Privatising Nigeria’s rail transport

From the beginning of civilisation, transportation has been critical to the economic development of economies. The fortunes of Nigeria’s rail transport have declined due to neglect.

The motive behind constructing railways in the country was to enhance evacuation of mineral resources and agricultural products from the hinterland to seaports for onward shipment to overseas markets in Europe. The flow of goods to the hinterland was also facilitated by the rail, providing a link between the North and the South. While the economy expanded over time (with occasional hiccups) and new centres of activities emerged, the nation’s railways failed to respond to potentially viable services and opportunities that existed.

The thought of redesigning a rail system that would serve its economic purpose did not surface for a long time, leaving kilometres of routes uncovered, thereby forcing movement, of commuters as well as goods, to rely entirely on roads. Operational performance of the Nigerian Railway Corporation (NRC) reveals that the highest number of passengers carried was 15,555,200 in 1984 and the highest volume of freight was 2,375,000 metric tonnes in 1977.

With current plans by the NRC to acquire new coaches, signal and communications, purchase locomotive engines and rehabilitate rail tracks across major railway districts, state governments in the country are looking in this direction. Worthy of note is the Light Rail in Lagos State, a public private partnership (PPP) project which links Orile-Badagry axis to the West African sub-region.

Governments have realised huge benefits by allowing private enterprises to construct and operate railways. Novel management approaches such as build, operate and transfer (BOT) as well as design, build, operate, and transfer (DBOT) made it easier to fund railway rehabilitation from various sources (both local and international). Examples of such initiatives include Bangkok’s Skytrain elevated rail system and Great Belt Fixed Link in Denmark. Until now, policy flip-flops were the main reasons for the delays in sorting out the railways. As governments changed, approaches to the same problem were sometimes markedly different and not decisive.

In Nigeria, the railway bill sent to the National Assembly over five years ago is yet to be given the attention it requires. The Nigerian Railway Act of 1955, which is still in operation, gives exclusive rights of ownership of the railway to only the NRC. This Act, however, makes it impossible for the private sector and the state governments to participate both in the establishment and ownership of the rail lines and the railways.

Given the enormous capital investment of over $10 billion in the railways by the government in the last six years, we believe that repealing the current Act and re-enacting a new Act is the first step towards attracting investors and investment into the sector as it would describe the role of the NRC and spell out specific roles stakeholders should play in rail development.

We believe there is need to extend existing rail network to connect major seaports and the Inland Container Depots (ICDs) and Container Freight Stations (CFS), when completed. The East-West rail connection, which is long overdue, should be given priority attention.