector. What drives someone in the private sector to leave the private sector and go to the public sector? Our focus is on good practice. I’m tired of seeing bad leadership. Some people who have left the private sector for the public sector have done some good work in the public sector. What was their motivation? What lessons can we learn from them? That’s what we are working on right now.

Can you just share what some of your major findings were in the report on the effects of Lagos connectivity on productivity and economic growth?

One of the things that’s interesting in that report is that, on average, people spend about 2.21 hours in traffic just going to work everyday. The most interesting is the economic cost of this congestion. The productivity of Lagos is very low. In the city prosperity index, of only 11 African cities, Lagos was the poorest with 16.11 in productivity. We found out that nobody in our environment has put an economic cost to that problem of traffic congestion.

We worked with financial derivates company, owned by Bismarck Rewane, to actually do that. We started a study to put money on it because once we know how much it costs, then it’s clear that something has to be done about it. We are talking about a cost that is about ₦79,000 for those who use public transport, and if you own your car, it costs you extra ₦133,000 every year, because of traffic. All of a sudden, you realize, if I have ₦133,000, I know how many people I can help with that. Something else we were interested in finding out is how much businesses are losing.

We found out that micro businesses lose between ₦60,000 and ₦500,000 yearly, depending on how many employees they have. Small businesses lose between ₦460,000 and ₦2.94 million monthly, to traffic congestion. Medium-sized businesses lose between ₦3 million to ₦14.94 million monthly. This is how much we are losing. We then calculated the revenue loss to the state. Per year, this state loses about ₦4 trillion to traffic. Putting a financial and economic cost to this has helped a great deal.

It is also interesting some other things that we found. The demand for trips in Lagos per day is about 20 million. How many BRT buses in Lagos can take those people from one place to another? It’s impossible. We have to get people off danfos, off private vehicles, into mass transit trains and ferries.

What we’re trying to do is to use research to bring the problem to a manageable proportion, to see the extent of the problem, and then also provide some solutions. We want to provide that research and then champion conversations. Let Lagosians start talking about how much they are losing and put pressure on the government to get something done sooner than later. We’re not in this transport thing for just one year. Minimum, 10 years, we’ll be talking about traffic congestion in Lagos, so that in 2030, we’ll be able to look back and say this is what has happened since we started talking about transport. The citizens and businesses have to keep pressurizing the government. By the way, it’s not a Lagos problem only although we studied Lagos.

I also interviewed Peter Obi, former governor of Anambra state some years ago, for another project. He said to me that one of the things he wanted to achieve was poverty reduction. They then did some research to determine which local governments are poorest in Anambra state and why. They did poverty mapping and found that these people produced yams and there was no road that connected these people to markets where they can sell the yams, so they were selling the yams for close to nothing. So, the first roads that Peter Obi’s governments built was to connect that community to markets. So, connectivity is critical. We’re not saying just tar all the roads. There has to be a purpose. Connectivity is not a problem of Lagos alone, but everybody knows that it is typical of Lagos.

I want to get clarification on two things. You have mentioned that 20 million trips are requested in Lagos daily. What do you mean by 20 million trips are requested and what does the data actually mean by that?

We didn’t research that but that’s data that is available from Lagos Bureau of Statistics. It does not tell us the number of people that made those trips, or whether it is a to-and-fro trip. The fact is that we need 20 million trips in Lagos daily and we expect that this number is going to increase.

When you say an individual loses ₦79,000 annually and one with a vehicle loses ₦133,000 yearly, what exactly constitutes those losses?

We had researchers who went to different parts of Lagos and then talked to people and completed questionnaires. We asked vehicle owners how much extra they spend on fuel due to traffic congestion in Lagos. That’s how we came up with approximately ₦133,000. For the individual, it’s the extra transport cost, because they take public transport due to traffic congestion. For businesses, it’s different. While for individuals, it’s the financial cost, for businesses, it’s the economic cost.

How did you come about the 4 trillion naira that Lagos loses?

For the 4 trillion naira, first we multiplied. Since we lose 2.21 hours to traffic, we found out how many employees we have in Lagos, which is 6.39 million. We calculated the hourly wage rate. What is the hourly wage rate for people (micro, medium and small sized businesses)? We used the experience level of our sample. We had a comparison, which is the income pyramid in Nigeria. If we use the income pyramid, we would be getting about ₦850 as the hourly wage rate.

For our study, we found the hourly rate to be ₦1,080.51. That’s higher than the hourly wage rate, but given that this is Lagos, we thought it was reasonable that the average for Nigeria is ₦850 and ours is ₦1,100. So, the total loss would be the number of hours lost multiplied by the number of people working and the hourly wage rate.

From your findings, what possible solutions have been recommended to the private and public sector to manage these losses that come from connectivity?

I would say that the first recommendation is that we need to get the government accountable. This problem can be solved. For businesses, I think one thing that they have to consider, which takes us to the research we did on working from home, is to consider working from home.

I have been working from home for more than a year now and I have employed two researchers now. I have never met them. I interviewed them online and they have been working for me beautifully. Do people all have to go to work? Businesses have to look at that. It is incredible that Lagos state government, for example, has asked some grade levels to work from home. But what are they doing at home? A lot of their work is not automated. It’s not online. So, these people are collecting salaries but what is their contribution?

If somebody can stay without work for six months, is that person’s service required? Encourage people to work remotely. That’s the first thing. They could also consider reassignments. Let’s look at a bank that has so many branches. Why must somebody come from Ikeja to work in a VI office? If it’s not necessary, let this person work in Ikeja and the person who lives close to VI work in VI. It may not always be possible but where possible, reassign.

One insurance company I know moved their headquarters from VI to Ikorodu road and productivity went up. Most people lived on the mainland. Only the MD lived in Ikoyi. Of course, they still have an office in VI, but they were already thinking about getting people to work closer to their homes because they were not productive. It’s not just that they love the people, they also love the business, because if the person is more productive, it helps the business. It’s a productivity game.

What has been done to ensure that these reports don’t just gather dust on the shelf? What are you doing as an institute to ensure that the relevant policymakers and stakeholders turn these reports and findings into action?

The first thing we do is to research the environment. The second is to champion conversations. Championing conversations means disseminating our research findings. Without that, the research does not have any impact and we would not be achieving our aim as Danne Institute for Research. For this report, one of the first things we did was to have a webinar. We invited people from the private and public sector. The Lagos state governor was represented by the commissioner for transport. On the panel, we had CIPM president and we also had the president of Lagos Chamber of Commerce and Industry. Beyond that, we have been in the papers, social media. We have promoted our resources on social media because we want to champion conversations. The reason is because Danne Institute will not be able to effect the change. It is the citizens and businesses that have to hold the government accountable. We can’t do it alone but the citizens will not be able to do it if they don’t have the information.

As we make progress in Lagos, many of the other states, from the research we are doing, seem to be looking at Lagos a lot and try to pick one or two things from Lagos. The idea is not to transform Lagos but to contribute to the transformation of Nigeria.

Whatsapp mobile

Get real time updates directly on you device, subscribe now.