An Infrastructure Action Plan for Nigeria - Closing the Infrastructure Gap and Accelerating Economic...

8/13/2019 An Infrastructure Action Plan for Nigeria - Closing the Infrastructure Gap and Accelerating Economic Transformation

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AN INFRASTRUCTURE ACTION PLAN FOR NIGERIA2

Foreword

On his official visit to Nigeria from November 23-24, 2010, the President of the African Development BankGroup, Dr. Donald Kaberuka held discussions on Nigerias transformation with the President of Nigeria, HisExcellency, Dr. Goodluck Ebele Jonathan, members of his cabinet and senior policy makers. The Nigerianofficials identified meeting the demand for critical infrastructure facilities across the board as the govern-ments foremost priority.

The Government of Nigeria requested the African Development Bank (AfDB) to prepare a report on the stateof infrastructure in the country. The Bank accepted this request cognizant of the fact that, policy actions andinvestment in infrastructure have important roles to play in Nigerias economic transformation. Infrastructuredevelopment is a key contributor to a conducive business environment. It is a precondition for private sectordevelopment and a key enabler of regional integration. Investments in infrastructure are critical to advancesin agriculture, which is one of the key pillars of the Nigerian economy, and human development, includingthe delivery of health and education services to the poor. The activities involved in Infrastructure sector

upgrades can be a stimulus for growth and creation of productive employment. In a nutshell, studies haveshown that increasing the stock of infrastructure investments in core sectors by one percent can increaseGDP growth by up to one percentage point. In recognition of these facts, the development of Africas infra-structure is a key component of the strategic direction being pursued by the Bank.

The AfDB continues to lead on several key continental infrastructure initiatives. It has a mandate from theAfrican Union to implement the infrastructure component of the New Partnership for Africas Development(NEPAD), and it hosts the secretariats of the Infrastructure Consortium for Africa and of the African WaterFacility. The AfDB is also the Executing Agency for the Programme for Infrastructure Development in Africa(PIDA). This programme, which is designed as a successor to the NEPAD Medium to Long Term StrategicFramework (MLTSF), aims to develop a vision and strategic framework for the development of regional andcontinental infrastructure.

In line with its leadership role, the AfDB seeks to deepen and broaden its knowledge base of Nigeriaseconomy by undertaking economic and sector work in areas deemed as critical for enhancing competitive-ness and public sector effectiveness. This Flagship Report, which is entitled An Infrastructure Action Planfor Nigeria: Closing the Infrastructure Gap and Accelerating Economic Transformation, is part of effortsaimed at enabling the Bank to strengthen its knowledge base in Nigerias infrastructure sector. The Report,a policy and technical document commissioned by the Bank serves four purposes: (i) provide the Govern-ment with a master plan for the rehabilitation of infrastructure assets and recovery in infrastructure servicesin Nigeria in the decade ahead; (ii) contribute to the ongoing High Level Policy dialogue on infrastructureand economic transformation in Nigeria (iii) serve as a framework to intensify engagement with the interna-tional community on infrastructure in connection with the Transformation Agenda; and (iv) provides a solidplatform from which a strategy for possible AfDB and other donor operations in Nigeria can be scaled up.

The Report provides a detailed assessment of the current status of services in four key infrastructural sec-tors in the country and their role within the West Africa region (transport, electric power, information andcommunication technologies, and water and sanitation). It sets achievable objectives for Nigerias infra-structure by 2020 taking into account the Governments Vision 20:2020, and lays out an action program forachieving these objectives, which includes policy and institutional reforms, capital expenditure programsfor rehabilitation and new capacity, and increased resource allocations for maintenance of these facilities. Itprovides options for financing the proposed program, with a special focus on efficient and sustainable useof oil revenues for infrastructure development. It also identifies the specific areas where there is a role for theprivate sector, and discusses improvements in the current policy environment that will be required to attractprivate sector investments into the infrastructure sector.

Janvier K. Litse Ousmane DoreRegional Director Resident RepresentativeOperations Regional West -A Nigeria Field Office (NGFO)


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Preface

The Nigerian Governments Transformation Agenda and the Vision 20:20:20 aim to promote sustained andinclusive economic growth, and elevate Nigerias economy to be among the top 20 economies in the world.Considering that these objectives cannot be achieved without the availability of appropriate economic andsocial infrastructure, the Government has prioritized the improvement in the quality of infrastructure servic-es. In line with this commitment, this publication seeks to contribute to the body of knowledge regarding thiscomplex sector, and to assist by providing current information and analysis in order to inform and facilitatedecision making.

The report provides a detailed assessment of the current state of infrastructure and related services in theWater and Sanitation, Transport, Electric Power, and Information, Communications and Technology sectorsin Nigeria, and their role in facilitating regional integration in the West Africa region. The main report is divid-ed into two parts: Part A reviews the country context, including infrastructure and growth issues in Nigeria,

and the proposed policy options and action plans that can be pursued by Nigeria in order to improve thequality of infrastructural services. Part B of the report provides detailed data and assessments of the currentstate of the infrastructure and related services in the four key infrastructure sectors under review. A separatesummary report is also available. The full report and a detailed Annex to the report are available online athttp://www.afdb.org/en/countries/Western-africa/Nigeria/infrastructure-and-growth-in-Nigeria-an-action-

plan-for-strengthened-recovery/

The preparation of the report was based on broad stakeholder participation. This involved numerous roundsof consultations with Government officials and various key stakeholders between 2010 and 2013 to forge aconsensus on the core priorities as well as actions, which need to be taken. In recognition of the fact that thisreport is not an end in itself, the African Development Bank looks forward to continued dialogue to developnew approaches aimed at addressing the infrastructural challenges facing Nigeria.

Zondo SakalaVice PresidentCountry and Regional Programs and Policies

AN INFRASTRUCTURE ACTION PLAN FOR NIGERIA 3


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Acknowledgements

The Infrastructure Action Plan for Nigeria: Closing the Infrastructure Gap and Accelerating Economic Trans-formation Report was prepared by a team of staff and consultants from the African Development Bank (AfDB)led by Ousmane Dore, the Resident Representative of Nigeria Field Office (NGFO). The AfDB staff in theteam comprised of: John Baffoe, Chief Country Economist, Peter Sturmheit, Country Program Officer, Fran-cis Ntamu and Aude Apetey, Private Sector Specialists, Reni-Callie Okoro, Infrastructure Engineer, UsmanMohammed, Principal Disbursement Officer, Danladi Ebbah, Agricultural Engineer, Gregory Osubor, SocialSector Expert, Bokar Toure, Senior Power Economist, Jaafar Abba, Principal Procurement Officer. Specialthanks go to Aloysius Uche Ordu, then Vice President, Operations, Country and Regional Programs andPolicy, and Valentine Zongo, now Resident Representative in Democratic Republic of Congo (DRC) for theirguidance and for their invaluable inputs. The Team was assisted by consultants namely, Russell Cheetham,Lead Consultant to the Department and prime author of the Reports main sections on infrastructure, as well

as Tedd Briggs, Wendy Brennen, Aako Ugbabe, Joseph Okpaku, and Eleri Ewah for their sectoral contribu-tions. The team also benefited from support provided by Solomon Abebe Asfaw and Jean-Pierre Mutzinsi,both Power Sector Experts from the Energy Sector Department of the African Development Bank. AndohMensah, Principal Country Program Officer at the Nigeria Field Office (NGFO), is also acknowledged forfacilitating communication, executing outstanding processes, coordination and completion of the study, andpublication of the findings. The Report also benefitted a great deal from the general directions provided bythe team at the Regional Directors office ((ORWA).

The work undertaken for this Report was initiated at the request of the Government of Nigeria. It was carriedout under the guidance, leadership and support of Mr. Zondo Sakala, Vice President for Operations, Coun-try and Regional Programs and Policy,(ORVP) and also from the contributions of the Nigeria Task Team aBank-wide team charged with facilitating support to the AfDBs engagement with Nigeria.

The preparation of this Report also benefitted from comments, insights and generous support of other AfDBstaff too numerous to mention, but by this acknowledgement, their contributions are recognized and theteams appreciation is registered. The team appreciates the strong support of the Executive Director forNigeria, Mr. Shehu Yahaya.

A large number of key officials and representatives from the fifty-two (52) Government Ministries, Depart-ments and Agencies also provided extremely valuable inputs and comments at various stages of the Re-port, including during the Consultative Workshop held in 2011. The Presidential Task Force on Power SectorReform, the Nigerian National Petroleum Corporation (NNPC) and the National Bureau of Statistics (NBS)are particularly acknowledged, for providing valuable time series data which formed the basis of assump-tions and assessments carried out in the report.

Clara Kayser-Bril provided excellent research support for the report. She painstakinly organized the dataand tables in the report. We also thank her for meticulously formatting and organizing several versions of thedraft document and manuscript as it went through multiple review processes.

