Transport sector’s tales of woe, renewed hope for 2020
An efficient transportation system and infrastructure is one of the most fundamental structures for any nation’s economic progress. In this report, BENJAMIN ALADE x-rays 2019 in retrospect and stakeholders’ expectations in the New Year.
It is not a hidden fact that Nigeria has great and diverse transport potentials yet to be fully tapped and explored.
Although, Nigeria’s transport sector has its own low points, it can still succeed through better strategy, restructuring, hiring the services of experienced technocrats with background in transportation to help manage the sector effectively, going by the postulations of key stakeholders in the industry.
Domestic transportation is a key driver for economic growth, because it is a means of connecting urban and rural areas and to gain access to goods, services and activities needed for livelihoods and well-being of the citizenry through a variety of transportation modes such as land, maritime, air, rail, and pipeline.
Poor infrastructural systems is inimical to economic growth due to its effects on distribution of goods and services, hence, urgent steps must be taken to address the challenges affecting the growth of the sector.
The nation’s automobile industry has been reeling under the pangs of harsh operating environment, just as the bottom-line of the sector’s listed equities, since 2015, remained subdued, with gloomy outlook, due to policy challenges.
In view of this, the Federal Government has continued to initiate policies that are expected to turn around the fortunes of the industry for the better, while infrastructure issues are still a clog in wheel of such policies, coupled with a tough operating environment.
Concerned about poor implementation of some of the policies, particularly the National Automotive Industry Development Plan (NAIDP), stakeholders believed that Federal Government’s inaction towards the automotive policy is slowing down the desired potentials inherent in the sector.
Part of the major policies that shaped the automobile industry last year was the closure of the land borders to avert the smuggling of goods, particularly used vehicles that has ultimately hurt the domestic automobile market.
These borders are major corridors for second-hand cars coming into Nigeria, even though there is a ban on importation of cars that are more than 15 years old.
A report quoted a Luxembourg-based shipping company, BIM e-solutions, as saying that an average of 10,000 cars arrive at the Cotonou port from Europe monthly.
The sustained closure of land borders in Nigeria may have pushed up the sales of brand new vehicles in Nigeria with automobile companies reportedly hitting 11,000 units in 2019 alone.
Auto dealerships struggled in 2018 to hit the 10,000-mark following the dwindling purchasing power of the people, as they could not afford the purchase of brand new vehicles.
But year 2019 was far better even though experts believe Nigeria, with a population of approximately 200m people, still has a long way to go in improving sales of brand new vehicles.
General Manager of Stallion Motors in Nigeria, Arpita Roy Luthra, in a chat with The Guardian, said the initiative has boosted new vehicle sales to 11,000 while being bullish about a better 2020.
She said: “I foresee an increase in sales in the new year. In fact, we are very happy with the kind of direction the government is taking. One is the closure of land borders, so that has boosted our businesses.
Managing Director/Chief Executive Officer, Cars45, an automotive trading platform, Etop Ikpe also confirmed that land border closure has been a blessing to the auto companies.
He however said Nigeria needs to do more in making financing available for vehicle purchase, adding, “One key thing in this industry is financing. The NADDC (National Automotive Design and Development Council) is working on this.”
Dean, School of Transport, Lagos State University, Prof. Samuel Odewumi, said the sector has suffered inconsistency in policy frameworks, which is slowing down the potentials of the sector.
“Which arm of government has been directed to patronize the local manufacturers? What are we doing to encourage the industry,” he queried.
Nigeria has 108,000 km surfaced roads as at 1990, according to historical data. It is home to the largest road network in West Africa and second largest, south of the Sahara. Since independence, the country has being battling dilapidated and decaying road infrastructure.
The Lagos-Ibadan Expressway, for instance remains jaded, with the contractor announcing a new date of 2022 as completion date for the Repair works on the road. The contractor opened only on December 1, a portion of the road (about 400 metres) from Kara Bridge to Berger Bus Stop, which was closed for four months for repair.
Government approved about N134 billion in 2018 to accommodate more features on some sections of this critical arterial road. The repairs started in 2006.
At the last count, over 150 highways, 66 interstate roads and 45 bridges scattered across 34 states, are in various stages of completion.
The Minister of Works and Housing, Babatunde Fashola in November had caused a stir, at the budget defence when he said the 2020 allocation cannot even pay outstanding debts owed contractors.
Unless something drastic is done, 2020 may record worsening road profile as capacity to rehabilitate them has dropped abysmally. He canvassed tolling. Same may commence in the New Year.
