Category: Issues

The Federal Government may have inched closer to actualising its plan to float a national carrier, following the emergence of Ethiopian Airlines as the carrier’s preferred bidder, with 49 per cent stake. But despite what appears to have signalled a smooth take off of the project, controversy around the alleged opaqueness in the criteria for selecting the core investor/technical partner remains, fuelling fears that the project may go the way of others before it. KELVIN OSA-OKUNBOR reports.

Controversy has continued to trail the newly unveiled national airline – Nigeria Air. Even with the emergence of Ethiopian Airlines as the carrier’s preferred bidder, signalling, perhaps, the eventual take-off of the project, the selection of Ethiopian Airlines, an African carrier allotted 49 per cent stake in the project, has thrown up another controversy in the aviation industry.

At the centre of the controversy, according to some experts and operators, is the Federal Government’s decision to cede 49 per cent stake in the proposed national carrier to Ethiopian Airlines, which is a competitor in Nigeria’s huge air transport market. Those who understand the ownership structure described it as “a disservice” to the efforts of indigenous carriers.

Specifically, they queried whether Nigeria, a country with over 200 million people, needs another African country to deliver an airline for it. Besides, given Ethiopian Airlines’ intimidating inroads into the Nigerian market, where it operates into five Nigerian cities – Lagos, Abuja, Kaduna, Kano and Enugu- they argued that offering it a deal to partner for a national airline could be counterproductive.

The Federal Government had on September 23, this year, announced Ethiopian Airlines as the preferred bidder for the Nigeria Air Project with 49 per cent stake. The African carrier was named alongside three Nigerian investors: MRS, Skypower Aviation Handling Company (SAHCO) and the Nigerian Sovereign Investment Fund (NSIF) with 46 per cent stake, while the Federal Government owns five per cent.

Minister of Aviation, Hadi Sirika, explained that the investors were subjected to due diligence, after which the contract would be negotiated between the consortium and the Federal Government, leading to a Full Business Case, which would be expected to be approved by Federal Executive Council (FEC). He said the process was expected to take about eight weeks.

The Minister explained that the share capital of about $300million would be provided by the preferred bidder, which would launch Nigeria Air to its full size of 30 aircraft and international operation in the next two years. He said apart from the five per cent share investment by the Federal Government, no further funding would be provided.

Sirika said Nigeria Air will be launched with three Boeing 737-800 in a configuration very suitable for the Nigerian market and will launch with a shuttle service between Abuja and Lagos to establish a new comfortable, reliable and affordable travel between these two major Nigerian airports. Other domestic destinations would, however, follow.

He further said a signature-ready contract had been finalised with Ethiopian Airlines for the three Boeing 737-800 with a 16 Business Class and 150 Economy Class configuration.

Sirika said: “All executives have been approved by the Nigerian Civil Aviation Authority (NCAA), which has issued an Air Transport License to Nigeria Air.

Having identified the first three aircraft, the new carrier would finalise the Operation Manuals and, then, go through the inspection and approval of NCAA. “The money spent for the launch of Nigeria Air, for all the requirements to establish an Air Operating Certificate (AOC) and be admitted to start an airline operation is well within the five per cent capital investment of the Federal Government of Nigeria,’’ Sirika said.

He said this would be the investment needed to establish the National Carrier initially for the AOC approval and everything else required by stringent national aviation regulations, as prescribed in the FEC-approved Outline Business Case (OBC).

“This OBC is the milestone for the preferred bidder consortium and has been met by the submitted business plan of the preferred bidder. It is the overall share capital of around $300, (million)  provided by the preferred bidder that will launch Nigeria Air to its full size of 30 aircraft and international operation within the next two years.

“No further Federal Government of Nigeria’s funding will be provided above the five per cent share capital of the next national Carrier of Nigeria, which was provided to launch Nigeria Air,” the Minister explained.

Questions over Ethiopian Airlines’ selection

However, a day after the Federal Government announced the preferred bidder for the proposed national carrier, Nigeria Air, with MRS, SAHCO and the Nigerian Sovereign Fund as Nigerian investors, the Ministry of Aviation removed the NSIA as an investor in the project.

The Special Assistant (Public Affairs) to the Minister of Aviation, James Odaudu, said the inclusion of the NSIA as an investor in Nigeria Air was an error. “Our attention has been drawn to the inadvertent inclusion of the NSIA as part of the private investors in the Nigeria Air project.

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“We wish to clarify that the Authority is not involved, in any way, as part of the private equity ownership of the airline, being a government establishment. It should be noted that the NSIA was not mentioned in the Minister’s presentation, but only in the general brief given to the media, an error made during its preparation,” Odaudu said, in a statement.

He further said: “For the avoidance of doubt, the equity ownership structure of Nigeria Air stands as: Ethiopian Airlines, 49 per cent; Nigerian private investors (SAHCO, MRS and other institutional investors), 46 per cent and the Federal Government, five per cent.The public, especially the business community and the media should please take note.”

However, some keen observers and experts appear not convinced by Odaudu’s explanations. To them, the removal of the NSIA as an investor in the project was part of the alleged opaqueness associated with the national carrier project.

They noted, for instance, that the action was enough indication that the government may have hurriedly packaged the project without recourse to due process.

An aviation analyst, Prof. Anthony Kila, wondered if Ethiopian Airlines is a technical partner or investor. He said: “We are wondering about things we should not be wondering about because the contour, the promoters of the venture, should have been upfront in releasing information. At this moment, there are more questions than answers.”

