Can Nigeria’s new government redeem aviation sector?

Aviation and export cargo experts in Nigeria have expressed dismay over the worsening condition of Nigeria’s air transport industry and agricultural export value-chain, which are still burdened by multiple taxation and harsh operating environment. Nigeria is also yet to release about $812.2 million airline funds trapped in the country, which the International Air Transport Association (IATA) has said is the highest in the world. IATA recently said that, globally, the blocked funds have increased “by 47% to $2.27 billion in April 2023 from $1.55 billion in April 2022.”

Local and international air fares have remained high in Nigeria after the Covid-19 pandemic, and aviation stakeholders worry over the negative impact of these and other issues on passenger numbers, as well as investments expected in aviation and related agriculture export sector, among others. The sustained high cost of operation has weakened Nigerian airlines’ ability to expand or compete favourably in the regional and long-haul markets.

Nigeria is also experiencing intermittent protests by five key aviation unions over allegations of lack of transparency in the recent concession of Nigeria’s major airports. The unions have also appealed to the new government in Nigeria to rescind the decision to deduct 40% of revenue generated by aviation agencies, since such deductions threaten the safety and improvement of aviation in Nigeria.

Besides, the Airline Operators of Nigeria (AON) instituted a litigation over allegations of lack of transparency in the setting up of Nigeria’s national carrier, Nigeria Air. Nigeria’s apex legislative bodies have also questioned the hurried launch of Nigeria Air by the former Minister of Aviation, Hadi Sirika, without prior issuance of the Air Operator’s Certificate (AOC) by the Nigerian Civil Aviation Authority (NCAA).

“Nigeria needs to get serious to establish an enduring perishable cargo business. Apart from envisioning and carefully planning it, you also need to do the work and make it a success.”

George Uriesi, Chief Operating Officer, Ibom Air

Restricted air cargo
Currently, there is no scheduled air cargo airline serving domestic routes in Nigeria despite the urgent need for such services. Nigeria’s agriculture and export sectors have faced challenges ranging from lack of standardisation and infrastructure, over-taxation, inadequate regulation and rejection of various products by foreign markets.

Nigeria’s domestic air cargo market has failed to grow over the decades, as farmers and other exporters suffer the high cost of air freight to foreign markets, or within Nigeria. Due to high taxes, air freight services are not sustainable to connect perishable agricultural products like fruits and vegetables from Nigeria’s northern region to the south where there is huge demand. The absence of storage facilities in remote agricultural regions as well as within or near airports also hinders air freight of agriculture cargo within Nigeria.

Consequently, Capt. John Okakpu, Managing Director of ABX Worldwide, and other concerned stakeholders are leading new advocacy to standardise Nigeria’s agricultural production and exports and ensure traceability of export products. He is working on a programme to train Nigerian agricultural producers and players in the export value-chain.

Christophe Pinninck, Managing Director of Asaba International Airport, said: “The only way for agri-export to work by air in Nigeria is to have a similar facility close to the cities that produce the perishable cargo. NBO (Nairobi) airport has good roads leading to it and the same is valid of JNB (Johannesburg). It is a total concept that is important. Not just a warehouse or a runway.”

According to Alexander Nwuba, president of the Aircraft Owners & Pilots Association of Nigeria, a location has been earmarked for the facility by the former Managing Director of the Federal Airports Authority of Nigeria (FAAN), Capt. Rabiu Hamisu.

Stakeholders have also called for government to upgrade current airports as opposed to building new ones. However, according to George Uriesi, Chief Operating Officer of Ibom Air, Nigeria needs to get serious to establish an enduring perishable cargo business. “Apart from envisioning and carefully planning it, you also need to do the work and make it a success,” he said. The Enugu state Governor, Peter Mbah, and the FAAN MD/CEO, Kabir Yusuf Mhammed, discussed on setting up a cargo terminal for Enugu International Airport, one of Nigeria’s airports that receives Ethiopian Airlines.

The infrastructure crisis also affects Nigeria’s flagship airports. The new terminal in Lagos has failed to attract foreign airlines due to inadequate apron to accommodate large aircraft, as few airlines currently use the new terminal. Some airline representatives want the concern of foreign airlines over the new terminal to be addressed, as they also call attention to the “extortion” and other distasteful experiences at the old Lagos international terminal.

Population without passengers
The economic crunch in Nigeria has also limited the number of local air travellers, despite the over 200 million population in Nigeria. Sadly, over 180 million Nigerians do not use air transport. While three new airlines launched operation in the last one year, the number of domestic passenger has remained at about 10 million, while most Nigerian airports still receive few airlines and frequencies.

SAATM & AfCFTA progress
Although Nigeria is among 19 States undertaking the Pilot implementation Project (PIP) of the Single African Air Transport Market (SAATM) and Nigeria has also signed for the African Continental Free Trade Area (AfCFTA), the challenges in the country’s aviation industry will impact on Nigeria’s expected exemplary role in SAATM and AfCFTA.

According to Adefunke Adeyemi, Secretary General of AFCAC, the implementation of SAATM by more states is vital to improve Africa’s economy and integration. And the Secretary General of the AfCFTA Secretariat, Wamkele Mene, stated recently that over the past four years of AfCFTA’s existence, “We can count many achievements thus far, not only in terms of ratifications, but also in terms of developing and operationalising legal instruments and mechanisms towards commercially meaningful trade under the AfCFTA preferential regime.” The Executive Secretary of the Economic Commission for Africa (ECA) Antonio Pedro, recently charged African states to develop “hard and soft infrastructure” to support trade among African States.

Government uncertainty
Nigeria is in an awkward position to participate meaningfully in the regional air transport and trade markets. Stakeholders want the new government in Nigeria to turn around the economy to generate increased volume of air cargo and enable more people to fly.

However, amidst these challenges, the new government still faces court litigations as opposition political parties are contesting the result of the presidential election that brought the current government into power on May 29, 2023. Aviation observers wait with bated breath over the many uncertainties needing urgent government attention for the recovery of Nigeria’s air transport and air cargo industry.