Economic observers are tipping Nigeria’s massive investments in rail infrastructure to be a game-changer in its quest for diversification and growth.
Africa director at Washington-based consultancy Eurasia Group, Amaka Anku, said the recently approved rail project to connect the country’s south to its north and extend into Niger, could be a “game-changer” for Africa’s biggest economy that “will allow Nigeria to become a clearing house for trade all over West Africa.
The current administration, led by President Muhammadu Buhari, is stepping up a drive to improve its decrepit infrastructure with a series of billion-dollar projects. The president seeks to pull the country out of its lethargic growth, largely dependent on the price of crude oil on the international market.
Next month, the federal government expects to start work on a $3bn railway line that would link Port Harcourt in the south to Maiduguri in the north. “The president is trying to grow all the sectors of the economy that would improve and increase production; he’s focusing on power, on roads, on transportation, rail networks and maritime,” said minister of transport Rotimi Amaechi.
Africa’s largest crude producer has generated billions of dollars in oil revenues each year for decades, but has little to show for it developmentally.
The country’s infrastructure is in a sorry state, with ports congested, road network decrepit, rail system only burgeoning, and power grid inadequate to meet the demand of its annually increasing population.
The federal government, earlier this month broke ground on a $2bn internationally-funded rail line connecting the country’s north to neighbouring Niger, and announced it was forming Infraco, a public-private infrastructure fund with N1tn ($2.6bn) in seed capital from the Central Bank of Nigeria, Nigeria Sovereign Investment Authority and the Africa Finance Corporation, a mostly privately owned pan-African project finance firm.
Amaechi, points to the recently completed Lagos-Ibadan railway, along with major port and road projects in the south as success stories.
Some of the projects, Lagos-Ibadan rail, airport terminals, a gas pipeline and two highways are being built by Chinese construction companies and partly financed by Chinese loans.
While the move should boost an economy hit by plunging oil prices and the coronavirus pandemic, critics have complained that they favour president Buhari’s native north and question a lack of transparency as well as the involvement of Chinese backers.
Future projects will be funded by Infraco, which the government said expects to grow to N15tn in the coming years. The government is also likely to tap international debt markets to finance the infrastructure drive, said minister of works Babatunde Fashola. “Most, if not all our external borrowing and fundraising is really to finance the deficit created by our commitment to infrastructure expansion.”