High interest rates destroying Nigerian airlines-Demuren

Former Director-General of Nigerian Civil Aviation Authority (NCAA), Dr. Harold Demuren has advocated low interest rates on loans, saying that pegging of bank loans interest rate to single digit would help reduce airlines’ burden especially post COVID-19 pandemic.

 He called on the Federal Government to intervene in the operations of the indigenous airlines by addressing the double-digit interest rates on loan obtained by the carries.

At a recent virtual seminar, with theme, “The Challenges and Opportunities For Nigeria’s Aviation Value Chain During And Post COVID-19”, put together by Aviation Round Table (ART) and monitored by Woleshadarenews, the former NCAA DG acknowledged the impact of COVID-19 pandemic on the entire aviation sector.

He further disclosed that single interest rate is more beneficial to the airline industry than the much touted palliative.

According to him, “Your investment is already destroyed if you borrow at 25 per cent. I think that is what we should be telling government.”

He declared that with the current high-interest rates at over 20 per cent, there was no way the country’s carrier could compete with their counterparts outside the country.

Demuren also canvassed for corporate governance in the airlines in the country, saying that without this, no airline or business organisation would be willing to do business with them.

He said: “Let me say this first, I am going to talk on both sides. There must be corporate governance. If you don’t have corporate governance, it’s not going to work. The money that the airlines make is not their money, it’s meant to pay for aircraft, meant to pay for the crew, meant to pay for maintenance, meant to pay insurance, navigational charges, meant to pay for fuel!

Meanwhile, airline operators under the aegis of Airline Operators of Nigeria (AON) stated that as a result of the COVID19, Nigeria aviation has an exposure of about 251,000 direct job losses according to the International Air Transport Association (IATA) including the various parastatals, ground handling and support  Service Providers, adding that failure of airlines will obviously bring down the support structure as well.

Chairman, AON, Capt. Noggie Meggison  said there is need for government to begin to put in place measures that will guarantee the survival of airlines, describing the sector as the main catalyst and a pivot to the quick recovery of the Nigerian economy.

Meggison reiterated that the International Monetary Fund (IMF) has projected that Nigeria’s economy will recede by three per cent in 2020; leading to the worst recession in 30 years according to the April 2020 World Economic Outlook Report recently released in Washington USA.

The lockdown, according to him, is a double blow for the Nigerian economy due to the drop in the price of oil which is the mainstay of the country to below $15, and the negative impact of the “COVID19 that has virtually suspended all economic activities.

He expressed worry that the Nigerian economy and indeed the aviation industry requires urgent government articulation of plans if the jobs of our youths must be preserved post COVID19.

“In response to this reality therefore, it is a known fact that Governments around the world have taken the bull by the horn and taken the initiative by putting aviation in the forefront of their country’s recovery and putting in place support for the sector as a major tool to jumpstart their economy,” he added.

Wole Shadare