The valuable editorial assistance of Ananda Covindassamy deserve special acknowledgement, as does theAfDBs Statistical Department (ESTA), which provided the statistics and other background information on Ni-geria. The country and regional maps were produced by Krollmaps.com. The maps and diagrams used inthis publication in no way imply recognition of any states or political boundaries by the African DevelopmentBank or the authors. Most of the images in this report were assembled from visits, reports and supervisionsto the projects financed by the African Development Bank and being implemented in Nigeria.

Vice President: Zondo Sakala

Regional Director: Janvier Kpourou Litse Country Manager : Ousmane Dore Lead Consultant : Russell Cheetham Task Managers : Peter Sturmheit/Andoh Mensah



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ContentsForeword 2

Preface 3

Acknowledgements 4

Weights and Measures 7

Acronyms and Abbreviations 7

1. The National Context 12

1.1. NIGERIAN ECONOMY 121.2. RECENT PERFORMANCE 131.3. OUTLOOK 14

1.4. KEY ISSUES AND DEVELOPMENT CONSTRAINTS 15

2. Infrastructure In Nigeria 17

2.1. TRANSPORT 17

2.1.1. Salient features of transport sector in Nigeria 17 2.1.2. Performance of the Transport sector 19

2.1.3. Issues to be addressed 22

2.2. ENERGY 24

2.2.1. Salient features of the Energy sector in Nigeria 24 2.2.2. Performance 25 2.2.3. Issues to be addressed 26

2.3. WATER RESOURCES AND WATER USE 27

2.3.1. Salient features of Water Resources and Water Use sector in Nigeria 27 2.3.2. Performance 27

2.3.3. Issues to be addressed 28

2.4. ICT 29

2.4.1. Salient features of the ICT sector in Nigeria 29 2.4.2. Performance 29 2.4.3. Issues to be addressed 29

3. Proposed Infrastructure Development Goals 30

3.1 OVERARCHING GOALS 30 3.2 SECTORAL GOALS 30

3.2.1 Transport 30 3.2.2 Electric Power and Access to Energy 31 3.2.3 Water Resources, supply and Sanitation 31 3.2.4 Information and Communication Technologies 32



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4 Proposed Sectoral Action Plans 33

4.1 TRANSPORT ACTION PLAN 33

4.1.1 Rationale of the Transport Plan 35 4.1.2 Action Plan For Transport Sector 36 4.1.3 Organizational changes and capacity building needs for Transport 37 4.1.4 Costs of Transport Action Plan 38

4.2 ELECTRICITY AND RURAL ACCESS 39

4.2.1 Rationale of the Electricity and Rural Access Plan 39 4.2.2 Action Plan for Power and Rural Access 40 4.2.3 Organizational changes and capacity building needs energy and Rural Access 40 4.2.4 Cost of Energy and Rural Access Action Plan 40

4.3 WATER RESOURCES, SUPPLY AND SANITATION 41

4.3.1 Rationale Water Resources, Supply and Sanitation Action Plan 41 4.3.2 Action Plan for Water Resources, Supply and Sanitation 41 4.3.3 Organizational changes and capacity building needs

Water Resources, Supply and Sanitation 42 4.3.4 Cost of Water Resources, Supply and Sanitation Action Plan 42

4.4 INFORMATION AND COMMUNICATION TECHNOLOGIES 43 4.4.1 Rationale ICT Action Plan 43 4.4.2 Action Plan For ICT Sector 43 4.4.3 Organizational changes and capacity building needs ICT 43 4.4.4 Cost of ICT Action Plan 43

5 Program Expenditures and Funding 44

5.1 DEVELOPMENT EXPENDITURE REQUIREMENTS 44 5.2 IMPORTANCE OF MAINTENANCE EXPENDITURES 45 5.3 KEY CHALLENGES 45 5.4 PUBLIC SECTOR FUNDING 46 5.5 MOBILIZATION OF PRIVATE CAPITAL 46

6 Implementation of the Proposed Program 48 6.1 ACCELERATED CAPACITY BUILDING 48 6.2 A FRAMEWORK SUPPORTIVE TO PPP 49 6.3 KEY ADMINISTRATIVE REFORMS 50

7 Benefits of the Proposed Program 51

7.1 MACROECONOMIC IMPACT 51 7.2 DIRECT BENEFITS 52

7.3 ALTERNATIVE SCENARIOS 53



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Weights and Measurest Tonne = 1,000kg kW Kilowatts = 1,000 wattsGW Gigawatt = 1,000,000 kW or 1,000 MW kWh Kilowatt-hour = 1,000WhGWh Gigawatt-hour = 1,000 MWh MVA Megavolt Ampere = 1,000 kVAkVA Kilovolt Ampere = 1,000VA MW Megawatt = 1,000 kWkW Kilowatt = 1,000 W MWh Megawatt-hour = 1,000 kWhOil Barrel = 0.1364 metric tonnes Oil Barrels/day = 49.8 tonnes/yearNG Billion cubic feet NG = 0.028 billion cubic meters NG

NG Billion cubic feet NG = 0.021 million tonnes LNG

Acronyms and Abbreviations

AfDB African Development BankADF African Development FundAIF Actis Infrastructure FundAIIF Africa Infrastructure Investment FundALRP Abuja Light Rail ProjectAWF African Water FacilityBOO Build, Operate, OwnBOQ Bill of QuantitiesBOT Build, Operate, TransferBPE Bureau of Public Enterprisesbscf Billion Standard Cubic FeetCAP Community Action PlanCAS Centre for Arid Zone StudiesCBO Community Based OrganisationCBDA Chad Basin Development AuthorityCBN Central Bank of NigeriaCDO Community Development Officer

CFL Compact Fluorescent Lightbulbs (and lamps)CIA Central Intelligence Agency (United States)CPRP Community-Based Poverty Reduction ProjectCSO Civil Society OrganisationCSP Concentrated Solar PowerDFID Department for International Development, UKDISTCOs Distribution Company (for electricity)DMB Deposit Money BankDRA Demand-responsive ApproachDwt Dead weight tonnageEAIF Emerging Africa Infrastructure FundECA Export Credit Agency

ECN Energy Commission of NigeriaECN Electricity Corporation of NigeriaECOWAS Economic Community of West African StatesEECCA East Europe, Caucasus and Central Asia



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EIA Environmental Impact AssessmentEPSRA Electric Power Sector Reform ActESA External Support AgencyESIA Environmental and Social Impact AssessmentESMAP Energy Sector Management Assistance ProgramEU European UnionFAAN Federal Airports Agency of NigeriaFAO Food and Agriculture OrganisationFCT Federal Capital TerritoryFCTA Federal Capital Territory AdministrationFERMA Federal Roads and Maintenance AgencyFGN Federal Government of NigeriaFME Federal Ministry of Environment

FMAWR Federal Ministry of Agriculture and Water ResourcesFMF Federal Ministry of FinanceFMP Federal Ministry of PowerFMST Federal Ministry of Science and TechnologyFMW Federal Minstry of WorksFMWR Federal Ministry of Water ResourcesGDP Gross Domestic ProductGEF Global Environmental FundGENCO Generation CompanyGHG Greenhouse GasGIS Geographical Information SystemGNI Gross National Income

GPS Global Positioning SystemGSM Global System for Mobile CommunicationGSMA GSM AssociationGWh Gigawatt HoursHJKYBTF Hadijia-Jamaare-Kamadugu-Yobe Basin Trust FundHPP Hydro Power ProjectHRD Human Resources DevelopmentHSDP Health Systems Development ProjectIAEA International Atomic Energy AgencyICA Investment Climate AssessmentICAO International Civil Aviation OrganizationICD Inland Container Depot

ICRC Infrastructure Concession Regulatory CommissionICT Information and Communications TechnologyIDA International Development AgencyIDB Inter-American Development BankIEC Information, Education, CommunicationIPCC Intergovernmental Panel on Climate ChangeIPP Independent Power ProducerIPSSP Independent Private Sector Service ProviderISO International Organization for StandardizationIUCN World Conservation UnionIWRM Integrated Water Resources ManagementJICA Japan International Co-operation Agencykm Kilometers

kV KilovoltkW KilowattkWh Kilowatt hours



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LAP Local Government Action PlanLCOE Levelized Cost or Energy (or electricity)LEEDS Local Government Economic Empowerment and Development StrategyLFA Logical Framework ApproachLGA Local Government AuthorityLNG Liquified Natural GasM&E Monitoring and EvaluationMbd Million barrels a dayMDAs Ministry, Department, AgenciesMDG Millennium Development GoalsMIGA Multilateral Investment Guarantee AgencyMIS Management Information SystemMT Million Metric Tonnes

MVA Megavolt AmpereMW MegawattMWh Megawatt hoursMYTO Multi-Year Tariff OrderNAEC National Atomic Energy CommissionNAERLS National Agricultural Extensional Research Liaison ServiceNAMA Nigeria Airspace Management AgencyNAP National Action PlanNAPTIN National Power Training Institute of NigeriaNBET Nigerian Bulk Electricity Trading PlcNBS National Bureau of StatisticsNCC Nigeria Communications Commission

