$1.96 BILLION NIGERIAN-NIGER RAIL PROJECT: MATTERS ARISING
By Wole Akinseloyin
The Federal Executive Council (FEC) decided to extend the rail to Maradi without explaining to the nation the rationale for that decision, especially at a time of low revenues; however, the citizens can only rely on the reason given by the supervising Minister, Rotimi Amaechi in 2017, based on the Daily Trust publication of September 12, 2017
“We realised that we had competitors from our land-locked neighbours, competitors like Ghana, Togo and even Benin Republic. These landlocked neighbours are importing through these countries because we don’t have rail lines that go to them. So to address this situation, Mr President approved a rail line that will go to Maradi in Niger. But that rail line which will come from Kano to Maradi in Niger must pass through some cities. So the rail line passes through Kazaure and then Daura before proceeding to Jibya and then Maradi. Is it that when the rail line gets to Kazuare, it jumps into the air over Daura? No, it has to pass through Daura to get to Jibiya and Maradi. It’s quite unfortunate that people read meanings to a rail line going to Daura. This rail line addresses the competition we have with Ghana and Togo for our landlocked neighbours. So we can now tell our landlocked neighbours that we can take their goods and services from our ports in Lagos to their country.”
Maradi is the second-largest city in the Niger Republic, with the entire region having a population of 267,249 in the 2012 census. We may assume that the area could be about 500,000 in 2020, but nothing suggests based on their previous growth rate. In 1988 Maradi had a population of 110,005, and in 2001 it had a population of 148,017, so 500,000 in 2020 would be overly generous.
The critical questions should be: Can Nigeria afford it? Is it a priority for Nigeria based on the trade volumes with the Niger Republic? Is this the norm elsewhere?
Can Nigeria afford it?
The nation’s sovereign debt rose from N12.12 trillion in Q2, 2015 to N31 trillion in Q2, 2020. In five years, the country has added N18.88 trillion to its sovereign debt. Of the N18.88 trillion, the Federal governments share is N15.43 trillion. Out of this N15.43 trillion, only N6.01 trillion spent on capital spending according to budget office implementation reports, which means a whopping N9.42 trillion goes to recurrent expenditure
Based on the 2021-2023 MTEF/FSP report, Federal Government revenue from January to May was N1.624 trillion, while debt service was N1.575 trillion, which means debt service to revenue between January and May 2020 stands at 96 percent. Nigeria cannot afford to be Father Christmas with this level of debt and debt service to revenue
Is the rail to Maradi a priority based on trade volumes with Niger Republic
Based on the ERGP, it means Nigeria needs $100 billion every year for 30 years on infrastructural spending. For the past five years, the 2018 infrastructural expenditure is the highest, N1.682 billion ($4.67bn). The Federal government did not release money for infrastructural spending for the first six months of 2019. Of the N25 billion voted for FERMA in 2017, only N800 million was released to renovate all federal roads in Nigeria
Generally, intra-African trade is meagre about 2% in 2015-2017 compared to other regions of the world, America 47%, Asia 61%, Europe 67% and Oceania 7%. In Q4 2019, Nigeria exports to ECOWAS was N582.3 billion ($1.9bn) while Nigeria’s export to the Niger Republic in 2018 was $111m that is 0.19 percent of Nigeria’s total export, while imports from the Niger Republic in the same year was $6.24m a mere 0.013 percent of our total imports. In 2018, our trade volume with the Niger Republic was $117.24m out of $108.2bn (0.0057%).
Can the federal government justify paying for the rail system this expensive just for a trading volume of less than $10 million a year? After all, Rotimi Amaechi said that the Niger Republic government is not paying for the rail,” “The Niger government is not contributing to the project, and they do not need to do so. We have to also provide the same infrastructure that makes them go to other countries for business. Those countries already have the access and that is why Niger can go there go there for business.”
There are many of these projects around the world, even in Africa. There are a Trans-African highway network and railway. The railway system is to go through about ten countries from Dakar in the West to Djibouti in the East, covering 8,715kms. In all of these, every nation has always sought funding for the highway or rail through their countries. The first phase is the Senegal-Mali axis, which costs Mali $1.5 billion and Senegal $1.24 billion. Senegal did not pay for Mali.
The $3.3 billion Chinese funded and 756km railway from Djibouti to Addis Ababa is paid for by Djibouti and Addis Ababa. Chinese banks loaned Ethiopia $2.8 billion and Djibouti $500m. The Madaraka Express in Kenya is from Mombassa to Nairobi. Madaraka Express to be extended to Naivasha and Naivasha to the border town of Malaba in Uganda so that Uganda can fund their part. The highway from Montenegro to Belgrade, Serbia, is being funded by both countries. From Belgrade to Bolijare, a border town, the cost is about €2.389 billion and the Montenegro part about €1.5 billion.
Invest in Lagos State Infrastructure
Senator Remi Tinubu wanted Lagos State to be granted special status, but the Senate voted it down for no logical reasoning. Lagos is regarded as the fourth-most densely populated city globally, accounts for over 25 percent of Nigeria’s GDP. Lagos accounts for about 55-60 percent of the nation’s VAT. In Q4 2019, Lagos accounted for over 89 percent and 77.44 percent of the nation’s exports and imports, respectively. Yet it is neglected, and its infrastructure is in a dilapidated state with most of the state a vast slum.
The federal government can invest the money for the Maradi train in Lagos for better roads, efficient transit systems, smart grids/smart city solutions as a whole. Lagos needs a centralized or partly decentralized sewage system, rail system within the State, which will ease the traffic gridlock if the State can complete the seven lines. Unfortunately, the blue line is still under construction since 2009, a mere 27.5km rail. This suggestion is not for the Federal government to take over the expenditures of the Lagos state, but the additional grants will go a long way to help in any of the areas highlighted. Brazil does the same thing with Sao Paulo.
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