A former Chief Executive Officer of one of the aviation agencies, who spoke on the condition of anonymity, also said: “Everything is shrouded in secrecy and a lot of enigmas. So, it makes it very difficult to comment on.”

For the former President, National Association of Aircraft Pilots and Employees (NAAPE), Isaac Balami, the planned national carrier would have been more beneficial if Nigeria had owned over 80 per cent of the airline.

Balami said: “I would have wanted this thing to be at least 80 per cent Nigeria-owned. As it is, the largest chunk of the stake is going to a country and an airline that, ordinarily, should be under us or we should be ahead of them.

“I just pray that one day we would correct the wrongs and get Nigerian businessmen that would look inward and invest and not allow foreign airlines to come and take everything out of this country. I don’t know the nitty-gritty, I have not gone through the contract, but anything that is not going to empower Nigerians is not good enough.”

Also, Group Capt. John Ojikutu (rtd), expressed reservation with the choice of Ethiopian Airlines as a core investor.

He said: “First and foremost, I am not in support of having any foreign airlines and a competitor with us on the Bilateral Air Services Agreement (BASA) routes as our technical partners.The foreign airline’s interest in the partnership comes before ours.

“Secondly, similar partnerships with the KLM and the SAA in the early 90s did not benefit us. We should, therefore, look for partnerships outside the competitors in the BASA routes in countries like Canada, Australia.”

However, there are some people who don’t see anything wrong in the choice of Ethiopian Airlines. For instance, economist and Chief Executive Officer, Sabre West Africa, Dr. Gbenga Olowo, said there was nothing unusual in the government unveiling Ethiopian Airlines as preferred bidder for the project, as the speculation has been in the air for some time now.

Olowo, who is also President of industry think tank group – Aviation Safety RoundTable Initiative (ASRTI), said Ethiopian Airlines could be a good partner to birth a national airline for Nigeria.

“My position remains the same. Since the issue of Air Nigeria has been laid to rest, given government’s insistence to do so, my endorsement is based on the need for the success of any new start-up airline in Nigeria,” he said.

Olowo said it is, especially advantageous for Air Nigeria to partner Ethiopian Airlines as a competitor on Nigeria’s BASA for the simple purposes of Code Share Agreement (CSA) and Blocked Seat Agreements (BSA) outside the airline’s intended direct services.

Continuing, the aviation expert said: “The merits of cooperation and collaboration will more than outweigh that of competition, provided the management is on top of its game. Nigeria Airways, in the past, operated to many countries, not directly but by commercial agreements.

“That is not all, interlining and global alliances, which is a necessity in today’s aviation, comes with ease given this partnership rather than the airline struggling on its own for relevance and partnership for route expansion and penetration purposes.

“The robust maintenance facility of Ethiopian Airlines and its varied fleet will be very helpful to the young airline. Manpower training and personnel exchanges would be another benefit.

“Ethiopian Airlines as an African partner is inward-looking and it’s very good for the implementation of the Single African Air Transport Market (SAATM) under the African Continent Free Trade Agreements (AfCFTA).

“Without any intention of being the brand manager for this project, it is my call to salute any good decision be it by individual operator or the government.”

Olowo added that the only caveat, which has been printed repeatedly, is that the five per cent of the government ownership, which is the country’s commonwealth, might not be necessary after all, since the government is midwifing a privately owned airline.

“It is a general contention that the government has no business in business due to incessant political interferences. It is also expected that the carrier is not treated as a “mere flag carrier” than others already flying the flag, including Air Peace and one-time Arik.

“I want to discountenance the national carrier nomenclature as no single airline can quickly and easily reciprocate BASA belonging to Nigeria. Two or three strong airlines are desirable.

“The playing field must be levelled for all flag carriers in the interest of Nigerian aviation. This is the voice of a solution provider rather than a mere critic. I will encourage the airline operators, aircraft operwators, and interested stakeholders and associations to endeavour to buy the 46 per cent remaining shares available to the public,” Olowo said.

Some Nigerian passengers, including Mr. Dotun Adekole, align with Olowo. Noting that the government is not meant to run businesses anymore, the concern should be about who can do the job and ensure the safety of Nigerians, as well as see how they can make profits off the venture.

“It makes no sense for the government to be wasting public funds on an airline.

‘’Ethiopian airlines have the capacity. Instead of the government adopting one of our airlines in Nigeria and upgrading it to a national carrier, they prefer accepting Ethiopia. The biggest shame is that no one bided,” Adekole said.

Despite the ‘Malabo Declaration’ for 10 per cent of budgetary allocation to the agricultural sector across Africa, the Federal Government has continued to observe the declaration in the breach, allocating a meagre three to five per cent to the sector. Industry operators and stakeholders are pushing for improved budgetary allocation to the sector, which, according to them, holds the key to feeding the nation and contributing to her Gross Domestic Product (GDP). DANIEL ESSIET reports.

Meagre budgetary allocation to the agricultural sector, has, over the years, been limiting its capacity to boost food production in Nigeria, curb billions of dollars spent yearly in food importation, bolster farmers’ harvest and income, and position agriculture to drive the nations economic diversification agenda, among others.

Although Nigeria was signatory to the ‘Malabo Declaration’, which recommended that 10 per cent of budgetary allocation should be to the agricultural sector across Africa, the continent’s largest and most populous economy has failed to keep fate to this declaration, as its budgetary allocation to the sector has so not been encouraging, hovering between three and five per cent.

