THE EFFECT OF FUEL SCARCITY ON NIGERIAN ECONOMY A CASE STUDY OF UYO LGA


THE EFFECT OF FUEL SCARCITY ON NIGERIAN ECONOMY A CASE STUDY OF UYO LGA

CHAPTER ONE
INTRODUCTION

1.1 Background to the Study

Transportation and property are important in physical and economic development of
towns and cities all over the world. Property and land values tend to increase in areas
with expanding transportation networks, and increase less rapidly in areas without
such improvements. Rapid and continued rise in housing and land prices are expected
in cities with transportation improvements and rapid economic and population growth
(Goldberg, 1970).
Man, nations, regions and the world would be severely limited in development
without transportation, which is a key factor for physical and economic growth
(Oyesiku, 2002). Transportation systems and land use are interdependent. Indeed
findings of earlier studies indicate compelling and consistent connections amongst
them (Ewing and Cervero, 2001; Polzin, 2004). According to Bailey, Mokhtarian, and
Littlel (2008), transportation route is part of distinct development pattern or road
network and mostly described by regular street patterns as an indispensable factor of
human existence, development and civilization. The route network coupled with
increased transport investment result in changed levels of accessibility reflected
through Cost Benefit Analysis, savings in travel time, and other benefits. These
benefits are noticeable in increased catchment areas for services and facilities like
shops, schools, offices, banks, and leisure activities.
Road networks are observed in terms of its components of accessibility,
connectivity, traffic density, level of service, compactness, and density of particular
roads. Level of service is a measure by which the quality of service on transportation
devices or infrastructure is determined, and it is a holistic approach considering
several factors regarded as measures of traffic density and congestion rather than
overall speed of the journey (Mannering, Walter, and Scott, 2004).
1
Access to major roads provides relative advantages consequent upon which
commercial users locate to enjoy the advantages. Modern businesses, industries,
trades and general activities depend on transport and transport infrastructure, with
movement of goods and services from place to place becoming vital and inseparable
aspects of global and urban economic survival. Developments of various
transportation modes have become pivotal to physical and economic developments.
Such modes include human porterage, railways, ropeways and cableways, pipelines,
inland waterways, sea, air, and roads (Said and Shah, 2008).
According to Oyesiku (2002), urbanization in Nigeria has a long history in its
growth and development. Extensive development being a feature of the 19th and 20th
centuries, with concentration of economic and administrative decision-making in
Lagos, Ibadan, Kaduna, Jos, and Enugu, and high degree of specialization and larger
population associated with greater specialization of goods and services. Wyatt (1997)
states that urban areas have tendency to develop at nodal points in transport network
and places with good road network will possess relative advantage over locations
having poor network. Urban locations with such relative advantage are found where
different transport routes converge with high degree of compactness, connectivity,
density, length and accessibility exhibited within the intra- and inter- urban road
networks.
Ikeja is a typical example in the history of growth and development of cities in
Nigeria. The city became capital of Lagos State in 1976 with improved road networks
developed to cater for increase in concentration of pedestrian and vehicular
movements. Similarly, commercial activities like banking, retail/wholesale
businesses, and professional services congregated to take advantage of nearness to
seat of governance. Concentration of activities attracted consumers and ancillary
service providers. This partly caused increase in demand for commercial space and its
concomitant effects on commercial property values along arterial roads in the
metropolis.fuel scarcity
The present position concerning commercial properties in Ikeja is that
majority are located along arterial roads that deliver much of the vehicular and
pedestrian movements.fuel scarcity There have been increases in rental values along the individual
arterial roads although not at equal rates. It is against this background that this
research analyzed the arterial roads, determined the levels of accessibility,
connectivity, traffic density of the individual arterial roads, examined the pattern of
commercial property values and the relationship between the explanatory variables of
the road network in Ikeja Nigeria.fuel scarcity
1.2 Statement of the Research Problem
