Nigeria’s aviation received $4.4b FDI in 2016
- Requires $800b for infrastructure
A total of $4.4billion accrued to Nigeria in air transport sector in 2016 from Foreign Direct Investment (FDI); 7.49 per cent of $59.4 billion that came to Africa.
Chief Executive Officer RTC Advisory Services Limited, a leading strategy and business advisory firm in Lagos, Mr. Opeyemi Agbaje at the Nigeriatravelsmart.com second colloquium in Lagos said the amount is also 0.25 per cent of $1.7trillion that accrued globally, just as the FDI into Nigeria has consistently reduced since 2011 when it was highest with a total of $8.9b.
In 2010, $6billion came to Nigeria’s aviation industry. It started depleting ever since then due to Nigeria’s unconducive investment climate.
In 2012, it came down to $7.1b; 2013 $5.6b; 2014, it came down to $4.6b. It nosedived to $3.6 billion and $4.4 billion last year.
Dr. Harold Demuren, CEO EAN Hangar; Simon Tumba, CEO, NigerianTravelsMart (NTM); Ali Mohammed Magashi, Chairman, Aso Savings & Loans Plc; Mr. Opeyemi Agbaje, CEO, RTC Advisory Services Limited at the NTM 2017 Colloquium in Lagos.
L-R: Chris Amenechi, VP, Pricing & Revenue Management, Copa Airlines, Panama; Capt. Dapo Olumide, CEO, Ropeways Transport Limited; Harriet Agbenyi; Saro Abdulrasheed, Corporate Banking, First Bank Plc; Ali Magashi, Chairman, Aso Savings & Loans Plc at the NigeriaTravelsMart 2017 Colloquium in Lagos.
While Nigeria has a fluctuating FDI, the African continent has seen a rise of foreign investment into the region’s aviation sector, an indication that other countries with stable business have enjoyed more offshore investments.
The finance expert said getting Nigeria’s aviation sector out of the doldrums is not rocket science, stressing that the country’s infrastructure challenge generally and in air transport and aviation boils down to a simple question.
He stated that attracting global FDI flows into Nigerian aviation requires a stable macroeconomic environment; forward looking and proactive policy; a clear and compelling vision for the industry shared by all stakeholders including government and the private sector; and regulation that seeks to foster industry transformation.
Besides, he explained further that the entire Nigerian transport industry required at least $800 billion in the next 37 years to address the infrastructural gaps in the system while the Nigerian aviation industry would require $50bn within the period.
Agbaje emphasised that the Nigerian economy in 1999 was $57 billion while it grew to $110bn by 2013, but noted that by 2016 the growth declined.
According to him, all forms of transportation contributed 2.88 per cent to the Nigerian economy in 1999, but nosedived to just 1.4 per cent of the nation’s economy, stressing that within the period, the Nigerian economy had grown ten folds while the transportation industry had continue to decline.
Agbaje noted further that there have been shifts in the structure of the Nigerian economy over the years sector, but insisted that for the country to be rated among the best, it should improve on the infrastructural deficits in the system.
Agbaje further explained that Nigeria had become a more diversified economy especially in the domestic production, but the Federal Government was yet to diversify from dependence on crude oil.
“The entire transport system is not keeping space with the Nigerian economy. From 1999 to 2016 the total Gross Domestic Product (GDP) was $1.6bn and was $6.1bn by 2016.
“Our government still relies on crude oil, but the private investors have diversified from the oil economy. The entire contribution of transport sector to the GDP in Nigeria is 1.4 per cent, but this has been on the decline in recent time.
“Out of this figure, the contribution of aviation to the entire transport sector is merely 5.7 per cent while road transport gulped 86.78 per cent, water transport is 1.4 per cent and rail is 0.03 per cent. The evidence of government’s incapacity is so glaring, yet, the government thinks it can solve every problem in the country.”
Also, the Alhaji Mohammed Magashi, another aviation consultant said that Nigeria required a national carrier and not a flag carrier to fully participate in the global aviation industry.
He posited that aviation industry was not competitive in terms of returns for investors, but described it as an enabler for returns for other sectors around the world.
He emphasised that the defunct national carrier, Nigeria Airways collapsed because of political interference, which he said culminated with several air crashes.
According to him, there was no any airline around the world that had the numbers of crashes involving new aircraft like the former national carrier, noting that accidents in aviation do not just occur without planning.
He said: “There was no airline in the world that crashes new airplanes like Nigeria Airways. In aviation, accidents are always planed from the outset. 95 per cent of aviation accidents in Nigeria are caused by human errors.
“Since the demise of Nigeria Airways, there has not been any opportunity for young aircraft maintenance engineers to log maintenance hours and get type ratings because there are no operational hangars where heavy maintenance takes place.
“Also, poor manpower development and regulation is what is leading to air crashes today in Nigeria. This is a threat to our national security. Our government needs to spend on aviation for the sector to grow.”
He argued that the re-establishment of a national carrier for Nigeria would lead to creation of leasing companies, creation of maintenance hangars and reduce capital flights out of the country.
He urged the government to eschew federal character especially at the executive management status and called for open and transparent mechanism.
Besides, the former Director-General of the Nigerian Civil Aviation Authority (NCAA), Dr. Harold Demuren, said that by 2050, Africa would be the centre place for global aviation industry while Nigeria would by the centre of attraction.
He disclosed that Ethiopian Airlines earns 30 per cent of its total ticket sales from Nigeria, yet, Nigeria was not benefiting from the earnings.
He, however, said that for Nigeria to fully benefit from the continent’s attraction, Nigeria needed to invest in infrastructural development and develop human capacities.
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