Over the years, indigenous companies in Nigeria have recorded low level participation in railway infrastructure development projects, most times been sidelined in large scale activities across the country; ADEOLA TUKURU writes .
Some of the benefits of indigenous companies in railway infrastructural development in Nigeria is that it provides the driving force necessary to sustain economic growth.
Other benefits of the localization of firms is that it allows infrastructural provisions to be prioritized which give firms a competitive edge while offering access to raw materials, skilled labour, technology and materials.
Thus the role of indigenous companies such as Metro technicals Nigeria limited, Costain Nigeria limited among others in railway infrastructural development is indispensable.
Reports on the ongoing modernization of railways in Nigeria, has shown that the federal government sought the participation of a number of foreign actors in this effort, including the African Development Bank with German-Nigerian firm Julius Berger for the central trunk line, and, controversially, a new concession with General Electric for the existing narrow-gauge network.
The largest projects in this sector, however, is dominated by Chinese firms. China Civil Engineering Construction Company (CCECC), a subsidiary of China Railway Construction Company, is involved in multiple infrastructure projects across the country, including the Lagos airport expansion, numerous road projects, and inner-city light rail projects in Abuja and Lagos, all financed with concessional loans from the Exim Bank of China.
In the railway sector, Chinese finance is backing two major standard-gauge rail (SGR) projects. The first is an upgrade of the Western trunk line from Lagos to Kano, replacing the colonial track.
The Minister of Transportation, Rotimi Amaechi confirmed that China is expected to approve a new $5.3billion loan package to build the Ibadan-Kano rail line with funds expected to have been available October last year.
The minister further said the Chinese have already released $1.6billion to support the ongoing construction of the Lagos-Ibadan rail line.
The loans Amaechi referred to is different n the interview from the $22.7billion new loan requested by President Muhammadu Buhari and approved at the beginning of the month. Most of the $17 billion will reportedly come from the China Exim bank.
Implications
Apart from its benefit , a sporadic and fragmented pattern of network development reduces the economies of scale that gives railway infrastructural networks their efficiency and cost advantages.
Other implications for the attractiveness of the SGR network to investors and potential private finance, and raises questions over the feasibility and long- term economic viability of these increasingly sprawling networks.
A longer-term question remains over how the government will service these loans: it is highly unlikely that routes will recoup their cost through user fees, and low commodity values have already strained government’s budget and the ability to finance new projects.
These calls for a focused, political will to devise policies and create the enabling environment for improving Nigeria’s indigenous content in the railway industry .
The role of Sukuk bond
The Sukuk will be listed on regulated exchanges similar to previous issuances. However, secondary market liquidity may be limited by the Sukuk size and the number of participants willing to trade on the exchanges.
Furthermore, the price of the Sukuk may be volatile in response to macroeconomic indicators such as interest rates, inflation and developments in local and international capital markets.
There is, therefore, a possibility that the Sukuk may not be easily disposed of at prices and volumes deemed appropriate by holders before maturity. The Sponsor has a strategic goal of deepening the domestic Sukuk market and is expected to undertake further issuances to increase the size of the Sukuk market in the short to medium term.
Stakeholders opinion on indigenous innovations
In a chat with Blueprint, the Managing Director of Metrotechinal Nigeria Limited, Mr Mike Okoye stated that it was time the Nigeria government fashion out a plan for indigenous companies.
He said the federal government
needs a strong commitment in building substantial stocks of human, social and physical infrastructure by engaging indigenous companies .
According to him, most of the indigenous companies across the country can rehabilitate old existing tracks as it isn’t necessarily inviting Chinese companies (CCEC) to do it for us .
“There are tracks Nigerians have constructed far back and it is no big deal for us to handle it because we have the resources and it will also save the country the cost of accumulating debts .
On some of it achievements in construction of Railway, Okoye explained that “As far back as 1993 down to the year 2000, our company was part of those companies who gave accurate data on railway construction of its First slippers .
“Some of these Chinese companies don’t know it but they bidded for the contract and won . We constructed 15killometers from Iju to Ijoko road from 2006 to 2008 for track dualisation .
“We also did the 61killometres between Zongoma and Gombe town and we also did the rehabilitation of rail from Ashaka branch in 2007,2008 and 2009,” he said.
In a paper presentation by Mr Caleb Muyiwa Adelowo from the National Centre for Technology Management, developing an indigenous innovation agenda in most sectors including the railway sector of the economy in Nigeria would propel entrepreneurial inclinations and foster the creation of small firms as they are seen as flexible drivers of innovation .
He further said creating supportive ambience got the adoption and adaptation of existing technologies, and creation of new technologies are sustainable for the local economy instead of over reliance on the imported technologies in China.
He also advised regulatory agencies to come in to ensure conformity to intern standards in terms of production, distribution and quality .
Also, a Research Fellow and Head, Division of International Economic Relations at the Nigerian Institute of International Affairs, Lagos, Efem N. Ubi, said for any plan to succeed, there has to be political will across al spectrum of the industrialization programme, including planning, trade protection, development finance and public investment in strategic industries.
He said a lot of people see corruption as the bane of Nigeria’s development and industrialization. While endemic corruption has been a major impediment to Nigeria’s development, China, India and a lot of the newly industrialized countries of Southeast Asia have made significant strides in industrialization while still grappling with systemic corruption.
Unlike China’s industrialization which was achieved by mostly internal reorganization and acquisition of knowledge and technique from abroad ,it’s been observed that Nigeria’s industrial progress has so far been charted largely by foreign capital and expertise .
The basic objective of patronizing Nigeria is not merely to accelerate the rate of economic growth and the rate at which the level of living population can be raised , it also gives her an increasing measure control over her own destiny .
