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How Rail and Energy Will Deliver a Robust Economy for Nigeria

Proshare

Thursday, August 31, 2017 1:20PM / Proshare Research

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The infrastructural deficit witnessed in Nigeria especially in critical sectors such as Energy and Rail has held back the growth of real asset in the country. This has further stalled the ability of the nation to deliver public goods required to enhance the wellbeing of its people. The fallout from this glut has led to an increase in the burden of inelastic goods on the income of house hold. 

Thus, providing critical infrastructure has become a necessity in addressing the quality of living of every Nigerian. At the same time, Nigeria cannot experience a take off without an improvement in its energy and railway infrastructure. 

This study therefore presents our findings after a careful review which took proper stock of the nation’s energy infrastructure, while comparing it with selected countries like Chile and South Africa. Some of the key findings showed that Nigeria lacked energy efficiency; more disturbingly is that the nation is power poor as it recorded the lowest ratio of power generated to population. Evidently, the present poor state of energy infrastructure has made technology transfer in Nigeria harder and caused an increase in the cost of doing business.   In addition the need for a more robust railway system which will force price conversion especially in food items has become inevitable. 

The spill over effect from expanding railway lines, will lead to an increase in demand for steel, cable wires and cement.  Obviously the impact of deeper railway penetration will rub positively on the construction sector, while investment in such critical infrastructure will help to improve labor productivity thus leading to wider agglomeration.  Certainly the need to address such infrastructural gap has become inevitable in order to bolster gross fixed asset. 

The study admitted that the lean resources of government has put public financing in a limited position, therefore alternative form of financing is important to complement government role. The study also went a step further in proffering alternative funding to infrastructure while encouraging government to leverage on the nation’s pension funds and sovereign wealth fund to beef up its sources of revenue. 

More importantly it is expedient for government to tilt to foreign institutional investors to reduce this infrastructure gap due to the huge resources at their disposal. In the same vein, it has to make the institutional environment better by improving its business concern and infrastructural index’s. The intense need for private capital to drive capital spending and drive growth cannot be shrugged off, given the country’s low capacity utilization and weak manufacturing index’s. 

As a matter of urgency institutional challenges such as poor stake holder consultation, absence of a viable private public partnership legal frame work and poor credibility in public infrastructure have to be resolved. Resolving these institutional challenges will foster private capital participation in infrastructure. 

Nigeria has not experienced her vertical take- off; such can only be experienced when a robust energy and railway system is in place, as the presence of this will have a positive impact on internal trade, which will create the right impetus for a take-off.   

Rail lines and robust energy infrastructure create new trading routes and eliminate barriers to trade. They form new bonds of partnership and reinforce old ones; simultaneously they provide the right answers to nationhood. 

It is not surprising that railway do not just pave the road for wider economic agglomeration or a developmental take off, it plays the folk road in the political  life of  a nation (America, UK). Obviously, as greater market integration emerges with an emboldened rural economy stirred by a rail economy, it will gradually wrestle away the doubt that bedevils our nation hood.  

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For further details contact research@proshareng.com     

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3.   Article IV vs. ERGP - The Third Way – May 2017

4.   Lifting The Veil off The Financial Sector – Apr 2017

5.  Towards An Economic Model for Nigeria; Going Beyond Symptomatic Responses - The Panama Model – Mar 2017 

6.  FX Utilisation in January 2017-Symptoms of An Opaque Structure – Feb 2017 
 

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