NCC Nigeria Coal CorporationNDA Niger Dam AuthorityNDPHCN Niger Delta Power Holding Company of NigeriaNEEDS National Economic Empowerment and Development StrategyNELMCO Nigeria Electricity Liability Management CompanyNEP National Energy PolicyNEPA National Electric Power AuthorityNERC Nigeria Electricity Regulatory CommissionNESCO Nigeria Electricity Supply CompanyNFDP National Fadama Development ProjectNGC Nigeria Gas CompanyNGMP Natural Gas Master PlanNGN Nigerian NairaNGO Non-Governmental OrganisationNLNG Nigeria Liquified and Natural GasNHI National Heritage InstituteNIAF Nigeria Infrastructure Advisory FacilityNIFWFR National Institute for Fresh Water Fisheries ResearchNIPP National Integrated Power ProjectNIS Nigeria Industrial StandardNIWA Nigeria Inland Waterways AuthorityNIWRMC Nigerian Integrated Water Research Management CommissionNNRA Nigerian Nuclear Regulatory AuthorityNNPC Nigerian National Petroleum CorporationNPA Nigeria Ports Authority

NPC National Planning CommissionNPFSP National Programme for Food Security in Ekiti, Ondo and Cross River StatesNRC Nigerian Railways Corporation



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NSC Nigerian Shippers CouncilNWRI National Water Resources InstituteO&M Operation and MaintenanceODA Official Development AssistanceOPIC Overseas Private Investment CorporationPACP Presidential Action Committee on PowerPAIDF Pan-African Infrastructure Development FundPCR Project Completion ReportPENCOM National Pension CommissionPHCN Power Holding Company of NigeriaPIM Project Implementation ManualPIO Project Implementation OfficePIU Project Implementation Unit

Plc Public Limited CompanyPPA Power Purchase AgreementPphpd Passenger per hour per directionPPP Public Private PartnershipPTA Parents- Teachers AssociationPTFP Presidential Task Force on PowerPV PhotovoltaicRAMP Rural Access Mobility ProjectRBDA River Basin Development AuthorityR&D Research and DevelopmentRE Renewable EnergyREA Rural Electrification Agency

REAP Renewable Electricity Action ProgrammeREF Rural Electrification FundREFIT Renewable Energy Feed-in TariffREMP Renewable Energy Master PlanRWESA Rural Water and Environmental Sanitation AgencyRWSSA Rural Water and Sanitation AgencySanplat Household Latrine with Sanitary Concrete SlabSAP State Action PlanSEA Social and Environmental AssessmentSEC Securities and Exchange CommissionSEEDS State Economic Empowerment and Development StrategySIA Strategic Impact Assessment

SME Small and Medium EnterprisesSOE Statement of ExpenditureSON Standard Organization of NigeriaSPDC Shell Petroluem Development CompanySPV Special Purpose VehicleSTWSSP Small Towns Water Supply and Sanitation ProgrammeSWA Sector Wide ApproachSWF Sovereign Wealth FundTA Technical AssistanceTCN Transmission Company of NigeriaTEU Twenty-foot equivalent unit (measure used for capacity in container transport)TOT Training of trainersUA Unit of Account

UN United NationsUNDP United Nations Development ProgrammeUNICEF United Nations Childrens Fund



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UNIDO United Nations Industrial Development OrganizationUSAID United States Agency for International DevelopmentUSD United States DollarVLOM Village Level Operation and MaintenanceWACS West Africa Cable SystemWAGP West Africa Gas PipelinesWASCOM Water and Sanitation Committee (see also WESCOM)WASH Water Sanitation and HygieneWES Water and Environmental SanitationWESCOM Water and Environmental Sanitation Committee (see also WASCOM)WSP Water Service ProvidersWSSSRP Water and Sanitation Sector Reform ProgrammeWSS Water Supply and Sanitation

WTG Wind Turbine GeneratorZAR South African Rand



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THE NATIONAL CONTEXT

Nigeria has a land mass of 924 thousand squarekilometers (km2) and a population of about 167 mil-lion as of mid-2012. Nigeria is the most populouscountry in Africa and the seventh most populatedcountry in the world. Lagos, one of the largest citiesin Sub-Saharan Africa, with a population estimatedto be over 11.2 million is also the largest urban area

in Nigeria.

Nigeria is a federation comprising thirty-six statesand one Federal Capital Territory (FCT), which arefurther sub-divided into 774 Local GovernmentAreas. The aggregate budgetary resources areshared by the three levels of government accordingto an agreed formula. Since 1999, the share of localgovernment is 20 percent, with state governmentsreceiving 24 percent and the Federal Governmentthe remaining 56 percent.

Nigeria is a major player on the international and Af-rican continental scene. Nigeria is the largest share-holder in the African Development Bank. To make anincreasingly effective contribution to the economicdevelopment of low-income member countries,an agreement establishing the Nigeria Trust Fund(NTF) was signed in 1976 as one of the SpecialFunds administered by the Bank. In 2008, the Fed-eral Republic of Nigeria and the Bank agreed to aten-year extension of the NTF. The capital at the endof 2010 was US$ 200 million. It is also a memberof the African Union (AU) and a strong actor in theAU Peace and Security Council. Nigeria playedthe key role in the establishment of ECOWAS andis a strategic force and important member of theorganization.

1.1. Nigerian Economy

The Nigeria economy is strong but faces chal-lenges of inequality and inclusion. Nigerias GDP isone of the fastest growing in the world. GDP growthin 2013 is expected at 6.5 percent (NBS) or 7.2%(IMF). Exchange rate has stabilized between Naira

155 and Naira 160 over the last two years. The rateof inflation has been decreasing.

The structure of the Nigerian economy is predomi-

nantly primary product oriented (agriculture andcrude-oil production). In 2011, the oil and gas sec-tor accounted for 79% of revenue collected at fed-eral level and 71% of export revenue. Nigerias GDPis estimated to be $375 billion just behind South Af-ricas GDP of $390 billion making Nigeria the 30thlargest economy in the world from the current 40th.

Agriculture which remains very vulnerable to climatechange and other factors still account for about40% of the nations GDP and employs about 70%of the labor force despite infrastructure, productionand market support services constraints.

In addition to oil and gas, Nigeria is endowed with awide collection of mineral resources, including coal,bauxite, gold, tin, iron ore, limestone, lead and zinc.To address the high youth unemployment problem,the government has, since 2011, launched theYouth Enterprise with Innovation in Nigeria (YouWiN)

Programme designed to encourage youth entrepre-neurship and provide grants for small and mediumscale enterprises.

Agriculture. Nigeria has a vast area of arableland, diversified ecological zones, abundant waterresources and adequate rainfall in most regions ofthe country, thereby creating favorable conditionsfor high yield agriculture.

Oil.Oil was discovered in Nigeria in 1953 in theNiger Delta. The Nigerian economy has been domi-

nated by oil since the 1970s. Nigeria gained an ad-ditional US$ 390 billion in oil-related fiscal revenueover the period 1971-2005, equivalent to 4.5 timesthe 2005 GDP of the country. The petroleum sectoraccounted for a modest 12.7 percent of total GDPby 2012. The Excess Crude Account (ECA) compo-nent of External Reserves rose from about $4 billionin May 2011 to around $9 billion at the end of 2012,but now about $6 billion in May 2013.

Oil revenues that accompanied the oil price in-creases were used to finance a range of ambitiouspublic expenditure programs. Rapid growth in the

public sector and a construction boom led to largeincreases in wages and product prices. At the sametime, the Naira experienced substantial apprecia-



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from the coast. National poverty rates in the coastalareas are typically under 40 percent, but they rise tomore than 70 percent in parts of central Nigeria andeven more so in the northern parts of the country, alarge part of which are landlocked with widespreaddilapidated infrastructure.

Table 2: Average Real Growth in GDP and Non-oil GDP ofNigeria (In % [ based on GDP] in Naira at 1990 constantprices)

Source: Annex 1 (Main report)

1.3. OutlookThe Outlook for Nigeria is characterized as follows:

Nigerias population of 167 million will reach atotal of a little over 200 million people by 2020with a strong urbanization leading to 56.8 per-cent of the population living in cities by 2020.Urban population is projected to increase at 4percent per annum over the period, with grow-ing needs for more infrastructure services.

Overall GDP is projected to increase between6.4 percent (World Bank/IMF) and 7.5 percent(NBS) for 2013-15.

Assuming that the prevailing labor participationrates remain close to current levels, an additional16million people will enter the labor force overthe 2010-2020 period, compared with about 11million over the 2000-10 period.

The priorities for supporting future growth are:Meeting the needs for a major expansion of in-vestment in infrastructure;

Establishing a stable macroeconomic enviro

ment with improved coordination between mon-etary and fiscal policy;

Reducing the heavy dependence on oil rev-enues for government revenues and expendi-tures;

Increasing investment in building human capac-ities and skills in the labor force and;

Establishing a strong institutional and regulatoryframework in support of private sector activi-ties.

