Thursday, 7th December 2023

Nigerian railways: Privatization and Malawi’s example

By Jerome-Mario Utomi
08 November 2019   |   3:23 am
There are books to teach you how to build a house, how to repair engines, how to cook a meal. But I have not seen a book on how to build a nation. All that is required is finding out who else had met the problem you face

There are books to teach you how to build a house, how to repair engines, how to cook a meal. But I have not seen a book on how to build a nation. All that is required is finding out who else had met the problem you face, how they had tackled it, and how successful they had been’-Lee Kuan Yew, Former Prime Minister Of Singapore.

Looking at the list of the recently appointed ministers by President Muhammadu Buhari, it will not be considered a wrong assertion or hasty generalization to conclude that the nation Nigeria has successfully assembled men/women and placed them in positions of authority as ministers and top public officers to administer the system and be responsive to the needs of the people via prompt infrastructural deployments, supply of stable electricity, provision of adequate and affordable houses, good road networks, effective security and efficient transportation system. What seems to be missing is the willingness of these appointed officials to find out who else had met the problem we face, how they had tackled it, and how successful they had been.

Specifically, the reality of infrastructural gaps, deficit and decay in the country- particularly in the transport sector, and the inability of the heads of these ministries to find out who else had met the problem we face, how they had tackled it, renders it ineffective as Mr President’s recent promise that the minister will be responsible for the development and implementation of policies, programmes and projects in their various ministries, departments and agencies in line with the government priorities; and  also ensure that agencies under their ministries are effective, efficient and accountable in their responsibilities,.

Talk about the state of roads and railways in the country. For more than three decades, the nation has serially neglected as well as view the road and rail transport sector in a unitary form- forgetting that each has its own laws, strategies both operational dynamics and matrix. And we have seen lately how the majority of the Federal roads currently cry for attention, and instead of the government acting in this direction, they are preoccupied with how to build toll points on roads currently not motorable.

Conversely, rail systems in Nigeria are finding it difficult to escape from the neglect visited on it by our ‘national political trains’ through vicious circles of under investments, low profitability, and capital scarcity-weakened rail operation in the country. The strategic implication of the above is that while the current effort by the present administration to build world-class rail facilities with huge capital investments from China is being acknowledged, our ‘national philosophy’ that impeded the development of the sector is still alive and active.

As subsequent paragraphs will reveal, Nigeria’s rail transport system would certainly not be where it is today, if the government had all these years, tried to develop it’s operations-technologically, financially or contemplated productive collaboration with the private sectors. However, even if the above factors are presently considered, it may offer a considerably reduced risk, but  the potential rewards will also, or could be, relatively small/low unless government places as a top priority; integration of economic/ agriculturally advantaged towns/cities into the plan  in such a way that  distribution of food products and other economic products from advantaged to less advantaged areas  will be seamless – as evidence has shown that such towns/cities referred to as disadvantaged often always hold the domestic trade and market prices of such commodities

This is not without precedence. Take Malawi as an illustration, the country going by reports, is a small landlocked country in the south of Africa, measuring approximately 800km from north to south and 150km from east to west in area size around 40percent, bordering in the North West with Zambia, in the North East with Tanzania and in the south with Mozambique. Its railways were a government corporation that ran the national rail network of Malawi, Africa, until privatization in 1999.

With effect from 1 December 1999, the Central East Africa Railways consortium led by Raukroad Development Corporation won the right to operate the network. This was the first rail privatization in Africa which did not involve a parastatal operator. This feat achieved caught global attention and loaded with lessons to learn.

To support this assertion, Wouter Zante, Associate Professor at the Vrije University and Fellow at the Tinbergen Institute, both Amsterdam, Netherland, while writing on the topic; trains, trade, and transaction costs; how does domestic trade by rail affect market prices of Malawi agricultural commodities? Noted that; privatization of railways brought resource-saving, guaranteed food security, improve domestic trade and market prices of Malawi’s agricultural commodities.

Comparatively, he pointed out that while high transport cost makes a trade between markets unprofitable and forces farmers into subsistence farming, low transport costs on its part, increase trade, lead to lower prices and lower price dispersion, and offer farmers incentives to commercialize. In the longer run, low transport costs may also increase supply response, improve allocative efficiency, accelerate technology adoption and innovation and enhance economic- growth.
Jerome-Mario Wrote from Lagos.

Submitting that Malawi’s experience has shown that transportation by rail is low-cost and contributes to lower food prices through its impact on the operation of the market, increase the welfare of households and improves food security while leading to a reduction of overall transport prices through railroad competition.

Clearly, privatization of the rail operation in my views has truly brought resource-saving to Malawi. And Nigerians know about these facts. But the questions are; how can we as a nation build on this awareness? And domesticate the lessons learned from the experience? As a nation, how can we achieve a fast-tracked development in the sector when the Nigeria Railway Corporation (NRC), like other government agencies, is reputed for ineptitude and inefficiency?

Who will make the Federal Government understand that operating a passenger train from Abuja to Kaduna, should not be the critical role of the railway in a country where the agricultural produce is landlocked in a particular geographical location as a result of ineffective distribution mechanism.

For us to achieve the target objective in the rail sector, the government must start thinking of privatization and a rail system that will have a connection between major economic towns/cities as the focus.

Achieving this objective will help the poor village farmers in Benue/Kano and other remote areas earn more money, contributes to lower food prices in Lagos and other cities through the impact on the operation of the market, increase the welfare of household both in Kano, Benue, Lagos and others while it improves food security in the country, reduce stress/pressure daily mounted on Nigerian roads by articulated/haulage vehicles and drastically reduce road accidents on our major highways.

Achieving this will again elicit the urgent need for the government to openly admit and adopt both structural and managerial changes that impose more leadership discipline than conventional, and creating government institutions that are capable of making successful decisions built on a higher quality of information which needs to be granted.

Jerome-Mario Wrote from Lagos.