Manufacturers canvass speedy completion of rail lines to cut production cost

Manufacturers say speedy completion of railways will help reduce cost of production and increase price competitiveness of their products.

President Muhammadu Buhari arrived South Africa last Tuesday to participate in the forum on China/Africa Cooperation (FOCAC) in Johannesburg, where he was believed to have renegotiated the $8.3bn Lagos-Kano standard gauge rail modernisation project, of which only a segment, Kaduna-Abuja, has reached completion.

Manufacturers see this as a good development, saying that a good railway system in the country will cut costs and integrate the economy. They add that it must go beyond talk, given that real sector players are facing logistics challenges, of which transportation is key.

“One of the major costs we incur is transportation,” said Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN) in a telephone interview.

“Rail is usually cheaper than other modes of transportation and I believe this will reduce costs,” Jacobs said.

He further said Nigeria can never get enough of other modes of transport, adding that it is also critical to develop the waterways as this would widen the reach of producers.

In a recent economic blueprint sent to Buhari, Jacobs had said that in view of the centrality of the rail system to the growth of internal trade and industrial competitiveness, manufacturers recommend that the rail modernisation should be accelerated.

Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), told BusinessDay that this could solve one critical problem of the real sector, which is logistics.

“One of the biggest problems the economy is facing is logistics and a key factor is transportation. This is affecting virtually all the sectors, from agriculture to industry and trade. If we are able to develop the rail system, there will be enhanced productivity and reduction in the cost of doing business,” Yusuf said.

He added that the rail system will integrated the domestic economy, thereby giving investors hopes that Nigeria is serious about diversification.

Other analysts who spoke with BusinessDay said this would reduce cost of production and help Nigerian exporters compete favourably in the global market.

ODINAKA ANUDU