Depressing, no doubt, operators and stakeholders in the agric sector, however, appear determined to reverse the trend. To this end, a two-day National Stakeholders Consultative Meeting on the 2023 Agriculture Budget’ was convened in Lagos, recently. And one of the forum’s resolutions was that the Federal Government should increase funding for priority areas such as value-added agriculture, market expansion, and rural water development.

The Consultative Meeting, which was aimed at changing the agric sector’s budgetary allocation narrative, was at the behest of non-profit making international organisation ActionAid Nigeria (AAN), Federal Ministry of Finance, Budget and National Planning, Federal Ministry of Agriculture and Rural Development (FMARD), Oxfam, and ONE Campaign, the Department of Agriculture & Rural Development of the ECOWAS Commission.

It was also aimed at facilitating conversations among key stakeholders connecting the continental framework, the Comprehensive Africa Agriculture Development Programme (CAADP) targets and government intentions within the National Agricultural Technology and Innovation Policy (NATIP) in Nigeria and strengthening citizens’ participation towards making 2023 agriculture budget responsive to food security and wealth creation.

The Meeting also provided stakeholders in the agric sector, especially smallholder women farmers, the opportunity to participate in agriculture policy and budget making processes, resulting, hopefully, to changes in priority budget line items that are pro-poor and even in the approach of government’s implementation of programmes and projects.

The Country Director, AAN, Mr. Ene Obi, set the ball rolling when he pointed out that after the Malabo Declaration for 10 per cent of budgetary allocation to be for the agricultural sector across Africa, the Nigerian Government’s budgetary allocation to the sector has not been encouraging, because it has remained between three and five per cent.

He, therefore, tasked the government at all levels on ensuring 10 per cent budgetary allocation to agriculture to boost food production.

Obi’s observation and call may have hit the right chord in the ears of the Nigerian authorities. For instance, the Chairman, Senate Committee on Agriculture and Rural Development, Senator Bima Muhammad Enagi. suggested scaling up of public investment in agriculture. He admonished the three tiers of government to commit 10 per cent of their annual budget to the agriculture sector.

“We call on federal and state executives, National and state Houses of Assembly to scale up public investment in agriculture, and ensure timely consideration, passage, and total budget releases as a strategic approach to increase food production, reduce hunger and poverty and achieve the Maputo/Malabo commitments,” Enagi said, hinging his call justifying his call Nigeria’s increasing yearly food import bills.

According to Enagi, “Nigeria’s food import bill is increasing and the highest imports of agricultural goods into the country was recorded in 2021, as products valued at N2.74 trillion were imported while local post-harvest losses is estimated at N3. 5 trillion annually with each state and Local Government Area (LGA) having its own large share.”

The Senate Committee Chairman on Agriculture noted that despite the government’s effort to improve the space for more public private partnerships arrangements in Nigeria’s agriculture sector, smallholder women farmers’ access to such schemes across the country remained below 27 per cent.

He also said the National Assembly (NASS) would ensure enhanced food security, which, according to him, is the greatest challenge in the country.

The National Secretary, Small Scale Women’s Farmers Organisation in Nigeria (SWOFON), Nnenna Ibiam, called on the Federal Government to be gender-sensitive in designing financial programmes that would make women farmers have easy access to loans.

Ibiam has an ally in the Chairman, CAADP Non-State Actors Coalition, Rose Mary Effiong. Effiong said poor access to credit has impeded the productivity of women farmers who are major drivers of the sector. She called on the Federal Government to consider policies that would ameliorate the challenges experienced by women farmers.

Participants at the forum, however, observed that the Nigerian food sector was confronting new and emerging challenges such as the on-going Russia-Ukraine war, which has affected input prices and availability of staples such as wheat.

The President, Federation of Agricultural Commodity Association of Nigeria (FACAN), Dr. Victor Iyama, called for increased campaign to increase food production to help curb the billions of dollars Nigeria spend in the importation of food annually and also cushion the effects of any crash in oil prices at the international market.

To boost food production, Iyama specifically called for new irrigation lines to guarantee steady supplies of seeds, fertiliser and pesticides to boost domestic production and bolster farmers’ harvests. He said this is so considering the growing number of mouths to feed, in a country with a population put at 200 million, and projected to grow at an estimated one million a year.

Indeed, the need for improved irrigation as canvassed by Iyama has never been compelling considering recent droughts in most parts of the North, which pushed grains harvest down in many production areas.

For the Southwest Chairman of the All Farmers Association of Nigeria (AFAN), Otunba Femi Oladeji Oke, investing in agric development, particularly in the processing of food products, especially grains, mainly through financial incentives to farmers including zero interest loans was necessary at this time.

According to him, agriculture is among multiple sectors in Nigeria that offer opportunities for long-term growth.

A World Bank Consultant, Prof Abel Ogunwale, said achieving sustainable agricultural production, generating employment, reducing imports and minimising post-harvest crops losses should be the major objectives of the government.

He, however, said increased collaboration between farmers and the processing industry holds the key to increasing domestic agricultural output and curtailing the size of food imports.

Beyond the Consultative Meeting’s emphasis on increasing Nigeria’s budgetary allocation to the agric sector, a communique issued at the end of the engagement and obtained by The Nation put forward a number of recommendations which, when implemented, will enhance the sector’s fortunes.

