The relevance of the transport industry to sustainable economic development of any nation cannot be overstated. There is no denying the fact that transportation aids in facilitating the movement of goods and people, linking the different points of activities, thereby promoting both nation and regional integration to drive development. The Nigerian Transportation Industry (the “Industry” or “Sector”) is a critical sector in implementing trade facilitation, and enhancing regional integration through the African Continental Free Trade Area (AfCFTA). This newsletter provides an appraisal on the position of the industry viz-a-viz the AfCFTA.
THE NIGERIAN TRANSPORTATION INDUSTRY
Nigeria’s transport network has expanded in recent years to accommodate a growing population. The transport and storage sector was valued at N2.6trn ($6.9bn) in current basic prices in 2020, down from N3trn ($8bn) in 2019, according to the National Bureau of Statistics (NBS). This was reflected in a lower contribution to GDP, at 1.8% in the fourth quarter of 2020, down from 2.1% during the same period the previous year but higher than the 0.8% recorded in the third quarter of 2020. One of the most significant challenges facing the sector is meeting the needs of both large coastal cities and rural inland communities in order to fully unlock the country’s economic potential. This is especially the case with mining and agriculture, both of which are expected to benefit from two large-scale projects: the Lekki Port in Lagos and the Kano-Maradi rail line in the north of the country.
Transport activity in Nigeria is overseen by the Federal Ministry of Transport, which includes dedicated bodies such as the Nigerian Airspace Management Agency, Nigerian Ports Authority (NPA), Nigerian Railway Corporation (NRC), Nigerian Civil Aviation Authority, Nigerian Shippers’ Council and the Federal Airports Authority of Nigeria (FAAN). Development plans for the sector are incorporated into the Nigeria Integrated Infrastructure Master Plan (NIIMP), a 30-year roadmap established in 2014. The NIIMP covers all segments and aims to enhance multi-modal networks, as well as improve institutional, legal and policy directives. It laid out specific objectives to be met in short-, medium- and long-term intervals, including airport upgrades, highway refurbishment, and the expansion and rehabilitation of railway lines.
Nigeria’s roads and highways form the backbone of the country’s transport network, as these arteries handle 90% of all passenger and freight traffic, according to the NIIMP. As it is the largest segment – contributing N2.4trn ($6.4bn) to GDP in 2020, down from N2.7trn ($7.2bn) the year before – the government is focused on both servicing existing roads – many of which are in poor condition or unpaved – and constructing new ones. Towards this end, the 2021 budget earmarked N168bn ($451.2m) for the construction, rehabilitation and dualisation of roads. The package also set aside N54bn ($144.2m) for building and renovating bridges, and N4bn ($10.7m) specifically for the rehabilitation of a mainland bridge in Lagos.
Improving rail links is also central to the NIIMP, with the master plan noting at the time that the network “needs to be almost completely rehabilitated or rebuilt”. The longer-term vision is to expand routes to a create multi-modal system linked with facilities such as ports and airports. The prioritisation of rail development has continued, with the 2021 budget earmarking N71.2bn ($3.2m) for the construction and N11.6bn ($31m) for the rehabilitation of railways.
The Lagos-Calabar rail line is envisioned to link all six of Nigeria’s seaports: Apapa Port and Tin Can Island Port in Lagos State; Onne Port and Port Harcourt in Rivers State; Warri Port in Delta State; and Calabar Port in Cross River State. According to the most recent data published by the NPA, inbound tonnage across all ports expanded from around 9m tonnes in 2016 to 10.4m in 2017 and 10.9m in 2018, with the first quarter of 2019 recording 2.8m tonnes. Outbound tonnage over the same period also rose from 2.1m in 2016 to 2.3m in 2017 and 2.4m in 2018. Nigerian ports shipped out some 487,000 tonnes in the first three months of 2019.
The air transport industry was particularly affected by the pandemic, as many countries closed their borders at various points throughout 2020 to reduce the spread of the virus. Nigeria’s aviation segment entered the pandemic in a relatively strong position, according to FAAN. Arrivals to Nigeria’s 30-some airports totalled 8.8m in 2019, while 8.7m departures were logged. This represented a 7.4% increase from the 16.4m total passenger movements recorded in 2018. Meanwhile, cargo traffic grew in 2019 – from 164.9m kg in 2018 kg to 174.9m kg – while mail by air rose from 47.3m kg to 55.6m kg. The domestic terminals of airports in Abuja and Lagos accounted for 25% of passenger movements and 30% of aircraft movements each in 2019, while Murtala Muhammed International Airport (MMIA) in Lagos handled 81% of all cargo.
