The Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, has emphasized that the concession of Nigeria’s major roads in poor condition will help curb inflation, increase productivity, and stabilize the Naira.
Thank you for reading this post, don't forget to subscribe!Speaking on Channels Television’s Business Morning on Monday, Rewane highlighted how the initiative, driven by the Highway Development and Management Initiative (HDMI), would attract private-sector investment in road infrastructure through a Public-Private Partnership (PPP) model.
He explained that this approach allows the government to step aside, enabling private investors to fund, maintain, and manage roads, ultimately easing transportation challenges and reducing economic losses.
Impact on Inflation and Productivity
Rewane stated that poor road infrastructure is a significant driver of inflation in Nigeria, as it disrupts the movement of goods and services.
“Kidnapping is low, productivity increases, and the cost of transportation, which affects the prices of goods, will reduce,” he said. “So, you would now see the prices of goods begin to come down.”
He further explained that inflation is driven by low productivity and an excessive money supply. While monetary policies can control money supply, the root cause of inflation is reduced productivity due to transportation challenges.
“When goods are produced but cannot reach the market due to bad roads, it leads to post-harvest losses,” he said. “This, combined with high fuel prices, contributes to rising inflation.”
Stronger Naira Through Inflation Control
Rewane linked inflation directly to the strength of Nigeria’s currency, explaining that when inflation is high, the Naira weakens.
“There is a strong correlation between inflation and exchange rate weakness—the higher your inflation rate, the weaker your currency,” he said.
By improving road infrastructure, transportation costs would drop, leading to lower prices of goods, increased efficiency, and ultimately a stronger currency.
Security and Efficiency Benefits
Rewane also noted that highway concessioning would enhance security by reducing kidnapping risks.
“When you concession the road to somebody that spends maybe N100bn or N200bn, and guards it with drone technology and central reservation and high barriers, only three or four outlets to get out of the way, it means that you cannot be kidnapped,” he explained.
He added that efficient road networks would significantly cut travel times, allowing businesses and commuters to operate more effectively.
“With well-maintained roads, transportation costs will decline sharply. Travel times will reduce significantly, making economic activities more efficient. For example, a trip from Benin to Asaba, which currently takes three to four hours, will be cut down to just 45 minutes,” Rewane stated.
Long-Term Road Management Strategy
Under the road concession arrangement, private operators are granted 25-year agreements to build and maintain roads while remitting a percentage of toll revenue to the federal and state governments.
Rewane stressed that this model would significantly lower road maintenance costs for the government while ensuring continuous road quality improvement.
As Nigeria battles high inflation, a weak currency, and security challenges, he maintained that a well-executed road concession program could be a game-changer for the economy.
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