The transportation infrastructure industry in Nigeria is expected to reach N300bn by 2014. The opportunity for investments is huge and the return on investment is encouraging given the wide gap in supply and demand. Despite the increase in economic activity and population growth, Nigeria desperately needs an upgrade to an economic backbone of transportation infrastructure and development.
Transportation Infrastructures including roads, rails, airports, seaports/waterways are all very crucial to economic developments in Nigeria. The transport sector is currently faced with a lot of challenges. Nigeria’s roads carry more than 90 percent of domestic passengers and freight, yet the road networks are bad and roads in a terrible state with pot holes. The rail system are a "no go area" as the trains are old and outdated. Many Nigerians are not even aware that trains are still in operation. That is to tell you the level of neglect and inefficiency in the rail system. Other challenges in the transport and logistic sector includes time delays, bottlenecks for international shipments, poor tracking and tracing capabilities and poor logistics quality and competence. All these are industry risks that negatively affects growth prospects for logistics and transport industries.
However, the government is making serious effort to bring a lasting solution to these challenges. In order to achieve this, the government is seeking for Public Private Partnership (PPP), and policies are being made to attract and favor private investments. The market is certainly ripe for investments in transportation infrastructure development.
Previously, the government has been the major driver and controller of all infrastructural developments occurring in the country. However, this model which has proved to be slow and ineffective, hence, the introduction of the private public partnership initiatives.
Although, the PPP initiative was introduced at the Federal Government level, it has also been adopted by other state governments encouraging private investors to invest in their individual states.
A recent report by PricewaterhouseCoopers (PwC) ‘Africa gearing up’, revealed that a good transport and logistics capacity has a significant impact on economic growth potential. The report highlighted that a few sectors are most relevant for Transport and Logistics investors such as retail, agriculture, raw materials, and manufacturing.
While South Africa has the most developed retail sector, with most consumers shopping in formal retail, Nigeria’s large urban population is an attractive market that can stand alone and also serve as a gateway to West Africa. On the other hand, Kenya is also emerging as a strong choice for retail companies looking to set up in eastern Africa.
According to the PWC report, most executives from logistics companies that are operating in Africa see Nigeria as one of the African countries with the most potential for their business.
In addition, several companies expanding into West Africa see Nigeria as a gateway to the region, even before Ghana. While Ghana’s main advantage is a stable democracy and thus a safe entry point for total newcomers to the African continent, Nigeria offers by far the largest market in the region, being home to nearly 170 million of the 250 million people living in West Africa.
This implies that Nigerian government has a lot to do in terms of positioning itself in order to attract foreign and private investments.
As a final remark, these inefficiencies in the transport system, rings a bell that there is a problem, which signifies a business opportunity. Successful businesses are those who carve a niche for themselves by providing solution to an existing human problem. In line with this argument, the Transportation and Logistics sector in Nigeria has posed to be an opportunity with high ROI for investors who will not only invest their funds, but bring to the table innovations that will lead to efficiency in the sector.