The Government vision for the 2011 to 2020 period

is articulated in the Nigeria Vision 20:2020 Eco-nomic Transformation Blueprint (NPC 2009), andthe Transformation Agenda. The underlying me-dium term strategy for achieving the long-term vi-

Macroeconomic ManagementTo establish macroeconomic resilience, the govern-ment has also made tremendous efforts to reducerecurrent expenditures to allow for completion ofunfinished capital projects. As a result, recurrent ex-penditures have dropped from 74.4% of total budgetin 2011 to 68.7% in 2013. The government has es-tablished an Envelope system intended to enableMinistries prioritize uncompleted capital projects.Along the same lines, government borrowing is ex-pected to fall from Naira 852 billion in 2011 to Nairabillion in 2013.

Nigerias debt to GDP ratio stands at -21% compared

to that of that -42.7% for South Africa and -34.2%across the sub-sahara Africa. Trade has also im-proved remarkably. Imports are down for some keyproducts such as paper making materials and tex-tiles. Non-oil exports have also increased from 9%of total exports in 2008 to 31% in 2012. Oil exportsare now 69% of total exports, compared to 91% in2008.

Public Financial ManagementImprovements

To enhance efficient personnel cost planning andbudgeting in the national payroll systems, the gov-ernment instituted the Integrated Payroll and Per-

sonnel Information System (IPPIS) in 2012. This sys-tem will ensure effective budgeting of payroll costsbased on actual verified numbers and not estimates.To improve acquisition, allocation, utilization andconservation of public financial resources, the Gov-ernment Integrated Financial Management an Infor-mation System (GIFMIS) was also introduced for ef-ficiency. It is important to note that 58 percent of thenational budget is now executed through GIFMIS. Itis expected that about 79% will be executed throughGIFMIS by end of third quarter 2013. Although thesemeasures are admirable, it remains to be seen howthey can be sustained overtime.

Nigerias credit ratings have also improved. Rat-

ings by international agencies like Fitch, Standard &Poors and Moodys have improved to BB- (or equiv-alent). Private firms in Nigeria as a result, are able toraise funds abroad. Access Bank for instance, hasbeen able issue a $350 million Euro Bonds. Nigeriahas also become a preferred investment destinationrecording approximately $7 billion of foreign directinvestment in 2012.

Sovereign Wealth Fund Saving for the futurehas been a policy strongly emphasized by the govern-ment. To execute this policy, the Nigerian governmentestablished the Sovereign Wealth Fund (SWF) in 2012 toimplement a program for putting money aside for emer-gencies. Incidentally, the SWF has been proposed as apotential financing mechanism or option for addressingthe infrastructure deficits in Nigeria in the Infrastructureassessments completed by the African DevelopmentBank.



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sion 20: 2020 objectives are built upon some of thefollowing pillars:

A gradual shift to a service-based economy andmanufacturing, value-addition of agriculturalproducts, agro-processing and beneficiation ofnatural resources (oil, gas, minerals).

That the sectoral contribution of agriculture tothe GDP, will shrink from the current 41.5 per-cent (2009) to 34.3 per cent (2013), as moreagricultural produce is transformed from theirprimary state into processed products, withmore value-added.

A reduction in the present level of food importworth over US$3.3 billion per year by 50 percentby 2013.

For the required structural transformation to occur,however, the binding constraints on the agriculturaland industrial sectors must be addressed, in par-ticular, the extensive infrastructure bottlenecks thathave plagued the country for decades.

The specific objectives of Vision 20:2020 are:Achieving double digit growth rates and main-taining strong economic fundamentals;

Achieving significant progress in economic di-versification;

Stimulating the manufacturing sector andstrengthening its linkage to the agricultural andoil and gas sectors;Raising the relative competitiveness of the non-oil sector, to increase the demand for Nigeriasproducts and services;

Deepening the financial sector and sustainingits stability to enable it finance the real sector;

Encouraging massive investments in infra-structure and human capital and creating an

enabling environment for domestic and privateinvestment; andAdopting pragmatic fiscal management andimplementing appropriate monetary, trade anddebt management policies to support domesticeconomic activities.

1.4. Key Issues And Development

Constraints

The most significant constraints to achieving theVision 20:2020 objectives are:The lack of progress in improving the productiv-ity of private investment in the non-oil economy,observed in agriculture as well as industry and ser-

vices and the resulting weak performance of theindustry sector (growth in agriculture was basedon the extension of cultivated areas rather thanproductivity gains). The performance of the manu-facturing and transport sectors has been a seriousconcern. In 2000, these two sectors accounted for12.4 percent of non-oil GDP, but by 2010 their sharehad declined to only 6 percent. The improvedgrowth performance of the non-oil economy sincethe reforms in the early years of the 2000s is clearlyassociated with a recovery in non-oil private invest-ment to about 10.7 percent of GDP during 2000-09and about 15 percent in 2010-11. However, thesecurrent levels of private investment in the non-oileconomy are still well below the level of private in-vestment equivalent to about 20 percent of GDPthat is typical of the worlds high growth developingeconomies. The challenge for the Government is tocreate conditions for a further significant increase inpublic and private investment in the non-oil econo-my, along with improvements in the productivity ofthis investment.

The very low participation and opportunities in thelabor force for the youth,because the female par-

ticipation rate has been much lower than in manyother lower middle income countries.

The instability of the economy which increases therisk for private investors. The fundamental causeof the macroeconomic instability has primarily beenthe poor management of national resources, par-ticularly, of the oil revenues. Amidst the volatility ofoil revenues, Nigerias domestic policies for reformand improving economic governance has not beenvery effective either in enactment or enforcement.Corruption has instead been widespread, coupled

with lack of transparency and accountability. Dur-ing the three decades from 1970 to 2000, Nige-rias government spending essentially followed theboom-bust cycles of the world oil market, with pe-riods of excessive spending followed by periods ofsustained public under-spending. Other importantbarriers to economic growth today is the violenceand insecurity.

Qualitatively and quantitatively insufficient infra-structure. In the past, public investment in infra-structure has been no more than 9.1 percent ofGDP a level of investment that failed to keep pace

with capital replacement costs and that thereforecontributed to deterioration of the countrys infra-structure.



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Transmission Masts

Chlorination Laboratory - Cross River

State, 2006

State of a rural feeder road in Cross

River State before intervention of

the Bank funded Rural Access and

Mobility Project (2007)

Commuter passenger train in Lagos



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Nigeria has made important progress in improvingmuch of its infrastructure in recent years. Comparedto a number of Sub-Saharan countries, Nigeria hasrelatively advanced power, road, rail and informa-tion and communications technology (ICT) networksthat cover extensive areas of the country.

Unlike some other countries in the West Africa re-gion, Nigeria has developed infrastructure back-bones that have a national reach. However, the con-dition of the road network is poor and as a result,national connectivity is impaired.

Inadequacies of the mass transportation have en-couraged the use of motorcycle for commercial andpublic transportation. Water transportation has alsocontinued to stagnate along with other systems,even though the country has about 3,300 kilometers

of navigable inland waterways. While these oughtto provide easy access to the coast from the hinter-land, they have not been adequate for navigationdue to a lack of dredging and availability of modernvessels. The power transmission grid is national inscope, with most major generation facilities linkedto the grid, but the quality of supply is low. Thereis broad coverage by the mobile communications(GSM), although there are coverage gaps in thenorthern parts of the country.

Nigerias regional infrastructure connections are

expanding, but much remains to be done in thisregard. Nigeria is connected to the South AtlanticSAT-3, MAIN-1 and Glo-1 submarine cables alongthe west coast of Africa, but it lacks fiber-optic landlinks with its neighbors. There are limited pointswhere Nigerias national road network intersectswith the regional network. These include the east-west coastal routes and a few corridors to the land-locked hinterland countries. In the case of power,there is a long-standing interconnector with Niger,and the West Africa Power Pool (WAPP) line, whencompleted, will provide connections to Benin andGhana. However, there are no power interconnec-

tions with Cameroon to the east. The West AfricaGas Pipeline links Ghana to Nigeria and allows theexport of gas for power stations.

A number of important reforms in infrastructure havebeen launched in recent years. The ports sector isexploring pragmatic reforms in the transition intolandlord models and terminal concessions to attractprivate investment into the sector. The power sectoris undergoing a major restructuring that is pavingthe way for performance improvements, including amove towards electricity tariffs that recover a largershare of operating costs in the sector. Major liber-alization measures in the ICT sector have resultedin widespread, low-cost mobile services, a vibrantfixed line telephony circuit, and major private invest-ments in the development of a national fiber-opticbackbone. A strong domestic air transport sectorhas emerged with a handful of private carriers thathave attained regional significance.

