By Adeniyi Onifade
Nigeria’s aviation sector is considered as one of the major sectors with high Gross Domestic Product Expectations.
However, availability of manpower and operational facilities to ensure that the sector functions to it’s maximum has in time past proved to be a challenge.
More so, the sector has been considered as the worst hit by the Covid-19 pandemic following restrictions on air travel by virtually all countries of the world.
For instance, Data obtained by Valuechain from the National Bureau of Statistics (NBS) shows that the real Gross Domestic Product (GDP) growth rate of the aviation sector slumped by -11.78% in the first quarter (Q1) of 2021 from -51.69% in Q4 2020 and 5.68% in Q1 2020.
According to the NBS, “Air Transport under Services GDP contracted -11.78% compared to -51.69% in Q4 2020 & 5.68% in Q1 2020.
“Transport Services under Services GDP contracted -0.50% compared to -2.73% in Q4 2020 & -1.38% in Q1 2020.”
However, as ease of restrictions began to come in place, the situation improved as GDP growth rate of Air transport, under the Transportation and Storage sector, surged by 4.98% in second-quarter 2021, from a contrast of -11.78% recorded in Q1 2021.
As it stands, six sectors categorize the Transport sector which are road transport; rail transport and pipelines; water transport; air Transport; transport Services; and post and courier services.
Another contentious issue currently going on in the sector is the floating of Nigerian air to improve on the operational capacity of the sector and improve government revenues.
Only recently, the Minister of Aviation, Hadi Sirika, reiterated government’s drive in ensuring that the operation of a new national air carrier takes off in the first quarter of 2022.
If this materializes, it will come exactly four years after the cheers that greeted the announcement of Nigeria Air in 2018.
When it was launched, it was announced by the federal government that the airline would gulp N3.60bn ($8.8m) preliminary cost and 123.2bn ($300m) as take-off cost.
However, till date, there are still doubts if the national career will hit the airspace or not
This is due to the uncertainties surrounding the launch of the national carrier project, the Federal Government has allocated N14.6 billion for the project since it’s launch 3 years ago.
In the 2022 budget, current funding for the project was N400 million for working capital and another N150 million for consulting. Both are mentioned as ongoing projects in President Muhammadu Buhari’s 2022 appropriation Bill, which was submitted before the national assembly recently.
Recalled that Nigeria Air was unveiled in July 2018 and suspended indefinitely in September of the same year.
The airline was scheduled to commence operations on December 19, 2018. The proposed national carrier targeted 81 routes, comprising 40 domestic, regional and sub-regional and 41 international routes.
Budgetary Allocations
Data obtained on budgetary allocation since 2019 till date for Nigeria Air, has shown that there was budgetary provision inserted for the national carrier project beginning with N8bn as working capital and another N500m for transaction advisers.
In 2020, N4.6bn was provided in the budget for working capital while in the 2021 Appropriation Bill, another N1bn was provided as working capital for the national carrier.
It was listed under the ongoing projects’ list of the Federal Ministry of Aviation. With the latest N550m, the sum of N14.6bn would have been budgeted on the project since 2019 despite the suspension of the project.
It was not clear whether the amount budgeted so far was released even as the Federal Government envisages that the proposed national carrier would be private sector driven with about five percent government equity.
Also, there are serious doubts whether the amount budgeted so far was released even as the Federal Government envisages that the proposed national carrier would be private sector driven with about five percent government equity.
The federal government early this year said it expects private investors to raise $250m for the proposed carrier as it insisted the project would be delivered before 2023.
Implications
At different Aviation Roundtables, operators unanimously adopted that if Nigeria can successfully float a national career, it will create opportunities for them to maximise the huge passenger market, which is currently being leveraged upon by international carriers.
Accordingly, every country protects its own indigenous airlines, provides them incentives and also protects their interests.
But on the contrary, Nigerian government have granted foreign airlines unlimited opportunity to airlift Nigerian passengers without any kind of partnership with local carriers and government does not have any policy that would encourage foreign airlines to invest in the country, help train Nigerian personnel or even give Nigerians job opportunities in their international operations.
The onus now lies on the federal government to as a matter of urgency, commence full operations of the Nigerian air to justify the huge budgetary allocations for the take-off of the national carrier.