June 30, 2022/United Capital Research
The recently released NBS report on the Railway sub-industry revealed continued growth in the sector on the back of a healthy post-Covid 19 pandemic recovery. Revenues grew exponentially in the period under review, more than 3x to N6.1bn in generated income compared to the N2.0bn generated in 2020. Revenues from passengers accounted for 93.4% of total revenues, rising to N5.7 bn, a 2.3x y/y increase. While the revenue generated from cargo and other income receipts grew 0.12x and 11.9x, respectively, to N317.6mn and N66.8mn.
The NBS data further highlighted that the increased number of passengers and the volume of goods/cargo transported drove revenue growth. For context, passenger numbers grew to 2.7 million (+166.0% y/y). In comparison, the volume of transported cargo grew to 168.3 Kilo tonnes (+92.5% y/y). The easing of Covid 19 related lockdowns and post-pandemic-economic recovery was another significant driver for revenue growth. Additionally, the digital transformation initiatives by the Nigeria Railway Corporation (NRC), such as the launch of the E-ticketing app in H1-2021 and the commissioning of the 157-km Lagos-Ibadan rail line mid-year, further led to a spike in the numbers.
Currently, Nigeria has c. 51,500 Persons/ Route-Km of Rail line. (for comparison, India has c. 20,294 Persons/ Route-Km of Rail line while South Africa has 2,647 Persons/ Route-Km of Rail line). We expect to see a further increase in generated revenues even as the industry continues to grow to meet the enormous demand. In Q1-2022, the Nigerian Investment Promotion Commission data revealed an injection into the transportation sector.