The communique, which was signed by over 66 stakeholders and read by the Executive Director of National Agric Extension Research and Liaison Services, Prof. Ikani Emmanuel, regretted the late release of fund to the sector.

According to the communique, this has continued to impede the capacity of Federal and state governments to drive socio-economic development, including food and nutrition security within the policy thrust of the diversification of the economy towards agriculture.

Emmanuel, in the communique, therefore, advised states to develop their agriculture investment plan. “This will enable the efforts at the states and local governments to be recognised in the overall determination of the country’s commitment to the CAADP and enable accurate data for the Biennial Review Reporting,” he said.

Stakeholders also appealed to the Federal Government to develop pesticide policies and legislation that ensure that the most toxic pesticides are prohibited and phased out in Nigeria.

“To achieve this, the government needs to develop a safe sustainable food strategy that reduces the use of highly toxic synthetic chemical pesticides by 50 per cent by 2030; 25 per cent by 2040, a maximum five per cent by 2050 and strong support to be given to farmers in their transition towards agroecology,” the stakeholders recommended.

Other recommendations included more allocation of public investments to address strategic areas that will increase the agricultural Gross Domestic Product (GDP) to at least six per cent. The areas include extension services, access to credit, women in agriculture, youths, labour saving technologies, and input.

Under her digital economy agenda, Nigeria projects to increase her Gross Domestic Product (GDP) to 15 per cent by 2025, thereby brightening her chances of claiming a share of the global digital economy valued at $11.5 trillion. But the dearth of Information and Communication Technology (ICT) infrastructure is clogging the wheel of progress in transforming the country into a regional and global digital powerhouse.This has pushed the adoption and implementation of local content and indigenous capabilities, as well as public-private partnerships, to drive the agenda to the front burner. Assistant Editor CHIKODI OKEREOCHA reports.

With a burgeoning tech-savvy youth population with spending power, increasing smartphone and Internet penetration rates, among other favourable indicators, Nigeria looks good to leverage her digital economy agenda to transform into a regional and global digital powerhouse and, ultimately, boost productivity across all economic sectors.

For instance, with 109.2 million Internet users, Nigeria’s Internet penetration rate stood at 51 per cent of the total population put at 214.1 million in January 2022. Her 176.3 million cellular mobile connections were also equivalent to 82.4 per cent of the total population as at the same period.

Broadband usage has also been rising, moving up from 40.9 per cent in February, this year to 44.5 per cent in July, a figure considered hopeful for achieving the national broadband target of 70 per cent in 2025, according to the Executive Vice Chairman of Nigerian Communications Commission (NCC), Prof. Umar Danbatta.

Ordinarily, the afore-mentioned strong fundamentals, coupled with the growing interest of local and foreign investors, particularly in the country’s ICT sector, should position Africa’s largest and most populous economy to achieve her target of leveraging a robust digital economy to boost her Gross Domestic Product (GDP) to 15 per cent by 2025.

But, while the end-game of increasing the GDP to 15 per cent by 2025 was to brighten her chances of cornering a chunk of the global digital economy valued at $11.5 trillion, which translates to about 16 per cent of the global economy, the dearth of effective and efficient digital infrastructure to catalyse her transition are hurting her chances.

Indeed, the ICT sector’s contribution to the GDP has been one of the fastest growing components and is becoming the country’s most important long-term growth prospect. For instance, ICT contributed 18.44 per cent to the GDP in Q2 2022, while the oil sector contributed 6.33 per cent to the total real GDP in Q2 2022, according to the National Bureau of Statistics (NBS).

However, while an obviously excited Minister of Communications and Digital Economy, Prof. Isa Pantami, attributed the ICT sector’s growing contribution to the GDP to the current administration’s commitment to the development of the digital economy, fears are rife that the minister’s excitement may be short-lived, unless the nation’s inadequate ICT infrastructure (computers, Internet and broadband) are addressed.

According to Information & Technology (IT) experts, ICT infrastructure plays a key role in the socio-economic and technological development of a digital economy, which essentially refers to transformational changes occurring in the way businesses and individuals produce, deliver and consume goods and services in an increasingly digitalised marketplace.

A digital economy allows people to access products and services and creates wealth through social media and e-commerce using the appropriate applications. It boosts the productivity and local and global competitiveness of businesses as they can now use technology to automate their operations and processes. This is because businesses are able to use the Internet to reach new markets and customers.

But as promising as the future of a Nigerian economy based on digital technologies is, the country’s huge digital infrastructure gap may truncate her journey to that envisaged future. Inadequate access to the latest technologies and infrastructure, which are growth catalysts for modern digital economies, may hurt Nigeria’s opportunity of reaping the full benefits of a digital economy.

The Nation learnt that the infrastructure deficit threatening to truncate Nigeria’s transformation to a digital economy runs through the gamut of solid infrastructure (deployment of fixed and mobile infrastructure to deepen broadband penetration); service infrastructure (support for government digital services and the provision of robust digital platforms to drive the digital economy).

There is also soft infrastructure (strengthening public confidence in the use of digital technologies and participation in the digital economy), with the President of Lagos Chamber of Commerce and Industry (LCCI), Michael Olawale-Cole, noting that the multiplier effects of an effective and efficient digital infrastructure on national development cannot be overemphasised.

