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2020: How Transport Sector Can Grow Nigeria’s GDP – Folarin

2020: How Transport Sector Can Grow Nigeria’s GDP - Folarin


By Kenneth Jukpor

Otunba Kunle Folarin is the Chairman, Nigerian Ports Consultative Council. In this exclusive interview with MMS Plus newspaper, he gIves an appraisal of the nation’s economy in 2019, scrutinizing the effects of major global activities on Nigeria and proffered a thrilling insight into 2020. Enjoy it:


How would you appraise the economic activities in Nigeria in 2019 from a national outlook, with special emphasis on the port sector?

The maritime industry is within the global concept. So, let us start by looking at the activities that transpired on the global terrain especially those that affected international trade and consequently, Nigeria. Globally, 2019 was a year of partition because the big players had disagreements in balance of trade, particularly the United States of America (USA) and China. This is very important to us because Nigeria trades substantially with China and if there is an issue within the international trade Nigeria would either be a beneficiary of a victim of the disagreement.

In perspective, there has also been a tussle and disagreement between the United Kingdom (UK) and the European Union on the issue of Britain exiting the EU. This is also significant because Nigeria has a big relationship with the UK and the EU.

Summarily, these disagreements affected Nigeria in the sense that there was no opportunity to get trade support while that argument was going on. You can see that some of the projects handled by the Chinese companies such as the railways and bridges were stuck. They weren’t moving as they ought to. You could also see the disagreement between Nigeria’s Minister of Transportation and the Chinese companies as they failed to meet the completion date for projects that ought to have been finalized at the end of 2019.

There is an African saying that, “When two elephants fight, the grass suffers.” It means that the weak gets hurt in conflicts between the powerful.

On the national level, the nation’s Gross Domestic Product (GDP) didn’t grow, instead it dropped. The inflation rose to 11% and hovered between 10% and 11.9% throughout 2019 according to reports. In actual sense, the main indicators showed that it should be about 13% inflation.

Don’t forget that Nigeria tried to borrow $30million in the same year and that signified some problems in getting finance to support capital expenditure and some recurrent expenditure.

Having said that, when you look at how we ended 2019, with that level of inflation, drop in GDP with meant production dropped. Also, the 2019 budget wasn’t performed until the last quarter of the year. This factor suggests that the performance of 2019 budget would be less than 40%. The nation was in an unofficial recession that was certainly unexpected.

Do you think the 2019 presidential elections also played a role in the economic activities?

The election occupied the time and focus of the government. Essentially, the economy faced so many serious problems including financing, effects of international trade conflicts and other issues that arose during the year.

In 2019, it was reported that the transport sector didn’t contribute significantly to the GDP growth and the economy of the nation. How do we correct this trend in 2020?

We must work hard to get the transport sector recognized as a crucial player that could contribute to the GDP of the nation. There has been no definite assessment of the transport sector for its inclusion in the GDP postulation of the country. We must also understand that the vehicle for economic growth is largely driven by transportation. Transportation ought to be given the attention it deserves so that it could contribute to the GDP of the nation. In order to actualize this, we must develop a full capacity for intermodal transport system to work.

There must be a synergy between the transport industry and other economic axles in the country such as; agriculture, mines, power and other social services that will enhance the well-being of the people. The transportation system is a large indicator as to how the other economic arms are performing. There must be a holistic national approach to ensure that there are roads and rails linking the farm settlements to urban cities for ease of transportation of the products to the consumers.

All modes of transportation must be combined to produce results in line with the goals of other economic arms. The modes must also be combined to provide the necessary synergy in terms of capacity and absolute attention to contribute towards the development of the nation’s economy. We must also realize that we are in competition with other countries.

Within the ECOWAS formation, you find that Nigeria isn’t maximizing its potential in terms of moving the trade between the satellite countries surrounding Nigeria and the landlocked countries interwoven with Nigerian land mass. Don’t forget that up to 70% of the economy of West and Central Africa is domiciled in Nigeria. We must be conscious of this and take full advantage of it.

There has to be a Single Window to ensure one-stop transactions for payments at the ports. NPA has one, Customs has another but there has to be synergy so that we can have one with all agencies linked. With the ideal Single Window, transparency and speed in port transactions to reduce the cost of delays in the processes, the transport sector will boost the nation’s economy.

River ports are one of the opportunities that the nation could tap into. This will bring the cargoes and trade nearer to the people.

Developing the GDP via the transport sector should be a holistic plan and the target should be 25% in terms of its contribution. This is possible because transportation encompasses all the different modes including rail, road, sea, aviation and piping.

People should have an environment that supports investments in the transport sector. We talk about ship building and the disbursement of the Cabotage Vessel Finance Fund (CVFF). I would suggest that we begin to look beyond the CVFF and explore alternative funding opportunities; however, the role of ship-owners in providing seatime for cadets should be recognized and prioritized.

Nigeria’s 2020 budget of over 10trillion sees about 24% reserved for capital projects and N123 billion for the Ministry of Transportation. Is that sufficient for the transport infrastructure development outlined for the year?

Firstly, it is important to understand the philosophy of the budget and what it intends to achieve. Does it tend to achieve growth or consolidate on existing platforms for development? Does it intend to free the economy and allow players particularly FDIs play a big part in the nation’s economy? We must realize that globalization is going into recession. Globalization used to be the driving philosophy for intentional trade but it is taking a nap as a lot of countries have begun to look inwards, being nationalistic and prioritizing protectionist tendencies. A case in point is the US conflict with China and the UK and the EU. There is an inward looking phenomenon coming up across the world that would affect the inflow of FDIs. If countries are looking inwards and applying protectionist tendencies, it means that trade barriers are really coming up.

It is important to note that the 2020 budget sees capital expenditure account for the N2.4trillion while recurrent expenditure is at N4.8trillion. You find that the recurrent expenditure outweighs the capital expenditure while the debt servicing figures also outweighs the social welfare. This means that the implementation of the 2020 budget will not reflect the projected growth in infrastructure such as railway, power, roads, etc.

For the transport sector, the N123billion allocated is insufficient when considering the massive rail projects and others sub-sectors of transportation in dire need of finance.

For the port sector, there wasn’t much improvement in terms of infrastructure and efficiency to meet the activities at the ports. Most nations are looking inwards to build indigenous capacity and Nigeria should model its economy to do same. We can start looking inwards and prioritizing national interest by reserving the available project cargoes and export cargoes to Nigerians while other cargoes can be determined freely.

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