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Peictd Niser BRINGING THE NIGERIAN RAILWAYS BACK ON TRACK: CHALLENGES AND OPTIONS BY PROFESSOR ADESOJI ADESANYA HEAD, POLICY ENGAGEMENT DIVISION PAPER PRESENTED AT MONTHLY NISER SEMINAR SERIES, HELD AT THE NISER CONFERENCE ROOM ON NOVEMBER 13, 2010 0 BRINGING THE NIGERIAN RAILWAYS BACK ON TRACK: CHALLENGES AND OPTIONS Introduction Rail transport has and continues to play a key role in the movement of goods and passengers in many countries around the world including Nigeria. However, while rail transport continues to enjoy relative importance in terms of investment, growth and contribution to the national economy in several counties, it has suffered and continues to decline (in terms of modal share contribution) in Nigeria and other African countries. At a point in the history of Nigeria, rail transport played a very crucial and significant role in its contribution to the Nigerian national economy. According to Robinson et al (1961), Nigerian railway particularly was still playing a very active role in overland freight movement in the early years after 1960, to the extent that it accounted for approximately one-third of freight traffic. At some point in time, the Nigerian railways played a key role in enhancing colonial administration, by maintaining links between the central seat of colonial government in Lagos and other parts of Nigeria (Elechi, 1998). It also served as a major mode of transport used in facilitating the opening up of several mineral producing and agricultural areas. It was also major mover of freight and passengers across the country, especially where the rail lines traverse. While the Nigerian economy has expanded over time (with occasional hiccups) and new centres of activities have emerged, the Nigerian railways have failed to respond to the potentially viable services and opportunities that exist. In other words, in the last three decades in particular, not much has been achieved in terms of structural transformation of the Nigerian Railways, so as to meet potential demand for rail services as well as the rapidly emerging challenges of economic growth and national development. By 1970s through to the early 1980s, both the volume of passengers and goods carried by the Nigerian Railway Corporation (NRC) had started to drop dramatically (Adesanya, 2002). Unfortunately too, the fortunes of the rail transport sub-sector have declined so precipitously due to the enormity of the problems and challenges that confront it. The effects of the poor performance of the rail transport subsector is already being felt seriously in the form of the undue pressure being mounted on the road transport subsector and the attendant huge damage to roads and loss of lives among other things. Suffice it to mention that the Economic Transformation blueprint of Nigeria (Vision 20:2020 document) itself has noted that one of the supposedly key drivers of the economy at the bottom end of sectoral activities and which is regarded as practically dead is rail transportation (NPC, 2009:24). Given this situation and the huge opportunities that exist for the Nigerian railways to contribute significantly to the transformation of the Nigerian economy, it is critical to examine why the Nigerian railways have not woken up from its slumber despite the various efforts at resuscitating it. Therefore, bringing the Nigerian railways back on track is very important and how this can be achieved will depend on how well we are able to articulate the challenges that confront this mode of transportation and the options that are feasible and sustainable. This paper is structured into nine parts. The first is the introduction, followed by a general perspective on rail transport and its impact on development. The third section of the paper provides an overview of rail transport and national development in Nigeria. The challenges facing the Nigerian Railways are identified in the fourth 1 section, while the fifth highlights some of the key efforts made recently at resuscitating the Nigerian railways. International experiences with rail reforms are discussed in the sixth section, while the seventh to the ninth parts of the paper focus on policy options for moving the Nigerian Railways forward, policy implications and conclusions respectively. Rail Transport and Its Impact on Development In many countries, rail transport has and continues to play a catalytic role in bringing about socio- economic development. It contributes substantially to the movement of passengers and freight. Indeed, railways can provide the most cost-effective, affordable, energy saving and environmentally friendly form of transport, when traffic densities are high. When properly integrated with other modes of transport, economic levels of traffic can be consolidated to enable the railway to provide efficient services for high density flows of homogenous traffic carried over relatively long distances, including high volumes of containerized cargo or bulk freight such as oil, coal, steel or agricultural produce. Railway transport could be energy flexible and energy