This progress notwithstanding, there is widespread

agreement that the inadequate physical infrastruc-ture of the country is one of the major constraintsto sustained and broad-based strong economicgrowth. Addressing these challenges will requirea substantially larger annual level of investment ininfrastructure, a significant increase in annual allo-cations for routine and periodic maintenance to en-sure reliable infrastructure services, and increasedattention to the institutional arrangements that sup-port the infrastructure network of the country andthe related services. Recent studies suggest that ifthe infrastructure endowment of Nigeria were raised

to that of the Africa regions middle income coun-tries, it could boost annual GDP growth by aboutfour percentage points. The main reports deals withthe issue in much detail.

2.1. Transport

2.1.1. Salient features of TransportSector in Nigeria

Roads. At independence in 1960, the national

road network was about 6,500 km and by 2010, thenational road network is estimated to be 197,000km, about 18 percent of which is paved. The Fed-eral primary road network accounts for 9 percent

INFRASTRUCTURE INNIGERIA



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than 75 percent of these locomotives were not oper-ational in 2009. There are also about 480 passen-ger coaches and over 4,900 freight wagons. Lessthan 50 percent of the coaches and wagons were inserviceable condition in 2007.

Inland Ports.Nigeria has substantial domesticwater resources that include rivers, creeks, lagoonsand lakes, and an extensive coastline of about 853km. There are 12 major inland rivers with about3,800 km that are navigable. The Niger River andto a far lesser extent the Benue River (including its

major tributaries and estuaries) are the principalwaterways. These waterways are the major trans-portation routes linking Apapa, Tin Can, Warri, PortHarcourt, Onne and Calabar seaports.

Air Transport. Nigeria has four internationalhubs (Lagos, Abuja, Kano, Enugu and Port Har-court) and 20 domestic airports that are owned andoperated by the Federal Airports Authority of Nige-ria (FAAN). There are 62 private airstrips throughoutthe country, 34 of which have paved runways. Thefour international airports offer scheduled flights to

US, Asia, the Middle East and some European hubdestinations (London, Frankfurt, Amsterdam, Paris),but are only connected to few African capitals (thereare connections between Lagos, Abuja, Accra andAddis Ababa).

Pipeline for Transport of Natural Gas.Asof 2007, the Nigerian network included 3,071 km ofpipelines that carry natural (dry) gas, 124 km thatcarry condensates (wet gas) and 156 km of pipe-lines that carry LPG. The existing gas transporta-tion pipelines, gas processing facilities and otherassociated infrastructure are currently owned byindividual upstream gas producers and are dedi-cated to their respective operations. The NigerianGas Company (NGC) owns and operates 1,100 kmof gas pipelines with a capacity of more than 2.5billion cf per day. The network includes the Alakiri-Obigbo-IkotAbasi Pipeline (Eastern network); andthe Escravos-Lagos Pipeline System (ELPS) (West-ern network), which feeds the commercial nerve-centre of the nation, and fuels the main power sta-tion at Egbin, near Lagos. There is also a dedicatedpipeline infrastructure owned by the NLNG and the

NNPC/SPDC/Total joint venture.national railways company, NRC, owns nearly 200locomotives, including 54 shunt locomotives. More

of the total, with State managed secondary roadsaccounting for about 24 percent of the network. Theremaining 67 percent are tertiary and village accessroads, almost all of which are under the jurisdictionof local governments.

The road network carries at least 90 percent of theinternal and cross-border freight of the country. InLagos for instance, according to LAMATA , there are222 vehicles to every kilometer which is in excess ofthe national average pinned at 11 vehicles to everykilometer of pliable road and increasing steadily.About 30,000 km of the total network is located inthe urban areas of the country.

The road network in Nigeria is currently estimatedto be 197,000 km, about 18% of it paved. This net-work carries 90 percent or more of the internal andcross-border freight of the country. The major trafficgenerators are the main towns, state capitals andespecially to the sea ports and inland ports. About30 km of the total network is located in the urbanareas of the country.

Railways. The network consists of 4,332 track kmand 3,505 route km, characterized by sharp curvesand steep gradients in many sections. Only 30 kmof the track is in the form of double track and allof that is in the Lagos area. The Nigerian Railwaynetwork runs diagonally from the Southwest (Lagos)to Northeast (Nguru) and from the South-East (PortHarcourt) through Kafanchan to the North-East (Mai-duguri). The 3,505 km network is built on a CapeGauge of 1,067 mm.All trains are operated with diesel locomotives. The

Existing railway bridge on the Lagos-Kano line the bridges require

strengthening to allow for higher axle loads and speeds



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Urban Transport.The number of large buses inLagos is small in relation to the other African cities,whereas the minibus fleet in Lagos, Johannesburg,and Nairobi are roughly comparable after adjustingfor the population size of each city. Minibuses andshared taxis also account for a large share of thepassenger movement. Taken together, these twomodes account for 77 percent of passenger traf-fic in Lagos, compared to 68 percent in Nairobi,56 percent in Johannesburg, and 52 percent inAbidjan. The share of passenger traffic accountedfor by large buses is a low of 2 percent in Lagos

compared to 13 percent in Abidjan. A striking com-parison is the number of seats per 1,000 personsfor private cars, large buses and minibuses. In thecase of Lagos there are only three large bus seatsper 1,000 persons much lower than in comparablecities but there are 137 minibus seats per 1,000persons the highest among comparable cities.

2.1.2. Performance of the Transport

Sector

Roads. Nigeria has a road density of 0.21 km ofroad per square km of land area, which compareswell with an average of 0.06 km per sq. km. for theWest and Central Africa regions combined. Theroad density for Nigeria is roughly the same as thatfor South Africa, Mexico, Brazil, Indonesia, and Pak-istan.The main issue is that the quality and quantity ofroad service are inadequate due to lack of main-tenance which has led to the dilapidated state of

road networks. Significant portions of the road net-work are in poor condition, subjecting the processto capacity constraints, with a poor road safety re-cord and weak traffic and safety law enforcement.Banditry and criminal activity on the roads are ram-pant. It is estimated that 40 percent of the Federalprimary road network is in poor condition or worse,and therefore in need of rehabilitation; 30 percentis in fair condition and in need of periodic mainte-nance; and about 27 percent is in good condition.The most recent data about the condition of stateand local government roads dates back to 2003. Atthat time, the state and local government networkwas about 160,080 km of secondary and tertiaryroads, 85 percent of which was in poor condition orworse and 6 percent was in good condition.

Rural Roads.Most recent data show that about47 percent of rural inhabitants live within two kilo-meters of an all-season road, which is well abovethe average of 34 percent for Sub-Saharan Africancountries.

Urban Roads. The road network in Nigeria iscurrently estimated to be 197,000 km, about 18%of it paved. This network carries 90 percent or more

of the internal and cross-border freight of the coun-try. The major traffic generators are the main towns,state capitals and especially to the sea ports andinland ports. About 30 km of the total network is lo-cated in the urban areas of the country.

Road Transport. In 2010 the vehicle fleet wasestimated to consist of about 5.2 million four-wheelvehicles and 5.3 million two-wheelers. The fleetgrew by about 10 percent a year in the past decade.Nevertheless, in 2007 there were only 31 four-wheelvehicles per thousand persons in Nigeria, which islow compared with 79 for Indonesia, 165 for SouthAfrica and an average of 270 for Brazil, Mexicoand Russia. At present, the road transport indus-tries in Nigeria are characterized by large numbersof small-scale operators of goods and passengervehicles. A regulatory framework exists for vehicleregistration, although reporting of vehicle registra-tion by individual state government appears to beincomplete.

Railways. The Nigerian railway system has suf-

fered a long-term decline as a result of competitionfrom road transport which has eroded the rail trafficbase and neglect by the government.The Nigerian rail system has deteriorated and now

A Federal Highway in a fair state but note the absence of routine roadmaintenance (vegetation control)



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the government has embarked on some upgrades.The western line; Lagos Kano, a 1,224 km line hasbeen completed and now functional. The Easternline; Port Harcourt Maiduguri line is expected tobe completed by 2013. The Itakpe Ajaokuta Warri standard gauge rail line is now reported to be77% complete. In addition, some 25 new locomo-tives are reported to have been procured. Some ad-ditional 200 coaches and wagons are reported tohave been refurbished. As a result, available datashows that the number of passengers carried bythe rail system has risen significantly, from about 1

million in 2009 to about 4.2 million in 2012.

accounts for less than 1 percent of transport ser-vices in the country. The rolling stock of the Nige-rian Railways Corporation (NRC) is also in very poorcondition, with a most locomotives, wagons andcarriage out of service because of lack of parts andservicing.

Rail passengers declined from 15 million in the mid-1980s to about 1.5 million by 2000 and most likelyabout one million in 2007. Freight traffic declinedfrom a high of three million tons in the mid-1960s to117 thousand tons in 2000. The amount of freightcarried by the railways in 2000 was equivalent toonly 0.4 percent of the throughput of the ports in2000 and less than 0.1 percent of the throughput in2010. The amount of freight carried had declineddue to deterioration of the level of service and com-petition from road transport and the poor conditionof the infrastructure and rolling stock. Since then,

freight and passenger services have almost ceasedto exist.