The relationship between transportation and urban property values has been the focus
of many studies (for example, Dewees, 1976; Damm et al, 1980; Wolf, 1992; Singh,
2005). Some of the earlier studies returned positive relationship between transport and
property values while others showed negative relationship.fuel scarcity For instance, in a study on
the relationship between rail travel cost and residential property values, a replacement
of streetcar with subway increased site rent at a location that is perpendicular to the
facility within a one-third mile walk to the station (Dewees, 1976); and there was
positive influence of permanent transportation improvements on land values (Wolf,
1992). It was established that there was statistically significant relationship between
distance of a parcel of land to the nearest Metro station and land price (Damm,
Lerner-Lam, and Young, 1980), while there was evidence that residential property
prices decrease immediately around the transport investment or station value uplift
through changes in land values (Singh, 2005).fuel scarcity
The urban areas all over the world offer a number of advantages in terms of
concentration of people followed by demand for commercial properties and
transportation. Ikeja is a classical example of a city that has developed rapidly since
1976 when it became the Lagos State capital. Construction of roads increased
substantially with the opening up of residential precincts that also benefitted from
increasing demand for lettable spaces in commercial properties. Many private
companies, retail stores, commercial banks aggregate in the metropolis to take
advantage of opportunities afforded by locations near the seat of governance thus
attracting complimentary services. This led to high concentration of vehicular and
pedestrian movements especially along the access roads.fuel scarcity.
The roads exhibit a number of nodes and linkages to form networks of both
arterial and minor routes along which commercial properties locate. Commercial
users displaced residential users, causing sites to be at highest and best uses with
concomitant increases in the values of commercial properties. Accessibility within the
road network is affected by the compact nature of various routes that sometimes
impede volume of traffic. The road network is made up of nodal points and links that
determine the degree of connectivity and accessibility in the network.
A number of factors affect values of properties. These factors may be intrinsic
or extrinsic. The extrinsic factors include increase in demand for lettable space,
location, condition of adjoining properties, nearness to park and leisure, local and
national economic conditions. External factors are due to natural characteristics of the
property which affect the city where the property is located. Intrinsic factors arise
from within the nature of the property itself and relate to the physical attributes,
including size of room, state of repair, decoration, and facilities. Other attributes that
increase or decrease the amount that users are willing and able to pay in an open
market transaction include physical characteristics of the structure, change in taste and
demand, effect of adjacent activities, economic activities, inflation, and changes in
legislation. The demand for commercial properties itself is affected by changes in
population, planning and development schemes, legislation, and availability of good
road networks (Hendon, 1971; William, Davies, and Johnson, 1980; Richmond, 1982;
Millington, 1982; Olayiwola, Adeleye and Oduwaye, 2006).fuel scarcity
Earlier theorists (Burgess, 1925; Hoyt, 1939; Harris and Ullman, 1951; Lean
and Goodall, 1977) generally believe that sites adjacent to main transport routes have
relative advantages over those located some distance away, and other sites located at
route intersections possess relative advantage with greater advantages belonging to
sites located at focus of transport system. These advantages are determined in relation
to accessibility, which has different characteristics in relation to individual sites thus
differentiating between sites in terms of accessibility advantages.
Many of the aforementioned studies emphasized the effects of the factors on
values of properties generally with little consideration given to road network pattern
and its effects on values of commercial properties. Possible relationships between
road networks, location attribute, demand and supply, and accessibility and
commercial property values have therefore elicited the interest of the researcher in
this direction. The relationship cannot be determined without due consideration given
to the explanatory variables on one hand and commercial property values on the other.
The use of roads leads to a study of urban areas in relation to land uses, especially
commercial properties. It is against this background that this study was conceived.