efficient, when electric traction is used. Rail transport is also an important mode for passenger transport. Commuter traffic by rail for example is essential to keep cities accessible. Therefore, many cities, particularly in the developed world continue to develop various forms of rail transport (metros, Light rail transit, transport) in order to divert traffic to the rail and partly reduce congestion on city roads and so on. For example, in Europe, in 1998, 290 billion passenger-kilometers were generated (6 percent of all travellers) and 241 billion tonne-kilometers of freight (8.4 percent of the total, down from 21 per cent in 1970). Indian Railways (IR) is one of the largest railways in the world. Trains in India carry over 481 billion tonne-kilometres (BTKMs) and 695 billion passenger kilometres (BPKMs) of goods and passenger traffic respectively every year. IR also carries around 40 per cent of freight traffic and 20 per cent of the passenger traffic in the country (Government of India, 2009) and plays a key role in the Indian economy because it builds and maintains infrastructure assets like track, electric traction, signalling systems, telecom network, stations/terminals and, interestingly, it manufactures locomotives, coaching stock, wagon and components of rolling stock like wheel & axle. IR runs workshops to maintain its rolling stock and it is involved in ancillary activities like catering, tourism so on. In order to appreciate the level of contribution of rail transport to the economies of countries, Table 1 has been presented, in terms passengers carried and goods hauled. Developed countries certainly performed better that the developing countries in terms of the indicators shown. Table1: Railway Performance Indicators Country Rail line (total route km) Passengers Carried (in Goods Hauled (million ton- million passenger-km) km) (20000-06) Algeria 3,572 929 1,471 Australia 9,528 1,290 46,164 Canada 67,346 1,430 445,689 China 62,200 666,200 2,170,700 Cote d’Ivoire 639 10 129 Egypt 5,150 40,837 3,917 France 29,286 76,159 41,898 Ghana 977 85 242 Germany 34,218 72,554 88,022 India 63,465 575,702 407,398 Japan 20,052 245,959 22,632 Mozambique 3,070 172 768 Nigeria 3,528 174 77 Portugal 19,507 16,742 45,438 Russia Federation 85,245 177,639 1,950,900 United Kingdom 15,810 43,200 22,110 2 United States 153,787 47,717 2,589,340 Source: World Development Indicators (World Bank, 2008:330-302) Railways have made varying degrees of impact on the development of the countries where they exist (Kolars and Malin, 1970). Rowstow (1960), for example, described railways as 'historically the most powerful single initiators of (economic) take off, being a main force in the widening of markets and a prerequisite to expanding the export sector’. Hilling (1996) also observed that in many parts of Africa, railways provided the really first alternative to human porterage, and brought with them some economic advantages. In East and Central Africa, early rail lines were critical to the development of commerce, the expansion of commercial agriculture and the stimulation of settlement expansion. The 'line of rail' became the zones of economic activity, and the rail heads were the focal points for the expansion of settlements and economic input and output (O'Connor, 1965). Also, in Ghana, the Accra-Kumasi-Takoradi rail line clearly reflects a concentration of economic activities (Hilling, 1996). In many countries around the world, freight is transported by train. This is largely because transporting freight by train is highly economic when freight is being carried in bulk and over long distances. In the United States, for example, the rail system is used mostly for transporting freight. In Romania and the Commonwealth of Independent States (CIS), a preponderance of rail freight tonne- km, in fact more than 90 per cent, moves by rail. China, United Kingdom and Russia among others depend heavily on rail for long distance movement of bulky commodities (Hilling, 1996). The importance of rail transport in providing the stimulus for administrative control, regional growth and development are well documented. Economic growth, for example, followed the provision of rail lines into the cocoa belt of Ghana (then Gold Coast) in 1903 and the groundnut belt of Northern Nigeria in 1912 (Mabogunje, 1980). In Ghana, the completion of the first rail line in 1903, from the coast of Sekondi to the gold mining areas of Tarkwa immediately resulted in a sharp fall in land transport cost per tonne of imported goods from the mines to about 25.35 pounds to about 3.00 pounds (Hilling, 1996). Hogendorn (1968) also observed that within 18 months of reaching Kano, the railway had so stimulated groundnut production to the extent that every available piece of land was planted with groundnuts. It was observed that the impact of the railway on the development of the Nigerian economy was such that it enhanced the exportation of groundnuts from about 10,000 tons in 1912 to an average of 40,000 tons per annum for the next decade (Onakomaiya, 1978).
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