In recent times, when the conversation around Nigerian transportation pops up, the railway system seems to have a front row seat in the conversation. This could be due to the current government’s intentions in this direction. The questions vary from all participants in the discussion; its potential, revenue base, ease of boarding, among others, but the standout is the security of passengers.
Nigerians’ major means of transportation is by road due to its affordability across all income classes. Recently, the government sought to expand options for transportation that could accommodate all income classes. This time, it set its eyes on the railway system, which was also penned to be a source of revenue for the government.
The Nigerian Railway Corporation (NRC) generated N2.41 billion in revenue from
passengers in 2019, the National Bureau of Statistics (NBS) stated in a report. According to the official statistics, passenger income was the most important source of revenue in 2019.
For the same year, revenue from goods or cargo was N362.88 million, while revenue from other income receipts was N64.58 million, totalling N2.84 billion for the year.
The revenue generated from these three sectors; passengers, goods or cargo, and other
income receipts, declined in 2020 as a result of the pandemic’s suspension of many major operations. The report further stated that a total of N1.75 billion in passenger revenue was earned, which when put against the previous year, was a 28 percent decline.
Meanwhile, revenue from goods or cargos fell by 92 percent to N5.19 million, while total
revenue from other income receipts fell by 22 percent to N281.35 million. Rail transportation brought in N2.03 billion at the conclusion of the year, with revenue from passengers contributing the highest income.
Passenger revenue more than quadrupled in 2021 to N5.70 billion, while goods or cargo
revenue increased to N317.57 million. Total revenue for the year was a massive N6.08
billion, with revenue from other income receipts amounting to N66.80 million. Again,
revenue from passengers contributed to the massive increase in revenue.
Even though the revenue generated is not yet comparable to that of major nations such as the United States and Canada, the increase in passenger revenue indicates Nigeria is on its way to obtaining another source of income that can further improve the nation’s state and increase GDP, which grew by only 3.11 percent in the first quarter of 2022.
However, the main issue is the country’s insecurity, which has affected several sectors that may see increased growth. In March 2022, over 900 people were on board an Abuja-Kaduna train when it was attacked along the route. While some were fortunate enough to escape, the majority were killed on the spot or captured. This incident created fear and anxiety in other individuals who may have been eager to try out railway transportation, and it also demonstrates that rail transportation, which was formerly seen to be a safe mode of transit, is now unsafe. Earlier, in October 2021, the NRC banned operations on the same route for the first time for the same reason, and this recent attack occurred in less than five months.
The usage of railroads is beneficial not only for people commuting but also for moving goods and cargoes and enhancing faster distribution. Additionally, it reduces traffic because the common modes of transportation, including bicycles, automobiles, buses, trucks, and lorries, use fewer roads. Also, because an additional railway carriage can always be added to give more cargo room, rail transportation scores better in cargo hold size when compared to the moving capacity of bulk commodities by road vehicles in terms of safety and speed.
Some manufacturing companies, such as Lafarge, which employ rail transit to move some of their goods, may be obliged to find alternative modes of transportation in order to avoid substantial revenue losses from destroyed goods as a result of any attack.
NBS reported that in 2019, there were 200,113 tonnes worth of goods/cargos sent through rail transportation. However, it fell by 56 percent to 87,440 in 2020. Even though the volume of goods and cargo increased year on year from 2020 to 2021, it was still 16 percent less than in 2019.
Insecurity has now expanded to rail transportation, and this new development suggests that revenue growth from railway operations, particularly passenger revenue, will dip by year’s end in 2022.