1.3 Research Questions
The foregoing has elicited a number of questions in terms of road network analysis
and values of commercial properties in Ikeja, Nigeria to which answers are to be
proffered. The relationship between arterial road network and commercial property
values cannot be determined without due consideration given to variables that make
up the network, especially those that relate to arterial roads and other explanatory
variables and values of commercial properties. Some pertinent questions to enable the
study attain its stated objectives are as follows:
1. What is the pattern of arterial roads in Ikeja?
2. What are the spatial pattern and trend of commercial property values in the study area?
3. What are the relationships between commercial property values and arterial road
network in the presence or absence of other explanatory variables?
4. What are the individual contributions of the explanatory variables to variability in
commercial property values?
5. What are the models to explain and predict the relationship between the
explanatory variables and commercial property values?

1.4 Aim and Objectives of the Research
The aim of this research is to analyze the network of arterial roads and other
explanatory variables and commercial property values in Ikeja, while the specific
objectives are to:
a. Analyze the arterial road network pattern in the study area;
b. Examine the spatial pattern and trend of demand, supply and values of
commercial properties in the study area;fuel scarcity
c. Determine the relationships between commercial property values and road
network, in the presence or absence of other variables, in the study area;
d. Determine the contributions of individual explanatory variables to variability in
commercial property values in the study area;fuel scarcity
e. Derive models for predicting variability in commercial property values in
relation to the explanatory variables.fuel scarcity1.5 Research Hypotheses
Consequently, the following hypotheses were postulated:
1. There is no significant relationship between commercial property values and
independent explanatory variables in the study area.
2. There are no differences in individual contributions of explanatory variables to
variability in commercial property values in the study area.
1.6 Justification and Rationale for the Research
It is trite amongst earlier studies on accessibility in relation to property values that
profitability and utility are determined by accessibility. The greater the accessibility of
a location the greater the comparative advantage, and the greater the comparative
advantages the greater the demand for property at the location. Lean and Goodall
(1977), for instance, stated that urban areas naturally develop at nodal points in the
transport network and those locations with good transport access to other areas have
relative advantage over locations with poorer transport facilities and that urban
locations having such relative advantages are likely to be where transport routes
converge. Similarly, Estate Surveyors/Valuers and Planners believe that accessibility
has great impacts on property values, with properties along major roads and at nodal
points having greater values (Ogunsanya, 1986; Oduwaye, 2004; Omoogun, 2006).
However, accessibility discussed in these studies was based on intuition without
empirical basis to justify what relative accessibility advantages the locations have.
This study borrows techniques found useful in other fields like operational
research, geography, transportation and urban planning to explain and analyze road
network for purpose of determining the relative accessibility of each of the arterial
roads. It is believed that the techniques used in these fields can be extended to studies
in estate management, thereby making cross-fertilization of research ideas across
various fields possible.fuel scarcity In this regard, this research has become relevant in
determining the relationship between arterial road network and values of commercial
properties in Ikeja.fuel scarcity
In addition, it is essential to establish a technique that may be useful for
determining relative accessibility of locations in the network of arterial roads. Even
when relative advantages are determined, there is need to develop models that will be
useful for predicting commercial property values in Nigeria. The model may become
tool for professional Estate Surveyors and Valuers to change their practice of using
intuition to determine relative accessibility of locations in a road network. Similarly,
there is the need to predict the supply of, demand for, and fair market values of
commercial properties by developers, Estate Surveyors and Valuers, and feasibility
and viability appraisers in present day’s risks and uncertainty in property
development. This has underscored the importance of this study.
Based on complexity of commercial, industrial, real estate activities and
degree of urbanization exemplified by the study area, deductions and findings from
the study may be applicable to other cities in Nigeria. fuel scarcity The study will also arouse the
interest of researchers in estate surveying and valuation particularly along
transportation valuation, an aspect that probably has not been explored in Nigeria.fuel scarcity
A review of literature showed that studies on Nigerian intra-urban road
network using the graph-theoretic concept to determine accessibility effects on
commercial property values are scanty, available ones were on USA and U.K. This
study will therefore contribute to empirical studies on intra-urban road network and its
influence on commercial property values in Ikeja, Nigeria.fuel scarcity
1.7 Scope of the Study
Roads may be classified as international, inter-city or intra-city. International and
inter-city roads are usually major or arterial roads, while intra-city roads are routes
within a city and may be minor or major (arterial). The study focused on arterial roads
in the intra-urban network of Ikeja.fuel scarcity There are ninety roads in Ikeja out which thirtyseven
are arterial. From the thirty-seven arterial roads in the study area, only twenty
traverse the commercial axes while others serve institutional, industrial, and
residential neighbourhoods. This study therefore covered all major roads serving the
commercial axis and inner areas of Ikeja to the exclusion of inter-city roads such as
Lagos/Abeokuta Expressway, Oworonsoki/Apapa Expressway, Ikorodu Road, and
Lagos/Ibadan Expressway that form rings around the study area.fuel scarcity
Preliminary study revealed that there are five types of commercial properties
in the study area. fuel scarcity These are retail shop premises, banking spaces, office properties,
warehouses, and non-specific commercial properties. In respect of this research, focus
was on offices, shops, banking spaces and other types of commercial users along the
arterial routes to the exclusion of residential, industrial, and non-specific type of
commercial properties.fuel scarcity
Due to the magnitude, terrain and complex nature of Lagos State roads, the
study was limited to Ikeja intra-city roads.fuel scarcity Ikeja is the predominant component of
Ikeja Local Government, which itself is one of four zones identified within the larger
Lagos metropolis. fuel scarcity The four zones (Lagos Island, Apapa, Lagos Mainland, and Ikeja)
represent commercial hubs of Lagos metropolis, which as revealed by preliminary
observation, shows activity areas where employment, commercial, transportation
terminals, and other businesses are concentrated (Oni, 2008).fuel scarcity
Road network analysis was carried out to determine the levels of accessibility
and connectivity of nodal points as well as road and traffic densities in the hope of
predicting commercial property values along each arterial road. In doing so, only the
arterial roads identified as commercial axes in the study area were the focus of the
research to the exclusion of secondary connector roads, while the relationship
between arterial roads and commercial properties in the study area were examined.
Many factors have dictated the choice of Ikeja. First, it is the capital of Lagos
State of Nigeria and a socially heterogeneous city with variety of local, state and
federal government roads. Second, the property market in the study area is well
developed and it is possible to identify and analyze variations. Comprehensive data
are available on commercial property values in Ikeja, which is one of the few cities in
Nigeria offering opportunity for comprehensive survey of its commercial properties,
with enlightened occupiers of commercial premises thereby making data collection
possible. Third, a number of property magazines are in circulation in the city where
professional Estate Surveyors and Valuers advertise commercial properties available
for sale or letting. This makes the property market very active and up-to-date with
stakeholders, prospective tenants, property owners, and investors versatile and
knowledgeable about the goings-on in the market. Fourth, judging from what is
applicable in Nigeria, the Ikeja road network is one of the most complex in terms of
linkages, human and vehicular movements with availability of computerized and upto-date
data and satellite images of the road network.

