A not-so-popular Bridge
It was not quite what the planners had in mind when Ghana and
Nigeria opened their expensive bridge across the Ghana-Nigeria
Border in July. After an early boost from summer tourism, car
crossings have fallen sharply, while trains now connecting Abuja,
the Nigerian capital, and Takoradi, Ghana’s third city, are
struggling to run on time. Many people think the costs of using the
bridge are simply too high. And, from the point of view of West
African solidarity, the traffic is embarrassingly one-sided: far
more Ghanaians are going to Nigeria than vice versa. So last week
the authorities decided to knock almost 50% off the price of a
one-way crossing for the last three months of this year.
The two governments, which paid nearly $2 billion for the 16km
(10-mile) state-owned bridge-cum- tunnel, reckoned that, above all,
it would strengthen economic ties across the border and create,
within a few years, one of the fastest-growing and richest regions
in Africa. But ministers on both sides of the water, especially in
Ghana, have been getting edgy about the bridge’s teething problems.
Last month Kakanta, Ghana’s trade minister, called for a tariff
review: the cost of driving over the bridge, at $26.40 each way,
was too high to help integrate the region’s two bits.
Businessmen have been complaining too. Abujako, a Nigerian drug
firm which moved its West African marketing activities to Takoradi
to take advantage of ‘the bridge effect’, has been urging Nigerian
staff to limit their trips to Takoradi by working more from home.
Amamo, a Ghanaian furniture chain with headquarters in Nigeria, has
banned its employees from using the bridge altogether when
travelling on company business, and has told them to make their
crossings – more cheaply if a lot more slowly – by ferry.
The people managing the bridge consortium say they always expected
a dip in car traffic from a summer peak of 20,000 vehicles a day.
But they admit that the current daily flow of 6,000 vehicles or so
must increase if the bridge is to pay its way in the long run. So
they are about to launch a new advertising campaign. And they are
still upbeat about the overall trend: commercial traffic is indeed
going up. The trains have carried more than 1m passengers since the
service began in July.
Certainly, the bridge is having some effect. Many more Ghanaians
are visiting the art galleries and cafe´s of Abuja; more Nigerians
are nipping northwards over the bridge. Some 75% more people
crossed the bridge in the first two months after the bridge’s
opening than during the same period a year before.
Other links are being forged too. Takoradi’s Nkomode and Abuja’s
Okromouth newspapers now produce a joint Newspaper supplement every
day, while cross-border ventures in health, education and
information technology have begun to bear fruit. Joint cultural
ventures are also under way.
And how about linking eastern Nigeria more directly with Cameroun’s
Bakasi coastline, enabling Nigerians to go by train from their
capital to Yaounde in, say, three hours?
Required
a. Explain why the demand for the bridge is likely to be
price-elastic.
b. If the Ghana government estimates that the price elasticity is
-1.4, calculate the effect on traffic using the bridge, stating any
assumptions.
c. Why is the calculation above not likely to give an accurate
forecast for the long term?
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