The Nigerian rail network continues to operate es-sentially with much of its original facilities. Manystructures and some of the track work are now over100 years old. The declining quality of railway assetsand train services has also led to the disappearanceof intermodal transport nodes and further decline intraffic volumes. The situation has been exacerbatedby management weaknesses and institutional ar-rangements in the railway system. The railways are

a serious drain on government resources, while cur-rently failing to provide a useful economic function.However, recognizing the importance that the railsystem brings to the health of the transport sector,

Ports. As of 2006, the performance of Nigeriasmajor ports was poor by any standards. Nigeriasrating for the Quality of Port Infrastructure Index ofthe World Economic Forum was 3.3 in 2011, com-

Head Office of the Nigerian Railway Corporation (NRC)

RoRo Port, Apapa, Lagos State

Table 3. Selected Indicators for Railway Services

Source: World Bank (2011), 2011 World Development Indicators

pared to 4.7 for South Africa and 3.6 for Indonesia.The only comparator with a lower rating was Brazil.In 2006 general-cargo crane productivity was 8-9tons per hour compared to 30 tons per hour interna-tionally. For container crane productivity, the figure

for Apapa port was 12 moves per hour comparedto 25-30 moves per hour internationally. The globalbenchmark for container dwell time was about seven



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days in 2006, compared with 30 to 40 days in majorNigerian ports. And for truck cycle time, global bestpractice is of the order of one hour, compared withabout one day in the major Nigerian ports.For many years, Nigerias port system was an im-pediment to economic development. Comprehen-sive reform of the port sector began in 2000. Thereform program was designed to remove the mainimpediments to efficient operation and thereby facili-tate streamlining of import and export activities. Themeasures adopted included a shift of managementtoward the landlord port model and the extensive

award of private sector concessions for port-basedcargo-handling facilities. In conjunction with thesereforms, a comprehensive program of concessionsfor key cargo terminals, including container-terminalfacilities, was implemented. In all, 25 concessionswere awarded among the 11 ports under the controlof NPA in the mid-2000s.

Inland Ports. Only very limited use is made of theNigerian waterways for transport of passengers andcargo. Before 1960, river barges transported be-tween 100,000 and 200,000 tons of cargo annually,

and in the 1990s up to 125,000 tons of constructionmaterials were carried annually between Warri andAjaokuta. At the present time, only 1 percent of thetotal cargo of Nigerias ports is transported alongthe Bight of Benin where inland waterways are theonly available mode of transport.

Air Transport. The Nigerian Aviation Industryhas experienced steady growth in the past decade.

Only the three largest international airports (Lagos,Abuja, Port Harcourt) have significant prospects forrevenue generation and are able to cover operatingcosts. The remaining 18 airports managed by FAANapparently have substantial operating losses andrequire Federal Government subsidies. Apparently,none of the airports is in a position to contribute tothe funding of their capital expenditure programs.

The most recent 2012-2013 Global CompetitivenessReport of the World Economic Forum ranked thequality of Nigerias aviation infrastructure at 100 out

of 144 countries. Navigational aids and air trafficcontrol facilities have until recently been inadequatebut benefitted from a major upgrading programme.Most regional airports lack appropriate apron light-ing facilities and thus limit aircraft and airport utiliza-tion to 12 hours daily. The issue of aviation safety isa major concern in Nigeria. Nigeria rated 23rd onAviation Safety Networks list of the 25 geographi-cal regions having the highest number of fatal civilairliner accidents from 1945 to present. Audits re-vealed several deficiencies in air safety, including:(i) inappropriate technical security regulations; (ii)limited expertise of technical staff; (iii) profusion of

airlines with poorly maintained aircraft; and (iv) sec-tor financing difficulties.

Nigeria had its worst air traffic accident between2005 and 2006 (Bellview Airlines). As a result of thelarge restructuring of the domestic airline industryin Nigeria in the past decade, there has been a de-cline in the number of aircraft in service and a sub-stantial decline in the average number of availableseats per aircraft as a result of a shift to smaller air-craft by the current carriers. In addition, the averageage of aircraft fleet and the number has declined

significantly since 2007. Experts argue that giventhe current challenges of airport infrastructure, thissituation should allow for better management andsafety performance of current operations at the na-tions airports.

Pipelines for Transport of Natural Gas.The Gas Master Plan Infrastructure Blueprint in-cludes a network of gas hubs which will consist ofsecondary gas gathering facilities from designatednodes of the upstream gas producers to a networkof gas processing facilities where gas will be pro-

cessed to a national specification and evacuatedvia transmission pipelines. With full implementationof the Gas Infrastructure Blue Print, it is expected

Murtala Mohammed International Airport, Lagos

The total number of domestic and international pas-senger arrivals and departures increased from 9.4

million in 2004 to 14.8 million in 2011 an averageannual growth of 8.3 percent. Domestic passengersaccounted for about three quarters of the traffic inthis period.



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that most transportation pipelines will be intercon-nected. Under this framework, transportation pipe-lines from the well heads to the designated nodeswill be owned and operated by the gas producerswhile pipelines for the transportation of gas from thedesignated nodes to the transmission pipelines will

be owned and operated by the hub operator.

Rampant pipeline vandalization also poses a major

challenge to the gas infrastructure. The Transmis-

sion Corporation of Nigeria (TCN) reported recently

that, sudden losses in power of about 1,598 mega-

watts in certain regions of the country was due togas shortages resulting from the vandalism of two

major gas pipelines supplying gas to eight power

plants in the country.

Urban Transport. A number of problems haveemerged in the Nigerian urban transport system,

including: bad roads, inadequate fleets of buses

and trucks, irregular, inadequate and overcrowded

trains and airplanes, and congested ports. More-

over, there are increasingly serious institutional is-

sues, including a dearth of suitably-trained trans-

port managers and planners, serious issues ofinstitutional coordination, and ineffective regulation

of traffic.

Given that an increasingly large majority of Nige-

rians are expected to be living in urban areas by

2020, it is imperative that measures be conceived

and applied to anticipate this major urban mobility

challenge.

Nigerian megacities like Port Harcourt, Kano, Lagos,

and Kaduna are characterized by high growth rates

driven by in-migration and natural growth, muchof which occurs in informal settlements not served

by the formal base of infrastructure and services.

The rapid urbanization of Lagos metropolitan area,

combined with inadequate or poorly executed de-

velopment plans, has given rise to numerous trans-

portation problems: these include increasing traffic

congestion; worsening state of disrepair of roads;

absence of parks, walkways and public spaces;

deterioration in physical attractiveness and comfort

of road-based public transport; rising levels of road

accidents; increasing rates of traffic-related emis-

sion and atmospheric pollution; and the growingmenace of Okada (motorcycle taxis) transporters

and area boys (thugs and pick-pockets).

The key issues affecting the strategic developmentof the urban transport system in Nigerian cities areas follows:

About 95 percent of urban trips are by road,of which about 70 percent are made by publictransport. Private operators dominate the publictransport system with the use of taxis, unregis-tered fare paying cars, minibuses, and two- andthree-wheeled motorcycles.

Inter-modality of trips is limited. Most city travel-ers have limited options of traveling by rail (light,metro, or tram) or by ferry from metropolitan lo-

cations.Ownership and organization of public roadtransport systems are characterized by haphaz-ard and uncoordinated operation.

There is an absence of comprehensive and in-tegrated urban mass transit public transporta-tion system, along with a proliferation of largelyuncoordinated private operators.

2.1.3. Issues to be Addressed

Roads. Lack of maintenance has been the mostimportant factor contributing to the deterioration ofthe road infrastructure of the country. Other factors,such as lack of enforcement of axle loads for roadsand bridges, have also accelerated the deterio-ration in the quality of the infrastructure. In addi-tions, the large volume of heavy duty trucks plyingthe highways with heavy and bulky loads have alsocontributed to the bad shape of the roads.

It is clear that the need for substantially larger allo-cations of public funding for the maintenance of theroad network is one of the major challenges in the

decade ahead. The Federal Roads MaintenanceAgency (FERMA) is responsible for maintenance ofthe Federal road network. Its resources are derivedfrom the Federal budget. Current estimates of costsper km for appropriate levels of routine and periodicmaintenance suggest that if the entire Federal roadnetworks were in good condition and therefore sub-ject only to routine and periodic maintenance, theannual budget requirement would be about US$ 1.7billion for routine maintenance and US$ 1.2 billionfor periodic maintenance. Current levels of spend-ing on maintenance of the Federal network are a little

more than 10 percent of these requirements. Up-to-date information on the current levels of spend-ing on maintenance by state and local governmentsis not available, but the analysis undertaken for this



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Report suggests that if the entire network of stateand local government roads were in good condi-tion, the annual routine and periodic maintenancerequirements would be about US$ 200 million andUS$ 550 million respectively.