He said this was why the Federal Government announced a target of $40 billion private capital investment in digital infrastructure by 2025, besides facilitating about $1 billion in private equity. It also inaugurated the National Council on Infrastructure, with a plan of doubling the infrastructure stock of the GDP from 35 per cent to about 70 per cent.

Olawale-Cole spoke at the eighth edition of Information Communication Technology and Telecommunication (ICTEL) Expo organised by the chamber and held in Lagos, last week.

The two-day event, which featured exhibitions, presentations by keynote speakers, and pitch sessions, among others, was themed: “Ensuring Efficient Digital Infrastructure in Nigeria.”

Olawale-Cole said despite the lofty targets set for the country’s digital infrastructure, government lacked the political will to implement laudable policies that could transform the digital infrastructure. Noting that the reason for doubting the government’s 70 per cent target for infrastructure contribution to GDP was linked to the decade-long corruption, he said poor infrastructure was the greatest socio-economic development challenge.

However, the Federal Government has never hidden its intention to transform Nigeria into a digital economy. From October 17, 2019, when President Muhammadu Buhari approved the re-designation of the Ministry of Communications as the Ministry of Communications and Digital Economy, the administration left no one in doubt of its intension to achieve the feat.

The change of name expanded the ministry’s mandate to include a key aspect of the priority areas set for it, which is the “Development and Implementation of a Digital Economy Policy and Strategy.” Accordingly, the new ministry was assigned the role of coordinating all activities related to digital economy, and it has since been doing so.

However, the expansion of the ministry’s mandate was not the only indication of the government’s realisation that the economy’s local and global competitiveness depended on how it deploys technology to transform various sectors of the economy. It has also been paying attention and emphasis on the integration of ICT infrastructure in its policies and programmes.

The emergence of MTN Nigeria and Mafab Communications Ltd, as winners of the keenly-contested 3.5 GHz spectrum auction for Fifth Generation (5G) deployment, as well as the $574.2 million realised from the auction, were indications of government’s readiness to achieve the digital economy agenda.

Operators of cloud computing services to the rescue

While industry operators, stakeholders and Nigerians await the Federal Government to pluck up the political will to walk the digital infrastructure talk, the adoption and implementation of local content and indigenous capabilities to drive the  agenda has taken centre stage, with some local ICT companies leading the charge.

For instance, the Director of Operations, Unitellas Edge Cloud, Blessing Omo, said investing in digital infrastructure, particularly edge cloud technologies, which offer cost savings, capacity to scale rapidly, advance cyber-security features and access to powerful analytical tools for processing big data, was key to achieving the digital economy agenda.

Blessing, who spoke on ‘Digital Transformation: Unlocking Value with Edge Clouds in Nigeria’, at the expo, said Nigeria could achieve the next stage of her digital transformation and reap the benefits of cloud services by shifting focus from reliance on legacy IT systems to more cloud-based solutions.

“Edge Clouds are compact or modular data centres closer to where the end users utilise them. Edge Computing brings processing closer to the source of data and enables the unlocking of the value of data assets in real time for critical decision making,” she explained.

Citing the Automation World 2021 Cloud & Edge survey, which said 62 per cent of companies were leveraging cloud technologies as part of their digital transformation roadmap, Blessing said countries like the United States, United Kingdom, Singapore and others, which are implementing cloud policies in governance, have recorded accelerated digital transformation and delivery of essential public and business services.

By 2025, companies around the world are expected to use cloud technology in some way, with 85 per cent of business applications predicted to be based on it. In the United Arab Emirate (UAE), for instance, the share of cloud-related digital transformation spending is expected to increase to 30 per cent in 2024, up from 22 per cent in 2020.

Insisting that Nigeria can follow the same trajectory, the Unitellas chief operating officer said the primary benefits or values that implementing edge clouds in Nigeria would deliver included improved latency, reduction of response time, conservation of network resource (low-bandwidth costs), and improved security and privacy, among others.

Others are reduced capital flight in foreign exchange, increased confidence in local technology, constant availability of mission-critical applications, and cost savings due to pay per use without CapEx investments.

The Managng Director, Unitellas Edge Cloud, Mr. Smith Osemeke, harped on the need to prioritise the use of available local cloud technologies to cut off latency and drive Nigeria’s digital transformation instead of relying on the use of public clouds, outside Nigeria’s shores, with its attendant security and latency-related issues.

Osemeke, who was one of the discussants on the Expo’s panel session focused on ‘Education, Digital Learning and Digital Infrastructure in Nigeria,’ said the challenge of online learning in Nigeria still boils down to digital infrastructure hence, the need to interrogate what government is doing to ensure the required infrastructure are available locally.

“There is need to create more awareness about our local capabilities. The infrastructure is here to drive Nigeria’s digital transformation. We must encourage local content to create jobs and conserve foreign exchange,” he said.

For the Managing Director, Galaxy Backbone Limited (GBB), Prof. Mohammad Abubakar, public-private partnership (PPP) holds the key to providing efficient digital infrastructure.

Abubakar, who was represented at the Expo by the Group Head, Business Development, GBB, Mr. Dauda Oyeleye, said to further solidify GBB, a government agency’s stand on PPP, the company created an Enterprise Business Group (EBG) tasked with the responsibility of managing private customers as well as structured partnerships.

He said GBB had a pervasive fibre connectivity network across the nation, which the private sector could key into. “We have established partnerships with managed service providers, real estate developers, as well as other local organisations to reach the goal of attaining a digital Nigeria.

