Poor transport & logistics infra continues to impact Nigeria's performance
Will transportation hamper Nigeria's performance, as African Continental Free Trade Area (AfCFTA) takes root?
Nigeria is ill-prepared for the African Continental Free Trade Area (AfCFTA) launched in early 2021 on the continent. Nigeria is Africa's largest economy with a Gross Domestic Product of $480 billion, and home to the biggest black population in the world made up of over 200 million people.
Nigeria's lack of preparedness hinges on the country's poor infrastructure and severely handicapped manufacturing and productive sector, which is worsened by over-dependence on importation. With Nigeria's electricity supply at about 6,000 megawatts, the productive sector can barely survive.
In fact, the United Nations Industrial Development Organization (UNIDO) corroborated that lack of infrastructure like power makes the manufacturing of goods very costly in Nigeria. This also makes imported goods far less expensive for Nigeria's large impoverished population. About 40 percent or almost 83 million people of Nigeria's population live below the poverty line of 137,430 naira ($381.75) per year, as shown by the "2019 Poverty and Inequality in Nigeria" report Nigeria's National Bureau of Statistics (NBS).
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.
Moreover, with bad transportation infrastructure, tonnes of local agricultural and other primary produce, as well as imported goods, perish in frequent road mishaps leading to huge economic losses to the country. The Corps Marshal of Nigeria's Federal Road Safety Corps (FRSC), Boboye Oyeyemi, disclosed that Nigeria lost N39 billion to trailer and tanker crashes in 2018 alone, involving about 650 articulated vehicles, with over 90 percent of these vehicles having been used for over 30 years. He said that 900 crashes involving trailers and trucks were recorded in 2019, while 9,698 accidents were recorded in 2019 causing 4,737 deaths.
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. The Managing Director of the National Inland Waterways Authority (NIWA), Dr. George Moghalu, said that only about 3000km of Nigeria's over 10,000km of inland waterways is navigable.
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.
"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."
His Excellency, Pof. Yemi Osinbajo, the vice president of Nigeria, recently charged the Chartered Institute of Transport Administration of Nigeria (CIOTA) to ensure the standardization of transportation training and proper regulation of transportation activities in Nigeria as a key step to address the dire transportation challenges in Nigeria. CIOTA held the 3rd National transportation summit in Abuja recently to engender improved policy and regulation transportation in Nigeria. CIOTA is saddled with the responsibility of developing standardized training for transportation industry operators and regulators to bring to global standard all five modes of transportation in Nigeria including air, road, rail, pipeline, and water transportation.
The president & chairman of the Governing Council of CIOTA, Dr. Bashir Yusuf Jamoh, who is also the Director General of the Nigerian Maritime Administration & Safety Agency (NIMASA), said effective regulation is essential for the development of Nigeria's transportation sectors for economic development. He noted that efforts are on-going to review and improve regulation and standards in the maritime sector.
With CIOTA now coordinating and championing the development and improvement of regulation in all transportation modes, Nigeria could reposition its transportation system vital for Nigeria's effective participation in the AfCFTA. Also, the Director General of the National Inland Waterways Authority (NIWA), Dr. George Moghalu, said he is doing everything to enhance waterways in Nigeria.
The 3rd National Transportation Summit called for effective technical and economic regulation in all transportation sectors. Policy and regulation is, however, more urgent in road, rail, pipeline and inland waterways. Maritime and aviation sectors currently have advanced regulation and policy frameworks derived from their involvement in international transportation conventions, under the International Maritime Organization (IMO) and International Civil Aviation Organization (ICAO), respectively.
Currently, the Nigerian Civil Aviation Authority (NCAA) has performed creditably well in technical regulation of Nigeria's aviation industry leading to nearly 10 years of zero accident among the airlines. However, the director general of the NCAA, Capt. Musa Nuhu, said the NCAA needs to improve on its economic regulation of the industry to promote fair competition and ensure that economically unhealthy operators do not compromise on their technical and safety performance. Capt. Nuhu also urged Nigerian airlines to explore the huge benefits of the Single African Air Transport Market (SAATM) and the AfCFTA.
Roland Ohaeri, editor of Aviation & Allied Business Journal, who also made a brief presentation at the CIOTA National Transportation Summit said that multi-modal transportation would drive air cargo development in Nigeria, and he also emphasized on the need for continued effective regulation of the aviation sector. Already, the successful revolution in e-commerce in Nigeria is facing serious setbacks arising from the challenges in the transportation sector.
Overall, the Minister of Transportation, Rotimi Amaechi, stated that the Nigerian government is addressing the serious challenge of poor transportation network in Nigeria, with huge investments in the rail sector.
Nigeria's Reality Test
The launch of AfCFTA in early 2021 was largely seen as a positive development to drive economic evolution in Africa. According to the African Union (AU), "as at 5 February 2021, 36 countries have deposited their instruments of ratification, 36 countries have ratified the AfCFTA agreement." Though some states are tardy in implementing the AfCFTA, Nigeria must take a frontline position to buoy itself and help to also lift weaker economies. As the largest economy in Africa's economic bloc, therefore, Nigeria must urgently salvage its incapacitated manufacturing sector and perhaps set the pace for manufacturing and distribution of goods and services within Africa.
The AfCFTA made up of 1.3 billion population, a combined GDP of 4 trillion dollars, and adjudged the largest single economic bloc globally requires robust manufacturing and distribution of goods and services to be successful, and Nigeria is expected to lead this economic revolution in Africa. Nigeria has ratified and domesticated the AfCFTA and the complementary Single African Air Transport Market (SAATM) launched by the African Union in January 2018 in Addis Ababa, Ethiopia to liberalize air transport in Africa for African airlines.
More importantly, while signing these agreements is essential to provide the policy framework for the operationalization of the free trade area and air transport liberalization, enabling private sector operators to operationalize these agreements is crucial for Nigeria.
And to attract the private investors, Nigeria must renew its transport and other economic infrastructure, and improve the operating environment by removing unnecessary taxes and fees and other barriers to manufacturing and distribution of goods and services for domestic and regional markets.
With its rich assemblage of recommended policy frameworks to deliver an excellent transportation system in Nigeria, coupled with the country's huge human and material resources, Nigeria stands the best opportunity to make a great success of the AfCFTA for itself and for Africa States. Transportation professionals believe the Nigerian government must accept change, and implement these recommended frameworks. Where there is a will, there is always a way.
This feature was originally published in the January - February 2022 issue of Logistics Update Africa.