September 12, 2023/FBNQuest Research

According to the recently published report on rail transportation, from the National Bureau of Statistics (NBS), the total revenue generated from railway traffic increased by +33% q/q and +77% y/y to NGN1.3bn in Q2 ‘23. This compares to declines of -42% q/q and -56% y/y in the previous quarter. Despite the significant rise in the revenue generated through the mode of transportation, the sector’s revenue has not recovered to levels seen prior to the suspension of rail operations along the Abuja-Kaduna route in March 2022 because of security concerns.

We had anticipated a positive improvement in the revenue turnover due to concerted efforts by the security agencies to tackle security issues being faced by Nigeria’s rail sector.

As seen in previous quarters, revenue generated from passengers was the largest contributor to the sector’s total revenue in Q2 ‘23. It increased by 43% q/q and 84% y/y to NGN1.1bn and accounted for 84% of total revenue.

Furthermore, there were corresponding increases of 7% q/q and 12% y/y in the total number of passengers that travelled by train during the quarter.

Also, revenue from freight traffic more than doubled (y/y) to NGN188.0m from NGN91.7m in the year-earlier period.  

Although the volume of freight declined by -7% q/q, it saw a robust y/y increase of +80% y/y to about 56k tons during the quarter.

The significant y/y rise in freight traffic reflects the adoption of rail networks in cargo transportation due to its efficient product distribution and preservation of products, especially for perishable farm produce.

Conversely, income generated from other sources amounted to NGN18.7m in Q2 ’23, representing decreases of -45% q/q and -62% y/y.

Cumulatively, the total revenue generated amounted to NGN2.3bn, implying a decline of -23% y/y.