Nigeria improves conditions on its road network

The government’s commitment to fiscal stimulus, coming amid more austere economic conditions, promises to give a boost to Nigeria’s road network in 2016. The upgrade and expansion of highways and roads is a high priority for the current administration and, if carried through to completion, could significantly reduce distribution costs and ease of movement, which – as the local residents who regularly get stuck in the country’s infamous “go slow” traffic jams are keenly aware – urgently needs attention.

Capital Injection

Under the 2016 budget, the government plans to triple capital spending during this fiscal year. Over a three-year period, total spending is forecast to reach N6trn ($18.9bn). While this will be directed at several sectors, from utilities to rail, roads will be a leading beneficiary, with N208bn ($656.7m) earmarked for the network.

In February 2016 Babatunde Fashola, the minister of works, power and housing, announced that the government plans to complete 200 roads by the end of 2016. This is largely to clear a backlog of 206 road projects begun under the previous administration, which are unfinished due to a lack of funding. In total, the government owes over N600bn ($1.9bn) to road contractors. Speaking to a committee of the House of Representatives, Fashola said the greatest existing challenge to meeting the requirements of the road network was “...inadequate budgetary provision for projects to sustain annual cash flow requirement levels…This underscores the need for diversifying the sources of funding highway projects”.

Upgrades Needed

However, Fashola has outlined plans for the completion of 6000 km of strategic and economically important roads over the three years to 2018. This includes the Katsina-Kano-Maidugari road, the Ilorin-Jebba-Makowa route, the Lagos-Ibadan road and the Enugu-Port Harcourt route. The commitment to road rehabilitation and expansion is critical: the road network accounts for as much as 90% of all passenger and freight movement in the country. Yet it has long been a constraint to further development. In 2006, 29.9% of local firms identified roads as a major business constraint compared to an average figure of 18.2% across middle-income countries. In 2014 the National Planning Commission concluded in its National Integrated Infrastructure Master Plan report that “68.3% of roads in Nigeria were in terrible disrepair.” The report also stated that 40% of federal roads were in poor condition, while 78% of state and 87% of local government roads were in disrepair.

Nigeria’s roads fail to compete with regional and global peers across a broad range of indicators. For example, the country has the least-safe roads in Africa, accounting for one in four road deaths on the continent, according to a 2015 World Health Organisation report. Furthermore, the infrastructural limitations are not only caused by the condition of the roads, but also the size of the road network. In 2015 South Africa, which has a smaller economy and land area, had a network of 750,000 km of roads while Nigeria had just 200,000 km, according to a report by global advisory firm RisCura.

Toll Roads 

In December 2015 Fashola told local press that the government would reintroduce toll roads to generate revenue for the maintenance of federal roads. This is likely to be the first step towards allowing public-private partnership projects to generate funding and revenue for new roads. Toll roads are also on the cards for the metropolitan area of Lagos. Despite the cancellation of the last privately operated toll road concession on the Lekki-Epe Expressway due to a disagreement about toll rates, the Lagos Metropolitan Area Transport Authority told OBG that there is private sector interest in securing concessions for toll roads along the Lekki corridor. If such arrangements can be instituted successfully, Nigeria will take an important step forward in the battle to ameliorate the condition of the country’s roads.

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The Report: Nigeria 2016

Transport chapter from The Report: Nigeria 2016

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