“Our state-of-the-art infrastructure has been instrumental in sealing these deals and the partnerships just keep getting better. `GBB has taken steps to secure public confidence in the use of its digital infrastructure, through trusted international third-party attestations and would continue to redefine collaboration within and outside the country,” Abubakar said.

On his part, the Chairman, Heirs Holdings, Tony Elumelu, called for the scaling up of Nigeria’s digital infrastructure through adequate multi-sectoral investments to accommodate the country’s rapidly-growing digital economy.

Nigeria’s lack of capacity to account for her daily petrol consumption has left sour taste in the mouth of stakeholders and citizens. Experts say the continued disparity in consumption figures of the commodity leaves room for insincerity and fraudulent practices, especially in subsidy payment, which is put at N6.3 trillion for this year alone, MUYIWA LUCAS writes

Dynamites come in small packs. But, irrespective of its small pack, it is a highly explosive device. This aptly describes the Comptroller-General of the Nigeria Customs Service (NCS), Colonel Hameed Ibrahim Ali (rtd).

Ali, who served as Military Administrator of Kaduna State between August 1996 and August 1998, last week sent the regulators and stakeholders in the country’s oil and gas sector on what could be termed as a “soul searching” mission. Appearing before an interactive session of the House of Representatives Committee on Finance on the 2023-2025 Medium-Term Expenditure Frame and Fiscal Strategy Paper, the Bauchi State born retired Colonel, known for his non-conformist stance on national issues, came down like a ton of bricks on the Nigerian National Petroleum Company (NNPC) Limited.

Revealing that over 38 million litres of Premium Motor Spirit (PMS), known in locally as petrol, released in excess of actual consumption by the NNPCL into the market finds its way out of the country daily, Ali queried: “The issue is not about smuggling of petroleum products. I have always argued this with NNPC. If we are consuming 60 million litres of PMS per day by their computation, why would you allow the release of 98 million litres per day? If you know this is our consumption, why would you allow that?”

Buttressing his position, the NCS chief further argued: “Scientifically, you cannot tell me that if I fill my (vehicle) tank today, tomorrow, I will fill the same tank with the same quantity of fuel. If I am operating a fuel station today and I go to Minna depot, lift petrol and take it to Kaduna, I may get to Kaduna in the evening and offload that fuel. There is no way I would have sold off that petrol immediately to warrant another load.

“So, how did you get to 60 million litre per day? That is my problem. The issue of smuggling: if you release 98 million litre in actual and 60 million litres is used, the balance should be 38 million litres. How many trucks will carry 38 million litres every day? Which road are they following and where are they carrying this thing to?”

Discordant tunes

Ali is right. The issue of daily fuel consumption has remained a hydra-headed problem in the country for several years. According to industry stakeholders, it is easier for a camel to pass through the eye of a needle, than attempting to get the exact daily fuel figure consumed in Nigeria.

This position was attested to in 2018 by the National Bureau of Statistics (NBS), which was reported to have stated that Nigeria does not have an official figure on daily fuel consumption. With the NNPCL, responsible for managing the country’s oil unable to provide any means for determining fuel consumption volume in the country, the NBS said whatever numbers being bandied around are likely incorrect.

Still, even from the other related industry agencies in the oil sector, no unified figure has been agreed on as daily fuel consumption volume in the country, including the volume of crude oil stolen daily.

For instance, in 2020, the now defunct Department of Petroleum Resources (DPR), now known as Nigerian Midstream and Downstream Authority (NMDPRA) put the fuel consumption figure at 38 million litres daily at a time that the Ministry of Petroleum Resources put it at 52 million litres daily consumption. In January, this year, the Minister of Finance, Zainab Ahmed, put daily fuel consumption figures at 65.7 million litres. This represents a 10.31 million litres daily increase when compared to the average daily consumption from January to August 2021 estimated at 55.39 million litres daily.

Although the NNPC has not been able to give any official data on domestic petrol consumption, the Group Managing Director, NNPC, Mele Kyari, in June, last year, said petroleum consumption in the country is not up to 60 million litres per day, but that the corporation supplies as much as that.

“We always plan with 60 million litres, because anytime we do below that, there is a crisis. When borders were shut last year, consumption fell to 52 to 53 million litres per day. And during the thick of the COVID-19 lockdown in 2020, the number fell to about 42 million litres. If everything works well and consumption is limited to our country, we are dealing with about 42 million litres,” Kyari said on a national television station in June.

His position is in contrast with that of the Major Oil Marketers Association of Nigeria (MOMAN), who in May, said the local consumption of petrol jumped to 72.72m liters daily from 57.44 million litres sold in April- blaming the surge in consumption to the “thriving activities of smugglers” in the nation’s petroleum industry.

Still, as at April, NNPC put the fuel daily consumption at 74million litres, rising from 72.07 million litres daily from last December.

Contestable figures

Financial and economic experts contend that the disparity in fuel consumption volume leaves room for fraud in subsidy claims and payment as well as the amount declared as revenue. They maintained that inflated fuel consumption figures, overstated or understated revenue figures and huge subsidy bills are all harmful to the country’s fiscal balance especially with increasing budget deficits and the need to generate more revenue since there are no standardised means of how they arrive at the fuel consumption rates used to determine the subsidy cost.