Southeast and South-South remained zones with worst road profile in the country according to statistics released by the Federal Ministry of Works and Housing. The story has hardly changed as the year winds down.
The minister believes the administration is doing so much with much less, underscoring the regime’s penchant for prudence in the public sector. But Nigerians seem not to see yet the gains of such frugal spends on critical roads.
The Lagos-Kano and Lagos-Ibadan railway lines have remained in the pipeline year-in year-out. The Lagos-Ibadan axis was advertised before the election. Since then, there has been only one test-run that generated only heat without fire. The Eastern rail line from Port Harcourt to the north appears not to be a pipe dream, yet it is a critical route through which goods and people can be transported.
While effort is being made to get the other rail lines on stream, there have been reports that the operating Abuja-Kaduna rail line, which is not a modern system anyway has been running at a loss.
The Nigeria Railway Corporation (NRC) claims that the Abuja-Kaduna railway transport service generates over 100 million naira monthly, which is spent largely on diesel, security and on cleaners, while the Federal Government pays for track maintenance, staff salaries and others.
The $1.7 billion standard gauge project, may however be delivered second quarter 2020.
The Minister of Transportation Rotimi Amaechi, who has been driving the project, awarded to China Civil Engineering Construction Corporation (CCECC), said the government envisages high subscription of the train service. The Ibadan-Kano Lot of the project would begin by May 2020.
Amaechi, said all the state capitals would be linked by rail before 2023. He said work will begin on the Lagos-Calabar coastal rail line, once government is able to source funds. The construction of speed rail line on the eastern flank, from Port Harcourt to Enugu will also not be too long in coming.
Laws and policies
Perhaps Amaechi’s greatest achievement, which would beat his strides in the railway transformation, would be the berthing of a transportation policy for the country. Experts and industry watchers have stressed the need for the nation to have a governing policy driving the sector.
Rather than give it the requisite priority, successive administrations have paid lip service to the desire of operators to see the nation develop a policy to guide the government-to- government relationship as well as policies to regulate the operators, operations and other gamut of transportation in the country.
Governments since 1960 have set up various committees and panels, which have come up with various recommendations on the framework of a transportation policy for Nigeria.
However, rather than such materialising into a position paper, and a policy, such recommendations usually ended in white papers that were never implemented. The result has been a chaotic transportation system that is at best ad-hoc, with various states, which ought to domesticate such policies working at cross purposes as none, until the outgoing year, when Lagos received a draft policy from a committee set up in last year to help it draft a transportation policy to guide all gamut of the industry.
Beyond the transportation policy, which forms the super structure, upon which every investment of the government – whether in the past, present or in the future – devolves , stakeholders have also restated the need for the government to amend some laws that has militated against the sector.
One such law is the Nigerian Railway Act 1955, which is yet to be amended since it was presented to the eighth National Assembly.
Other laws, which the lawmakers failed to ensure their passage, are the National Transportation Authority bill, The Nigeria Ports Authority Amendment bill, The Nigeria Shippers Council Amendment bill, among others.
Expectations of stakeholders
Chief Executive Officer, Kobo360, Obi Ozor, said with the African Continental Free Trade Area (AfCFTA) on the horizon, Nigeria’s transports sector needs a major upgrade if it wants to take full advantage of the agreement.
Ozor said from a logistics standpoint, rail and road connections are still a big pain point for businesses whether that is due to time, cost or even the safety of moving goods – and with increased trade, these inefficiencies will only become even more glaring.
“Moving into the New Year, it’s critical Minister Amaechi addresses these issues directly and I think creating a national transportation policy that incorporates the benefits of technology will play a vital role in this.
“We are at a point whereby we’re seeing its benefits in areas like finance with unbanked customers and healthcare with patients in remote locations. There are similar opportunities in transportation and I think the private sector can also play a key role in helping the government exploit them,” he said.
On the road and the rail, Prof Odewumi, said the federal government is making the biggest expenditure in the budget of the ministry of works and transport. “The details are always rehearsed by the minister. The germane issues are the execution and funding modalities.
“We are relying predominantly on loans and external expertise for the constructions. We are yet to develop indigenous capacities that will ensure sustainability. From our experience with Kaduna-Abuja rail that is fully subscribed yet still being subsidised.
“How are we expected to repay the loan? We have to a lot more thinking on how to attract private investment into the sector but how to ensure repayment such that we do not get into debt trap, “he said.
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