The other major concern related to road infrastruc-ture is that the rural road network falls well short ofwhat is needed to service the rural economy. Manyrural areas with high agricultural potential, abundantnatural resources and a variety of rural enterprisesdo not have ready access to markets because of

inadequate transport facilities and services. Asnoted earlier, agriculture accounts for more than 50percent of Nigerias non-oil GDP, with much of theproduction coming from small-scale family farm-ing. Access to farm inputs and product markets atreasonable cost is key to improved farm productionand productivity.

Road Transport. The existing fleet is character-ized by a preponderance of old vehicles that resultin high vehicle operating costs and excessive levelsof pollution in urban areas.

Four specific concerns related to regulation of theroad transport industry stand out:

Road design standards have not kept pace withincreasing traffic volumes and vehicle weightsand poor axle load control that is causing sig-nificant damage to the existing road network.A lack of road markings, safety barriers, andsignage that are contributing to the high acci-dent and casualty rate on all roads.

Administrative and other bottlenecks on trans-port routes and at border crossings that slowthe movement of goods and people and raisetransport costs.

Railways. The average railway network traf-fic density for NRC in 2007 was about 250 trafficunits per million route-km for both passenger andfreight traffic, compared with 725 traffic units in theearly 1990s. NRCs current performance is amongthe worst in Africa. SETRAG concessions in Gabonhave achieved a ratio of 3,000, Camrail (in Cam-eroon) 1,400 and the state-owned Transnamib (inNamibia) 700.

The Global Economic Forum (GEF) ranks Nigeriasquality of rail transport infrastructure at 95 out of 144countries studied. Rebuilding the network so that

rail services are commercially viable will be a majorchallenge for the country.

Ports. Despite significant progress since 2000,much remains to be done to improve the productiv-ity of Nigerias main ports. Action is also needed toaddress continuing problems of poor customs per-formance at these ports, improve both the marineand landside access to ports, and plan for new ca-pacity infrastructure.

Inland Ports.The National Transport Policy state-ment of 2010 drew attention to the following prob-lems that must be addressed if inland water trans-port is to play a significant role in the decade ahead:(i) a high rate of sediment build up along naviga-ble channels; (ii) physical obstruction, includingwrecks, rocks, outcrops and aquatic weeds); (iii)inadequate government investment in infrastructurefor inland water transport, including inadequateriver port infrastructure; (iv) poor landside connec-tions to river ports; and (v) poor communicationsand navigational aids.

Air Transport. The airline industry is likely tocontinue to evolve in the coming years. The smallercarriers, for example, are undercapitalized and facedifficulties in mobilizing credit. A general problem inthe aviation industry in Nigeria is the availability ofskilled labour. A more bigger challenge is the lackof infrastructure such as modern navigational aids,runways, and adequate airport facilities such aswarehousing and storage houses, that can promoteoperation of increased commerce and use of biggeraircrafts in the identified airports in the country. Thepool of aviation-related skilled labor is composedof an ageing workforce in the public sector and bya brain drain as highly skilled Nigerians find workopportunities outside the country or with large inter-national carriers, especially the Gulf airlines.

A more bigger challenge is the lack of infrastruc-ture such as modern navigational aids, runways,and adequate airport facilities such as warehousingand storage houses, that can promote operation ofincreased commerce and use of bigger aircrafts inthe identified airports in the country.

Pipeline for Transport of Natural Gas. Forthe most part, natural gas reserves have been dis-covered in Nigeria as a byproduct of oil exploration



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and development. Nigerias oilfields have lackedthe infrastructure to produce and market associatednatural gas, and as a result much of it has beenflared. In 1980, 90 percent of gas produced wasflared, and in 1990, 77 percent was flared. For someyears now the policy of the government has been tostop gas flaring through the use of incentives andstiff penalties for gas flared. As a result, the quantityof flared gas declined to less than 50 percent of gasproduction by 2000. There is still a considerablemismatch between robust investments for export-oriented gas projects such as LNG, GTL, or the WestAfrican Gas Pipelines (WAGP) and weak infrastruc-

ture investment to develop natural gas required forelectric power generation and gas as feedstock forthe industrial sector of the local economy.

Urban Transport. There is an increasingly clearunderstanding within Nigeria that sustainable im-provements in urban mobility cannot take placewithout the implementation of proactive policies infavor of public transport development.

The main problems associated with the passenger- bus operator business groups in Nigerian citiesare as follows: (i) low level of service in terms ofspeed and reliability; (ii) buses are old and unsafefor passengers; (iii) fares are relatively high forsingle trips with no seasonal or multi-trip ticket op-tions and without subsidies given to disadvantagedpopulation groups; (iv) poorly organized bus parksthat create major traffic congestion along main roadcorridors; (v) no common ticketing system to enabletransparent transfers from one bus to another; (vi)no basic passenger information system exists re-garding route, schedule, fares and transfer options;and (vii) no priority measures for buses exist.

Many of the observed shortcomings in the urbantransportation system in Nigeria stem from sectormanagement weaknesses. Nigeria is characterizedby the absence of a planned and effectively inte-grated multi-modal transport system that incorpo-rates rail and water transport, where applicable, tocomplement road transport on which there is over-dependence. There does not appear to be a well-articulated policy and strategic framework for theurban transport sector.

Institutional responsibilities for urban transportdevelopment and service provision among vari-ous agencies are fragmented at the three levels ofgovernment with no coordinating framework. Two

Federal Ministries and one Commission are cur-rently involved in the planning and implementationof urban transport sector projects at Federal Gov-ernment level: the National Planning Commission(NPC) which has responsibilities for all sectors; theFederal Ministry of Works (FMW) which is responsi-ble for the Federal Road Transport sub-sectors; andthe Federal Capital Territory Administration (FCTA)which is responsible for the urban and rural roadssub-sectors within the FCT.

2.2. Energy

Turbine and Generator House for the Jebba Hydro-Electric PowerStation

2.2.1. Salient features of the EnergySector in Nigeria

Generation. The total installed capacity of thegovernment-owned plants is 6,978 MW, but avail-able capacity in 2010 stood at about 3,360 MW equivalent to only about 48 percent of installed ca-pacity. This has marginally improved to about 4,300

MW peak in 2012. The facilities currently owned bythe Federal Government include three hydropowerplants with an installed capacity of 1,900 MW, oneoil-fired plant with a capacity of 60 MW, one coal-firedplant with a capacity of 30 MW, but which is no lon-ger in operation, and seven gas-fired thermal plantswith an installed capacity of 4,988 MW. The total in-stalled capacity of the 11 on-grid private generationfacilities that were operational at the beginning of2012 is 2,314 MW. The total installed capacity wasabout 9,384 MW at the end 2011. Total availableinstalled capacity declined from 5,880 MW in 2009,to 5,550 MW in 2010 and 5,400 MW in 2011, farless than the estimated demand of 10,000-12,000MW. The result is frequent and unpredictable loadshedding, so much so that those who can afford



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electricity as well as about 55 percent of the urbanpopulation.Failure to pay bills and non-technical losses (whichstem mainly from illegal connections) account for 25percent of the total losses sustained by DISTCOs in2010. The introduction of prepaid energy meters isexpected to help with revenue collection.


There is no doubt that there are sufficient domesticresources to meet the power needs of the nation.

These resources include oil and gas, coal, substan-tial hydropower capacity and other forms of renew-able resources. The exploitation and utilization ofthese resources have been hampered, like other

aspects of national development, by the grossly in-adequate indigenous technical capacity and poorgovernance in the sector and lack of long rangeplanning.

Renewable energy is marginal in the energy mix.The barriers to the development of renewable elec-tricity are: (i) policy and regulatory issues; (ii) issuesrelated to investment and financing arrangements;(iii) technological obstacles; (iv) issues related topublic awareness; (v) lack of technical standardsand quality control; (vi) intermittent availability of

these energy sources and inadequate resource as-sessments.

The main cause of Nigerias inadequate power sup-ply is a lack of investment in the sector by a succes-sion of governments over the past 25 years.

Faced with the challenge of providing electricity andthus improving the economy with all its concomitantsocial and economic benefits, governments since1999 have initiated a number of interventions, manyof which until recently, have failed in implementa-

tion due to inadequate planning and the absence ofcrucial technical support.

The Nigeria Vision 20:2020 report sets out clearlythe main challenges facing the power sector:

An inadequate power generation capacity.Insufficient supply of fuel for thermal power sta-tions.

Issues related to the choice of technologies forpower generation.

An overloaded transmission and distributionnetwork, including obsolete and inefficientequipment, lack of modern control systems for

management of power supply, and widespreadtheft of equipment.Weaknesses in the institutional and regulatoryframework and lack of detailed assessments re-lated to future demand for power.

Inadequate framework and operating environ-ment for private investment in the power sector.

Inadequate pricing policies for electric powercoupled with weak capacities for billing and rev-enue collection making the sector fundamentallynon sustainable financially

Capacity constraints with respect to the skills of

the power sector workforce.

