Report: At 55 Years, Every Lagos Resident Would’ve Spent Over Six Years in Traffic

*Says high debt service cost to raise FG spending in 2022

Emmanuel Addeh in Abuja

Every Lagos resident would have spent over six years in traffic by the time they clock 55 years, a new report by the Financial Derivatives Company (FDC) Limited, has indicated.

The state has one of the worst traffic gridlocks in the world, as commuters spend hours on the road, losing a significant part of their productive time before arriving at their destinations.

FDC, led by Nigerian economist, Mr. Bismarck Rewane, also highlighted in its latest report published this month the economic outlook for 2022. The Lagos-based research and investment firm stated that while Lagos residents spent 1,080 hours in traffic a year, residents of London, which is said to have the highest congestion in the world, spent about 148 hours.

The report stated, “Lagosians are spending approximately 1,080 hours a year in traffic, compared to 148 hours in London, the city with the worst traffic jams in the world (excluding Nigeria and Egypt).

“This comes to 12.5 per cent of the time in a year. It also translates to 6.76 years in a life expectancy of 55 years.”

According to the report, compared to Lagos’ 1,080 hours, residents of Paris spend 140 hours in traffic, Brussels (134), Palermo (109), Moscow (108), Rome (107), Chicago (104), Lyon (102), New York (102), and Bucharest (98).

Despite efforts by successive governments to solve the traffic challenge in Lagos, there has been no major breakthrough, as residents languish for hours in the intractable hold-ups, wasting several man-hours.

Research organisations, like SBM Intelligence, had suggested an upgrade of the infrastructure in the water transport sector to encourage commuters to patronise boats and ferries to reduce the perennial traffic congestion in Lagos.

Other studies had advocated a mass movement mode of transportation, like the rail system, to move people in one of the world’s most populated cities.

In other issues, the FDC report stated that economic policy vagueness and “regulatory autocracy” plagued the Nigerian economy for most part of 2021.

It stated, “It was a year best described as ‘in like a lion, and out like a lamb’. But in reality, it was almost the opposite because of mixed signals.

“The economic growth maintained a slow and steady path as was expected but could be threatened by a rude interruption of the Omicron variant and the spectre of precision lockdowns.
“This notwithstanding, Nigerians are still frustrated with data that shows falling inflation in an environment of higher prices.”

In the Christmas edition of the monthly report, the FDC further extrapolated possible exchange rate scenarios based on oil price sensitivity, giving an external boundary of N610/$ and an optimistic scenario of N530/$.

Stressing that some of the economic imponderables were becoming clearer, the firm noted that just as the US fed was determined to increase interest rates three times in 2022 and the Bank of England had pushed up its policy rate to 0.25 per cent per annum, the implication of higher dollar interest rates was an excruciating external debt service burden for Nigeria, compounded by the subsidy overhang.

On the oil market, the FDC projected an optimistic oil price of $70-$75 and a $60 to $65 negative scenario for the first half of 2022, while oil production would hit 1.55 million barrels per day in a positive scenario and 1.3 million barrels per day in a negative scenario.

It predicted that fuel subsidy removal by the second quarter would take the price of the product to between N320 and N350 per litre while government spending on imports of petroleum products could taper from the last quarter of next year.

It also predicted a positive balance of trade at -$1.90 billion and a negative scenario of -$9 billion, while external reserves would increase to $42 to $43 billion for a positive projection and $35 billion in a pessimistic analysis.

According to the report, while government revenue was estimated to increase in 2022, on the back of improved tax revenue and proceeds from subsidy removal, fiscal deficit would narrow to 2.8 per cent in 2023 from 3.7 per cent in 2020.

However, the FDC stated that high debt servicing costs, large public wage bill and security expenses would keep government spending elevated throughout the period.

With public finances remaining in deficit on lower oil revenues, FDC projected that this would negatively impact the implementation of capital infrastructure projects, like rail and roads, even as debt-servicing costs to revenue will stay above 75 per cent.

In addition, it stated that inflation would remain stubbornly high, real Gross Domestic Product (GDP) will remain positive while the Central Bank of Nigeria (CBN) will be more intentional about exchange rate reforms and increasing foreign exchange supply.