$2 billion puts Nigeria’s railways back on track

$2 billion puts Nigeria’s railways back on track

Plans to turn Nigeria into a regional transport hub could create hundreds of new jobs. GE Africa and the Federal Government are working together to rehabilitate Nigeria’s railways, whilst training new engineers. More than 2,000km of railway are due to be renovated, at a cost of $2 billion.

Nigeria’s economy has been growing at more than 5% for most of the last decade, but the country’s infrastructure has lagged behind, slowing the country’s development.

Nigeria has a fairly extensive rail network – around 3,500km in total, connecting major cities and ports. However, that network has historically suffered from a lack of investment, and volumes of passengers and freight have declined over the past several decades. Transport and logistics are often cited as a major barrier to investment and business growth.

The Federal Government, the Nigerian Railway Corporation and GE are working together to modernise and expand Nigeria’s rail infrastructure to reduce the cost of doing business and connect the country to the growing markets across the region.

The company’s large-scale involvement in the railway sector began in 2009, explains Mohammed Mijindadi, the head of GE’s transportation business in Nigeria. The government of the thenpresident Yar’Adua had issued a number of contracts to rehabilitate the country’s dilapidated railway infrastructure.

“At the time that we signed the C2C, the infrastructure was in a pretty poor state,” Mijindadi says. The government ordered 25 locomotives, which GE delivered in 2010. The agreement went far beyond the import of vehicles and GE is laying the ground for a far more ambitious phase of the relationship, which aims to transform Nigeria’s transport sector by building an assembly hub for locomotives in the country.

“It will be a source of employment and one which can support supply, and sustain development programmes, and it will also be a very good thing for localisation,” Mijindadi says.

Providing jobs for Nigeria’s young, growing population and diversifying the economy intovalue-added sectors, such as manufacturing and vehicle assembly, are vitally important for the country’s ongoing growth and development. Building this domestic talent base in engineering and creating a manufacturing facility are important steps towards the development of the country. In the longer term, it is envisioned that the facility will become West Africa’s locomotive production hub, servicing the growing economies around the region.

“The hub is a potential play, considering the role that Nigeria plays in the region,” Mijindadi says. “Looking at the movements in the industry, we believe the rail industry will definitely pick up.” GE has a similar assembly hub in South Africa, servicing the southern Africa region. South Africa has also provided the blueprint for the localisation component of GE’s transport initiatives in Nigeria.

“We are not expecting to manufacture these locomotives in Nigeria, it is more assembly. What we have said is that we’ll work with the government to achieve up to 25% local content over a 10-year period. What we were hoping to do is to break it down into chunks.”

In the early stages, this will mean more basic tasks such as welding and fabrication will be performed locally. As the initiative develops, GE hopes to establish a supply chain in the country that is capable of taking on more complicated parts of the assembly process, possibly bringing in foreign firms to build capacity in local enterprises.

To further the development of a human capital pool in Nigeria, GE will support the establishment of a technical training university for engineers and managers, specialising in the demands of building and operating railway systems. This facility will include state-of-the-art teaching infrastructure, programmes for engineers, technicians and college graduates and hands-on experience. So far, GE has trained more than 100 NRC maintenance and service engineers in Lagos and training 10 engineers in Brazil.

In the interim, the company has deepened its involvement with the country’s railway infrastructure, exploring partnerships with other consortia that are developing projects in the country’s individual states. This includes a deal to participate in the development of the Lagos “Blue Line” light railway system, which will improve passenger transport in Nigeria’s commercial capital and take some of the pressure from the road network.

“Even though it’s not tied into the C2C, it’s an example of how we’ve been able to come in, work with a local consortium on ourdesign for the signalling system and also our best practices with regards to opening our doors to international partners that we have in the global industry in executing this light rail project in Lagos,” Mijindadi says. “Our commitment extends beyond the Federal Government, and we’re also trying to get some participation in state-run projects within the country.”

This article was written in collaboration with Global Electric.

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Written by African Business Magazine

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