Transport activity in Nigeria is overseen by the Federal Ministry of Transport, which includes dedicated bodies such as the Nigerian Airspace Management Agency, Nigerian Ports Authority (NPA), Nigerian Railway Corporation (NRC), Nigerian Civil Aviation Authority, Nigerian Shippers’ Council and the Federal Airports Authority of Nigeria (FAAN). Development plans for the sector are incorporated into the Nigeria Integrated Infrastructure Master Plan (NIIMP), a 30-year roadmap established in 2014. The NIIMP covers all segments and aims to enhance multi-modal networks, as well as improve institutional, legal and policy directives. It laid out specific objectives to be met in short-, medium- and long-term intervals, including airport upgrades, highway refurbishment, and the expansion and rehabilitation of railway lines.
Nigeria’s roads and highways form the backbone of the country’s transport network, as these arteries handle 90% of all passenger and freight traffic, according to the NIIMP. As it is the largest segment – contributing N2.4trn ($6.4bn) to GDP in 2020, down from N2.7trn ($7.2bn) the year before – the government is focused on both servicing existing roads – many of which are in poor condition or unpaved – and constructing new ones. Towards this end, the 2021 budget earmarked N168bn ($451.2m) for the construction, rehabilitation and dualisation of roads. The package also set aside N54bn ($144.2m) for building and renovating bridges, and N4bn ($10.7m) specifically for the rehabilitation of a mainland bridge in Lagos.
Improving rail links is also central to the NIIMP, with the master plan noting at the time that the network “needs to be almost completely rehabilitated or rebuilt”. The longer-term vision is to expand routes to a create multi-modal system linked with facilities such as ports and airports. The prioritisation of rail development has continued, with the 2021 budget earmarking N71.2bn ($3.2m) for the construction and N11.6bn ($31m) for the rehabilitation of railways.
The Lagos-Calabar rail line is envisioned to link all six of Nigeria’s seaports: Apapa Port and Tin Can Island Port in Lagos State; Onne Port and Port Harcourt in Rivers State; Warri Port in Delta State; and Calabar Port in Cross River State. According to the most recent data published by the NPA, inbound tonnage across all ports expanded from around 9m tonnes in 2016 to 10.4m in 2017 and 10.9m in 2018, with the first quarter of 2019 recording 2.8m tonnes. Outbound tonnage over the same period also rose from 2.1m in 2016 to 2.3m in 2017 and 2.4m in 2018. Nigerian ports shipped out some 487,000 tonnes in the first three months of 2019.
The air transport industry was particularly affected by the pandemic, as many countries closed their borders at various points throughout 2020 to reduce the spread of the virus. Nigeria’s aviation segment entered the pandemic in a relatively strong position, according to FAAN. Arrivals to Nigeria’s 30-some airports totalled 8.8m in 2019, while 8.7m departures were logged. This represented a 7.4% increase from the 16.4m total passenger movements recorded in 2018. Meanwhile, cargo traffic grew in 2019 – from 164.9m kg in 2018 kg to 174.9m kg – while mail by air rose from 47.3m kg to 55.6m kg. The domestic terminals of airports in Abuja and Lagos accounted for 25% of passenger movements and 30% of aircraft movements each in 2019, while Murtala Muhammed International Airport (MMIA) in Lagos handled 81% of all cargo.
AFCFTA AND THE NIGERIAN TRANSPORTATION INDUSTRY.
According to the former Minister of Transportation, Rotimi Amaechi, “transportation and AfCFTA are like Siamese twins as they are intricately linked. Transportation provides the vehicle through which the major objective of AfCFTA thrives; that is, creating a single continental market for goods and services with free movement of businesses, persons and investments, promoting regional and continental integration, market access and resources reallocation across sectors and countries.”
The transportation sector is the most critical in implementing trade facilitation, enhancing regional integration and key to every other AfCFTA protocol. Hence, the Nigerian government has embarked on huge transport infrastructure investment across the country to ensure efficiency in the transportation sector. These interventions include massive construction of roads, rail lines with access roads, inland water ports, seaports, new terminals in existing ports, dry ports with access to rail and roads, inland container depots/freights all geared towards building a modern and efficient transportation system that guarantees sustainable socio-economic development of Nigeria, regional integration and trade liberalization.
