FALL INTO THE GAP

Nigeria 2016 | TRANSPORT | FOCUS: NEW PROJECTS

For a nation of 170 million people, Nigeria's massive infrastructural gap is debilitatingly wide.

Despite being Africa's largest economy, it is not possible to travel across the country at highway speeds by road in Nigeria, and as a result, much of the country's agricultural production is lost in transit. The value of Nigeria's infrastructure gap is estimated at more than $300 billion. One of the incoming administration's priorities is infrastructure, and there are a number of important infrastructural projects around Lagos in particular. There are also a string of Chinese-backed ventures that are part of the country's aggressive expansion on the African continent. Part of the Lagos Rail Mass Transit system entails a total of seven lines, one of which is under construction. A modern mass transit system like the proposed light rail would ease congestion in Nigeria's commercial capital and provide opportunities for investors to participate in long-term valuable assets. The Lagos light rail is planned to operate on a concession-based model and is being constructed by the China Civil Engineering and Construction Corps (CCECC). There is a corresponding light rail project in Abuja, the nation's capital, which is also being constructed by CCECC and is already over 60% complete.

The Lagos to Kano Rail line was reintroduced in 2013 and has had great success in terms of riders, but still offers a low standard of service. In 2006, former President Obasanjo signed an agreement with CCECC to revitalize the route from Lagos to Kano. However, the agreement was canceled after a dispute. In 2009 it was again awarded to the CCECC and another firm. However, the new administration has claimed that a substantial part of the $1 billion loan provided to Nigeria by China was diverted by officials of the previous administration. This leaves the project's rehabilitation in question, although service continues today.

Another Chinese rail deal, this time with an also state-owned rail company, China Railway Construction Corporation Limited (CRCC), will involve the construction of a railroad line along Nigeria's coast. The deal, supposedly worth $12 billion, was announced in 2014 but has yet to see any development. Financing and execution of the deal are murky, but it would be China's largest single infrastructural deal outside of its homeland.

As for the development of ports in Nigeria, there is also quite a bit of movement. The Lekki deep-sea port, which is being developed by the Tolaram Group and constructed by a Chinese state-owned firm, China Harbour Engineering, has recently begun construction. The project is entirely privately funded through a consortium of six banks, including the African Development Bank. There is another major port project as well, based in Badagry, which is to the west of Lagos. That project is being undertaken by APM terminals, a global shipping firm and port concessionaire who is providing all of the financing through private means.

Both of the proposed new ports will provide Lagos with increased container capacity and decrease turnaround time significantly. Currently, the existing port facilities in Apapa is hindered by inadequate infrastructure just outside of the ports, although it has been improved significantly since the early 2000s. The port area has some of the worst roads in Lagos State and there is regularly gridlock so severe that importers lose significant sums because their goods are sitting just outside the port; fuel shortages also arise around the country because refined products are stuck.

The Buhari administration has released the largest budget in terms of capital expenditure in years for 2016. The government has pledged to spend more on roads and infrastructure then past governments have. If President Buhari can bolster infrastructure, the country, its people, and the businesses operating within it would benefit enormously. Many opportunities for foreign firms will also arise, but there are still major challenges in funding that budget, and a significant distance to go before the nation's infrastructure meets its needs.