Addressing the tariff and revenue collection is a top

The power sector has also been characterized by ahigh degree of operational inefficiency and under-pricing. As of 2005, only 64 percent of billed revenueswere collected. Distribution losses were as high as30 percent, compared to best practice levels of 10percent. Tariffs covered about 28 percent of the costsof power supply. In 2005, Nigerias residential powertariff was around US$0.03/kWh among the lowest inAfrica and well below the average of US$0.16/kWhfound in African countries predominantly reliant onthermal generation technologies

Spaghetti power distribution lines

Table 5. Composition of Electricity Consumption in (GWh)

Source: For 2000-2010, (UN Energy Statistics database and CIA WorldFact book. For 2011, estimates by authors. Population data from AnnexTable 1.6 of main report are to be used to calculate consumption percapita.



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priority for the power sector, in order to mobilize theresources necessary to improve its performance,improve the quality of service, increase electricityaccess rate in Nigeria and meet the future demandthat will be generated by the ambitious growth pros-pects under Vision 20:2020.While substantial hidden costs are typical of Africanpower utilities, the scale of the problem in Nigeriais much larger than anywhere else. In response tothese increasingly severe problems, the FederalGovernment launched a major effort in the latterpart of the 2000s to reform the power sector. The

reforms led to the horizontal and vertical unbun-dling of the national power utility into six generatingcompanies, one transmission company, and elevendistribution companies. In August 2010, the FederalGovernment issued the Road Map for Power SectorReform. The strategy recommended removing ob-stacles to a major role for the private sector in bothpower generation and transmission and distributionin Nigeria in the decade ahead. The Governmentalso took action to address the problems associ-ated with power pricing policy and cost recovery.These actions set appropriate pricing mechanismsto ensure the financial viability of the public distribu-

tion companies and off takers in power purchasearrangements. The government also committedto a Multi-Year Tariff Order (MYTO), introduced in2005, to raise the power tariff to $0.07/kWh by 2011and continue with further actions on pricing beyond2011.MYTO is expected to provide for periodic reviewof the cost parameters through the minor (annual)and major (five-yearly) review windows. The an-nual review of the framework takes into cognizancechanges in gas price, inflation and exchange rateswhile the major review considers holistic changes in

major parameters.

2.3. Water Resources and Water Use

2.3.1. Salient features of WaterResources and Water UseSector in Nigeria

Irrigation. Nigeria is endowed with adequate wa-ter resources. The total capacity of existing damsis about 51 billion m3. The total renewable waterresources of the country were equivalent to 1,893

m3 per capita in 2008. About 47 percent of the wa-ter storage capacity in active use is accounted forby single purpose hydropower dams, with multipur-

2.3.2. Performance

Irrigation. Withdrawals for agricultural and in-dustrial use accounted for about 68 percent oftotal withdrawals in 2011, with households andother domestic uses accounting for the remaining32 percent. These withdrawals accounted for onlyabout 5 percent of the total available internal water

resources available. Recent studies concluded thatNigeria has by far the best prospects for irrigationdevelopment of any country in Sub-Saharan Africa.According to the World Bank, about 75 million hect-

Sedimentation Plant - Cross River State, 2006

Water Supply. In 2010, about 4 percent of thepopulation had access to piped water compared to 16percent for Sub-Saharan Africa as a whole and muchlower than the 60 percent average for Middle IncomeAfrican Countries. Access to improved water is much

higher in urban than in rural areas. In urban areas,74 percent of the population had access to improvedwater in 2010, compared with only 43 percent in ruralareas where there is a high dependence on surfacewater and a much larger share of wells and springsare unprotected.

Sanitation. Only 31 percent of the population hadaccess to improved sanitation in 2010. The implica-tion is that almost 110 million people in Nigeria did nothave access to improved sanitation at that time. Some12 percent of the Nigerian population in urban areasand 31 percent of the population in rural areas still

practice open defecation. It should be noted that thepercentage of the population with access to improvedsanitation has been declining both in urban and ruralareas over the past two decades.

pose dams accounting for a further 41 percent ofcapacity in use. Single purpose irrigation and watersupply dams account for the remaining 12 percentof active capacity.



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Sanitation. Over the past two decades therehas been a steady decline in the share of the urbanand rural populations in Nigeria with access to im-proved sanitation. With only 31 percent of the popu-lation having access to improved sanitation in 2010,the implication is that almost 110 million people inNigeria did not have access to improved sanita-tion. As a result of low access to improved sanita-tion, the mortality rate due to poor sanitation is high,with reports that 5 to 20 percent of deaths resultfrom water-borne diseases such as diarrhea, chol-

era, typhoid, guinea worm and bilharzia. Access toimproved sanitation in Nigeria is substantially lowerthan in any comparable countries.


Irrigation. Virtually all of Nigerias dams are un-derutilized, with only 73 percent of total capacity inactive use. The dam storage capacity needs to beincreased with a volume of 250 m3 per capita. Thisis low compared with an estimate of about 838 m3for Sub-Saharan Africa as a whole.

Public sector irrigation schemes have performedpoorly for a number of reasons, and as a result there

has been substantial deterioration in the facilities.Many are now in urgent need of renovation. Privatesector investment which account for more than 80percent of the area that is irrigated is substantiallyaffected by the poor performance of the irrigationsystem.

Water Supply. A major concern relates to themismatch between the revenues collected for waterservices and the costs of service. Most of the statewater boards in Nigeria have low annual revenuesthat stem from low prices charged for water servic-

es and large amounts of revenues that are not col-lected. Revenue collection is as low as 10 percentof the amounts payable in some cases. Moreover,many boards have substantially inflated operatingcosts, in part due to overstaffing, and depend onunpredictable state budget allocations.

Sanitation. The key issue to be addressed is thelow rate of access to improved sanitation. For suc-cessful implementation of a major program for ex-pansion of access, a wide range of issues relatedto the design and implementation will have to be

addressed, including: (i) the lack of mechanisms forpublic interventions that support the policy, leavinghouseholds with the sole responsibility for acquiringthe facilities required for improved access to sanita-tion; (ii) wide-spread rural poverty which makes itdifficult for individual rural homes to implement thispolicy; (iii) insufficient capacity at all levels of gov-ernment related to the design and implementationof programs that can meet the ambitious targets forimproved access; and (iv) lack of mechanisms thatsupport the entry of private entrepreneurs into ser-vices related to provision of improved sanitation.

Conventional Water Treatment - Surface Water Cross River State, 2006

ares of land, equal to about 82 percent of the totalland area, is suitable for some form of agriculture.The FAO estimates that 2.076 million hectares aresuitable for irrigation, however, only 10 percent ofthis potential area is actually under irrigation, andonly 14 percent of the area (about 300,000 hect-ares) is equipped for irrigation, which is less than 1percent of the cultivated land in Nigeria.

Water Supply. Performance in providing thepopulace with access to improved water has beendisappointing. Of particular concern is the poor per-

formance with respect to access to utility water. Nige-ria is well short of meeting its Millennium DevelopmentGoal (MDG) of providing 75 percent of the populationwith access to improved water by 2015. Given thatabout 93 million people (27 percent of the population)had access to improved water in 2010, achieving theMDG target would require that an additional 87 millionpeople gain access to improved water during 2011-2015 a highly unlikely outcome.



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2.4. ICT

2.4.1. Salient Features of the ICT Sectorin Nigeria

The total number of users of the internet, and mo-bile and fixed line phones has increased from about660,000 in 2000 to almost 143 million in 2011. Thepercentage of the population living within range of aGSM signal has expanded rapidly, reaching 60 per-cent in 2006 and nearly 70 percent by 2009. Prac-tically all urban areas are fully covered and abouthalf of the rural population is within reach of a sig-

nal. According to World Bank data, private sectorinvestment in communications facilities amountedto about US$3.4 billion during 2005-10, with muchlarger amounts spent on operations and mainte-nance of the networks. One of the distinguishingfeatures on the Nigerian telecommunications net-work is that it has no competitive fixed line sector.Market liberalization policies of the Governmenthave resulted in entry of 30 active, fixed-wirelessoperators as of end 2009.

2.4.2. Performance

Nigeria has made substantial progress in the de-velopment of ICT infrastructure. In particular, ithas successfully developed a national fiber-opticnetwork. Unlike many other African countries thatare developing these networks as publicly-ownedfacilities, Nigeria has liberalized the market for fi-ber-optic infrastructure. As a result, there has beensubstantial private investment in this infrastructure.The country now has a fiber-optic network that con-nects the major cities of the country. However, it isvery unlikely that the private sector will extend the

network to small urban and rural communities.

Despite spectacular development over the lastdecade, a deep digital divide continues to sepa-rate Nigeria from more advanced economies in theworld. Nigeria ranked a low 13th among the 29Sub-Saharan Africa countries included in a recentsurvey. The divide is especially deep in terms ofthe quality of ICT-related infrastructure, affordabilityof ICT and the availability of ICT-related skills. Withmobile telephony subscriptions of 55 per 100 per-sons, Nigeria ranks 122 among

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