The Deputy Chairman, House of Representatives Committee on Finance on the 2023-2025 Medium Term Expenditure Frame and Fiscal Strategy Paper, Saidu Musa Abdullahi, in an obvious response to Ali’s poser before the committee, observed that  about 500 trucks were needed to convey 38 million litres of petrol daily.

“You talk about 38 million litres of petrol which amount to about 500 trucks leaving our shore on daily basis. We have investment in NIGCOMSAT. Has there been any time that our satellite captured images of trucks leaving our shore?

“I think it is very clear that what is required is the political will to put a halt to this. We talk about insecurity. This is the real course of it. The money that is supposed to go into the provision of social amenities is going into private pockets. I think there is need to work together to put a halt to this. Posterity will be kind to us if we are able to proffer a lasting solution to this issue of subsidy because it is not sustainable,” Abdullahi said.

Subsidy

The unavailability of correct data on fuel consumption is also rubbing off on the payment for subsidy on the commodity. Ahmed, while testifying before the House Committee last week, expressed concern that the government might not be able to fund capital projects from the treasury in the coming year due to declining tax revenues and the annual payment of N6.34 trillion in fuel subsidies.

Her concerns are justifiable. For a long while now, the NNPC has deducted funds meant to be remitted to the federation account (FAAC) to cover for petrol subsidy, resulting in zero revenue remittances.

In January, the NNPC requested for N3 trillion as subsidy fund for the 2022 fiscal year. The demand was premised on a daily consumption rate of 65.7 million litres and an oil price peg of $80 per barrel. In January, February and March, this year, petrol subsidy payments gulped N210.38 billion, N219.78 billion, and N245.77 billion. In April, May and June, N271 billion, N327.07 billion and N319.18 billion were spent on subsidy, while N448.78 billion was spent in July to cater for subsidy payments, while its outstanding balance carried forward is N1,044,514,420,619.73.

Data published by the now defunct Petroleum Products Pricing Regulatory Agency (PPPRA), showed that subsidy claims paid by the Federal Government in 2011 stood at N2,105.92 trillion, representing an increase of N1,437.84tr from the 2010 payment. In 2012, N1.35trillion was paid as a subsidy; in 2013, N 1, 316 trillion; 2014 was N1,217trillion and N653.51billion in 2015 was paid as subsidy claims. It is worthy of note that the NNPC since 2016, had been the sole importer of the product to the country.

In March, last year, Kyari stated this at a ministerial briefing that the then Corporation paid between N100 billion and N120 billion monthly to keep the pump price of PMS at N160- N165 per liter. This was at a time he said the product price could have been anywhere between N211 and N234/ litre. A breakdown of subsidy payment according to data from the NNPC shows that subsidy payments grew by 349.42 per cent from N350billion in 2019 to N1.573trillion in 2021.

For Ali, it is regrettable that the country is being weighed down by subsidy payment. “I remember that last year, we spoke about this. Unfortunately, this year, we are talking about subsidy again. The over N11 trillion we are going to take as debt, more than half of it is going for subsidy,” he lamented.

Abdullahi shares Ali’s sentiment. He said: “If there is anything that has and is constituting nuisance and has become a drain in the economy today, it is this issue of subsidy and as a government, we have not done well. We owe it to the people of this country to do what is right for this country. We are talking about over N6 trillion going for subsidy payment that almost doesn’t exist.”

But going by President Muhammadu Buhari’s position, subsidy removal does not seem to be on the table, at least for now. Despite calls by several international financial agencies and organisations that subsidy be removed, President Buhari, in an interview with Bloomberg earlier in the year, defended his decision not to heed the calls by the International Monetary Fund (IMF), World Bank and other leading economists to remove the fuel subsidy.

Buhari said: “Most western countries are today implementing fuel subsidies. Why would we remove ours now? What is good for the goose is good for the gander!” He said until there is internal production for refined products and boosted capacity which is ongoing, as well as stable foreign exchange (forex) rate, it would not be appropriate to remove the subsidy.

An industry operator, who pleaded for anonymity, explained that it is practically impossible for 98 million liters of petrol be consumed daily in the country. To this end, he wants the government to take a critical look at the NNPC’s books on subsidy payment, especially now that it has been commercialised.

“There is a whole lot of complicity going on in that sector, let government take a forensic audit of all these claims and then Nigerians would see how much they have been robbed, “ the source said.

The Chief Executive officer, Center for promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, argued that the subsidy regime continues to be a major burden on the oil and gas sector, especially the downstream sector. “There are issues of transparency, absence of level playing field, weak corporate governance and poor competition framework,” he said.

Yusuf warned that government’s refusal to end subsidy did not come as a surprise to him given its grave potential political cost.

“The whole subsidy story became a political economy matter; the matter moved from the realm of economics and investment to the political realm. We should expect the cost of funding the subsidy to be much higher this year because of the surge in crude oil price.

“If the oil price remains high for the most of the year, the subsidy cost could go as high as N5 trillion or even more by the end of the year. This would surely affect funding for critical infrastructures such as roads, railways, healthcare education, and even security.

“The petroleum products smugglers, beneficiaries of the fiscal leakages in the fuel subsidy ecosystem and their collaborators will continue to smile to the banks for the next one and half years,” Yusuf submitted.

More questions, less answers

Yet, while the position of Buhari may be understood, several questions remains to be answered by NNPC and the government, especially if the claims by Ahmed that Nigeria spends N18.39 billion daily on petrol subsidy payments anything to go by.

