About $800 billion would be required to fix critical transport infrastructure deficit in the next 37 years, a finance expert, Opeyemi Agbaje, has said.
Agbaje, who is the Chief Executive Officer of RTC Advisory Services Limited, said aviation alone would require about $50 billion to address gaps in airport and air navigation facilities.
He disclosed this in Lagos while delivering a paper at the NigeriaTravelMart Colloquium 2017, with the theme: “Vision 2050: how to fast track Nigeria’s aviation.”
According to him, Foreign Direct Investment (FDI) in the global aviation industry last year, was $1.764 trillion while only $59.373 billion came to Africa within the period.
Besides, Nigerian aviation industry only attracted $4 billion FDI, which indicated that the country did not encourage private participation.
He said despite the potential in the country’s aviation industry, Nigeria was yet to attract FDI, adding that for the country to attract FDI, it would need a stable macroeconomic environment and should be forward looking in its activities.
The Federal Government, he said, would not be able to provide funding to address infrastructural gaps in the country’s aviation industry until it puts measures in place to attract robust capital through foreign investment.
He said: “The entire transport system is not keeping pace with the Nigerian economy. Our government still relies on crude oil, but the private investors have diversified.”
Speaking on the topic entitled: “National carrier – An option to fast track growth, investment and resource”, an aviation expert, Ali Magashi, said Nigerian aviation could only make significant progress if the government reconsiders the setting up of a national carrier.
Magashi said a national carrier would be preferred to flag carriers operated by private sector players, which have over the years failed to deliver air travel services on international routes.
He said given the huge cost implications and attendant low returns on investment, only government is better positioned to mobilise the required capital to set up a national carrier with innumerable strategic benefits for the economy.
Magashi said the leading 20 global carriers, including United Airlines, Delta, U.S. Airlines, Lufthansa , British Airways and Air France / KLM Airlines are still owned by their governments.
Other airlines under government ownership, he said, include Turkish Airlines, Qantas, China Southern Airlines, China Eastern, Singapore, Japan, Cathay Pacific, Malaysia, Emirates, Qatar , Etihad , Ethiopian , Egypt Air and South African Airways.
He said countries such as Kenya that have opted for the flag carrier model have not done well due largely to its ownership and codeshare structure.
He said the re-establishment of a national carrier for Nigeria would lead to the creation of leasing companies, maintenance hangars and reduce capital flight.
He urged the government to eschew federal character, especially at the executive management status, and called for open and transparent mechanism in running such airline.
Magashi said: “I am in support of a national carrier for Nigeria because private sector players will not invest the huge capital investment in such enterprise with the attendant high risks and low returns .
“If as a country we want to achieve development in aviation, the government must make the initial investment and can only stop to invest until the airline develops with the right institutional compliance and maturity before it can be privatised’’ . Until then, the government will continue to support and bail out the airline.”
He continued: “For the proposed national carrier to succeed, the government must demonstrate the political will, handle issues bordering on vested interest and get directly involved in the process of aircraft purchase and other related procurement processes.
“The approach should be government to government in providing sovereign guarantee for purchase of airplanes. The governance structure should include stakeholders and sector integration in support of aircraft maintenance and manpower training. Above all, the government must eschew the principle of Federal character in the recruitment of personnel and ensure that the executive management level is determined by competence and experience.”
In his presentation entitled: A template for fast tracking Aviation by 2050, Chief Executive Officer, Evergreen Apple Nigeria Hangar, Dr Harold Demuren, said for the sector to grow, the government must increase its budget on air side infrastructure at the airports.
Besides, Demuren said the government should facilitate zero interest capital, address poor corporate governance issues and protracted litigation.
However, he said for Nigeria to fully benefit from the expected growth in aviation, the government must invest in infrastructural development and develop human capacities.
“Government must take a serious look at how to attract zero interest capital, investment in both the land and airside of airports and ensure that aviation fuel is clean, available and affordable,”Demuren said.
Also speaking , Chief Executive Officer, Ropeways Nigeria Limited, Captain Dapo Olumide, said domestic carriers will continue to fail until issues concerning their operational structure, ownership model and the use of operating equipment were re-examined.
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