While infrastructure is improving on within the country, without the capacity to manufacture for export and distribution in the larger African AfCFTA market, Nigeria’s participation in the AfCFTA will be grossly undermined. While this is worrisome, road transportation which handles about 90 percent of mobility in Nigeria is hardly regulated and is plagued by predominantly damaged roads, insecurity, and extortion of vehicles conveying goods at checkpoints. Particularly also, due to poor regulation, a huge percentage of vehicles undertaking cross-border haulage does not meet required standards, which may be a challenge if transportation regulation among States are to be strictly enforced under the AfCFTA.
The inland waterways are yet undeveloped and poorly regulated which leads to mishaps, whereas the maritime ports are fraught with unnecessary delays in processing and movement of goods, and resultant economic losses and hindrance to exportation. Movement of especially agricultural and perishable goods by air is almost non-existent in Nigeria due to poor ground transportation and lack of coordination of the multi-modal transportation system and cargo value-chains. However, due to their high turn-over, mostly imported items of clothing and high-value goods are now increasingly moved by air within Nigeria. This is a major setback for Nigeria’s meaningful participation in the AfCFTA.
The present inability to use technology to connect shippers to goods also leads to high movement costs and makes logistics in Africa more expensive than the rest of the world. Another challenge is the congestion at ports and long waiting times to process shipments upon arrival. In Nigeria, for example, port congestion caused by old infrastructure, absent rail transport, amongst many other issues has increased loading and offloading fees, with people paying up to $4000 to offload their containers, in one of Africa’s busiest ports – the Apapa port in Lagos.
The transportation sector is the most critical in implementing trade facilitation, enhancing regional integration and key to every other AfCFTA protocol. Hence, the Nigerian government has embarked on huge transport infrastructure investment across the country to ensure efficiency in the transportation sector. These interventions include massive construction of roads, rail lines with access roads, inland water ports, seaports, new terminals in existing ports, dry ports with access to rail and roads, inland container depots/freights all geared towards building a modern and efficient transportation system that guarantees sustainable socio-economic development of Nigeria, regional integration and trade liberalization.
While infrastructure is improving on within the country, without the capacity to manufacture for export and distribution in the larger African AfCFTA market, Nigeria’s participation in the AfCFTA will be grossly undermined. While this is worrisome, road transportation which handles about 90 percent of mobility in Nigeria is hardly regulated and is plagued by predominantly damaged roads, insecurity, and extortion of vehicles conveying goods at checkpoints. Particularly also, due to poor regulation, a huge percentage of vehicles undertaking cross-border haulage does not meet required standards, which may be a challenge if transportation regulation among States are to be strictly enforced under the AfCFTA.
The inland waterways are yet undeveloped and poorly regulated which leads to mishaps, whereas the maritime ports are fraught with unnecessary delays in processing and movement of goods, and resultant economic losses and hindrance to exportation. Movement of especially agricultural and perishable goods by air is almost non-existent in Nigeria due to poor ground transportation and lack of coordination of the multi-modal transportation system and cargo value-chains. However, due to their high turn-over, mostly imported items of clothing and high-value goods are now increasingly moved by air within Nigeria. This is a major setback for Nigeria’s meaningful participation in the AfCFTA.
The present inability to use technology to connect shippers to goods also leads to high movement costs and makes logistics in Africa more expensive than the rest of the world. Another challenge is the congestion at ports and long waiting times to process shipments upon arrival. In Nigeria, for example, port congestion caused by old infrastructure, absent rail transport, amongst many other issues has increased loading and offloading fees, with people paying up to $4000 to offload their containers, in one of Africa’s busiest ports – the Apapa port in Lagos.
CONCLUSION
An efficient transportation sector is instrumental to the realization of the goals of the AfCFTA and for Nigeria to fully enjoy the benefits of the AfCFTA, it must strengthen its transport and logistics sector for efficient continental services. With a functional transportation industry, Nigeria stands the best opportunity to make a great success of the AfCFTA for itself and its partners at large.
References
1. “Multi-modal transport links to boost Nigeria’s competitiveness”. Oxford Business Group, accessed 6th June 2022.
2. “Poor transport & logistics infra continues to impact Nigeria’s performance”. Logistics Update Africa, accessed 4th June 2022.