1.8 Limitations of the Study
The study focused on analysis of arterial roads and commercial property values in
Ikeja. It did not attempt to investigate the structural stability of the arterial road
network or assess the methods and accuracy of methods adopted by respondents in
fixing the values of commercial properties in the study area. It simply analyzed accessibility, connectivity, arterial road network, distance to most central place in the
study area, demand and supply of commercial properties in relation to commercial
property values in the study area. Graph theoretic technique was used to analyze the
arterial road network while opinions of Estate Surveyors and Valuers practicing in the
study area were relied upon. The accuracy, or otherwise, of such opinions although
not in doubt was not investigated.
Some challenges were encountered during the study. By virtue of the busy
nature of Estate Surveying and Valuation practitioners and “carefulness” of occupiers
of the sampled commercial properties, there was considerable reluctance on their parts
to volunteer information.fuel scarcity Some of the respondents, especially Estate Surveyors and
Valuers, delayed in completing the questionnaires and it took personal influence of
the researcher (as their colleague) and assistance of the Lagos State Branch Chairman
of the Nigerian Institution of Estate Surveyors and Valuers to obtain their eventual
impressive responses. In addition, the researcher took time to allay the fears of
Occupiers by educating them about the essence of the research, that it would in no
way expose them to imposition of levies or charges or any liability to the Lagos State
Government.
The populations of commercial properties and occupiers in the study area were
indeterminate.fuel scarcity The study population was too large and there was no census available
to ascertain them thereby making determination of their number somewhat tasking.
The researcher however found a way out of the challenge by using a form of sampling
based on estimated population of occupiers and adopting direct observation of the
sampled properties to determine the average number of occupiersfuel scarcity. These limitations
however neither affected the quality of data collected nor the conclusions drawn from
it.fuel scarcity
The various opinions of Estate Surveyors and Valuers were relied upon, in
some cases, to the exclusion of those of occupiers especially in respect of questions
that required a form of professional opinion.fuel scarcity This was consequent upon the findings
from the pilot tests earlier conducted which showed that the occupiers found such
questions too technical. fuel scarcityHence, questions like rating of the roads in the study area in
terms of accessibility, supply and demand of commercial properties were
subsequently limited to the Estate Surveyors and Valuers.fuel scarcity

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