Transportation and economic growth relationship has divergence

Transportation
cost accounts for more than 30% of the value of delivered products and this
high cost is attributable to the inadequacy and inefficiency in Nigeria’s
transport infrastructure whose needs cut across different sectors of the
economy such as manufacturing, health, etc and is central to economic growth
and development (Oni, 2004). Infrastructure Concession Regulatory Commission
(ICRC), 2017 averred that Nigeria as a country losses 2% of its GDP yearly due
to inadequate infrastructure translating to N2.03
trillion based on the country’s 2016 nominal GDP of N101.59 trillion. The growth in the number of road accident is
equally alarming which to large extent is due to bad road infrastructure
resulting from faulty design, poor drainage system and unpaved road that can
easily be washed away.

The Nigerian government
has dedicated huge financial resources in couple of years towards road
infrastructure development with the intention to stimulate economic activity.
Efficient infrastructure development underlies the integration of the national
economy and helps in spreading its benefits (Ubi, Eke and Oduneka, 2011). The dearth
of infrastructure to drive economic growth is not Nigeria-specific; it is an
African problem, or more generally a problem characteristics of developing
economies. Agenor (2010) opined that in sub-saharan Africa in particular, only
16 percent of roads are paved and less than one in five Africans has access to
electricity. With the largest road network in West Africa and the second
largest south of the Sahara, Nigerian roads are poorly maintained and are often
seen as a cause for the country’s high rate of traffic fatalities (Aderamo,
2012).

An interesting
catalogue of the woes and opportunities plaguing the Nigerian transportation
sector, especially road infrastructure is that a total road length of 200,000km
as at 2014 with only about 15percent of these roads paved and 28 percent of
them are not motorable, with over 5 million vehicles ply them (El-Rufai, 2011
and FMW, 2013). This overbearing pressure and overuse result in staggering N450 billion being spent annually by
Nigerian road users to repair their vehicles.

In the literature
many studies conducted on infrastructure and economic growth relationship has
divergence results. Most of the studies find positive link between
infrastructure and economic growth (Adesoye, 2014; Easterly and Rebelo, 2003;
Dash and Sahoo, 2010; Canning and Pedroni, 1999; Ijaiya and Akanbi, 2009;
Srinivasu and Rao (2013); Fatkota, 2014; Yasim, 2009). This is however not
particularly surprising since empirical evidence on the subject matter is not
as clear cut, as some studies find a negative relationship between the
variables Maku (2009); Egbetunde and Fasanya (2013), Onuwah and Akujobi (2012).
The direction of causality also varies, studies like Sturm, Jacobs and Groote
(1999), Dash and Sahoo (2010) Pravakar, Rajan, Dash and Nataraja (2010) found
unidirectional causality that runs from infrastructure to growth while studies
like Onakoya, Salisu and Oseni (2012), Kumo (2012), Rudra et al (2013) and Tong, Yu and Rolank (2014) found bidirectional causality
that runs between the variables, implying that infrastructure and economic
growth has a feedback effect. However, Keho and Echui (2011), Onikosi-Alliyu
(2012), Snieska and Simkunaite (2009) and Kustepeli, et al (2012) found no causal link between the two variables.

Therefore, the condition
of road infrastructure in Nigeria is worrisome, where only 18% of the nation’s
total road networks which takes 90% of the persons across the country is paved
Price Waterhouse Coopers (PWC, 2015). Nigeria has relatively advanced
infrastructure network that covers extensive areas of the nation’s territory.
It is inadequate though, and has been described as one of the leading
impediment to the nation’s growth (PWC, 2015). Road systems are grossly
inadequate of the 50,000km trans-african highways, 30% are unpaved and 50% are
in poor condition (Saghir, 2017).

The poor state of
Nigeria’s road network maybe attributed to historic low levels of investments
in road infrastructure as well as weak contracting procedures and poor planning
of road construction projects and inadequate maintenance (Lionel and Peter,
2016). From this review, there is no consensus among researchers on the nature
and impact of road transport infrastructure investment and economic growth in
Nigeria. Further investigation into the matter is of ultimate necessity for
Nigeria. In this regard, it is imperative to evaluate the short and long run
infrastructure investment in road impact on economic growth in Nigeria and
determine whether the continued increase in road infrastructure investment in
Nigeria is justified.