Questions bothering around the exact volume of petrol consumed daily in the country; why the NNPC is importing 38 million litres of the commodity above the requirement and no hint of it going into any reserve; for how long has the excess requirement been imported, among others are begging for answers.

By Oluwatomisin Amokeoja

With just two months to the commencement of the 27th edition of the Conference of Parties (COP27) — the supreme decision-making forum of the United Nations Framework Convention on Climate Change (UNFCCC) — Nigeria has continued to grapple with a plethora of challenges on addressing climate change crises in tandem with its final report of the updated Nationally Determined Contribution (NDC) submitted to the UNFCCC on July 30, 2021.

In Nigeria’s updated NDC, the government proposed to mitigate four greenhouse gases: carbon dioxide (CO2), Methane (CH4), nitrous oxide (N2O) and hydrofluorocarbons (HFCs), as against the three GHG (CO2, CH4 and N2O) proposed in the previous NDC submitted.

Observers have continued to watch with mixed feelings how Nigeria has struggled with implementation of the Climate Change Bill President Muhammadu Buhari signed into law on November 17, 2021. The Climate Change Bill sponsor, Chairman, House Committee on Climate Change, Sam Onuigbo, falls among those who have called for implementation of the Act despite moves for amendment. Onuigbo noted it forms part of Nigeria’s COP27 priorities.

The Act which followed Buhari’s proclamation on November 2, 2021 at COP26 that Nigeria will attain net zero GHG emissions by 2060, offers a clear path if implemented with its provision for carbon budgeting and a National Action Plan to enforce the carbon budgets.

Notably among the growing concerns include Chairman, Steering Committee of the Renewable Energy and Energy Efficiency Associations (REEEA) Alliance, Dr. Immamudeen Talba, who recently reckoned the need to properly coordinate the laws and policies ahead of COP27 holding in Sharm El Sheikh, Egypt, between 6 to 18 November, 2022. The energy expert stressed that the Climate Change Act, the energy transition policy, the Nigerian energy efficiency policy, the national renewable energy policy and other instruments should be properly synergised. He spoke at a forum where stakeholders in the Nigerian renewable energy sub sector moved to harmonise the divergent policies in the ministries, departments and parastatals of government in view of the renewed discussions on the impending transition to cleaner fuels.

“We want to harmonise all these commitments and come up with a framework and we want to see a situation where Nigeria goes back to the COP27 coming up in Egypt, with a presentation on what it has achieved vis-à-vis the commitments,” he noted.

Talba explained that since the policies are driven by different agencies, there has been no synergy, with a lot of uncoordinated approaches. “If you’re looking for data you can hardly see the data because there’s nobody to harmonise,” he added.

“At the end of the day, there will be no delivery because there’s no target or goals. You see that nothing has been achieved but money has been spent. That’s why the alliance decided that there’s the need to carry everybody along,” he pointed out.

To buttress Talba’s concern about data, Climate Action Tracker (CAT)’s study found that Nigeria set a net-zero target between 2050-2070 but did not provide information on the target’s emission coverage, its intention to cover international aviation and shipping, and its intention to use international offset credits to meet its net-zero target.

On the architecture target, the study noted: “Nigeria provides no information on its intention to communicate separate emission reduction and removal targets. It is also not its intention to establish a review cycle for its net-zero and intermediate targets.”

On transparency, the research shows that Nigeria provided no information on its intention to communicate transparent assumptions on domestic carbon dioxide removals to meet its net-zero target.

Taking about seven months to approve the appointment of Dr. Salisu Mohammed Dahiru as Pioneer Director General and Chief Executive Officer of the National Council on Climate Change (NCCC) does not in any way convince observers that Nigeria is set to achieve its net-zero emissions target. According to a press release signed by Saghir el Mohammed, Director, Press Federal Ministry of Environment, the appointment took effect from 25th July, 2022. Dahiru will lead NCCC to implement policies and projects toward mitigating the impact of life-threatening climate change crises on Nigerians.

Nigeria, seen as the giant of Africa cannot afford to take the back seat in the scheme of things. It must lead the charge as expectations continue to grow that African countries’ exposure to some of the most severe impacts of climate change will be front and centre of the discussions at COP27.

These are troubling times for airlines. Almost forced on their knees by rising cost of aviation fuel and difficulty in repatriating foreign airlines’ $464 million, the challenge of sourcing foreign exchange (forex) to buy spares and pay for repairs, has added to the industry’s problems. Experts and stakeholders say that unless the Federal Government takes urgent steps to resolve these issues, the negative consequences will not bode well for the beleaguered industry. Aviation Correspondent KELVIN OSA-OKUNBOR reports.

For operators in the air transport and allied sectors, these are challenging times. While many of them are still struggling to come to terms with the skyrocketing cost of aviation fuel, otherwise known as JET AI, which hit about N1, 000 per litre, last week, the window for accessing Foreign Exchange (forex) from the Central Bank of Nigeria (CBN) is getting narrower, thereby adding to their list of woes.

With the increasing difficulty in accessing forex from the CBN’s official window, there are fears that airline operators may be in for more troubles in the coming weeks and months, unless urgent steps are taken to resolve the impasse.

The fear is that if the forex crisis persists, more local carriers may be forced to shut, this could force them to secure it at a higher cost at the parallel market, with its attendant unsavoury effects on their operations, including lay off of workers and possibly, shut operations.

Already, with the increasing cost of operations that the crisis has triggered, local carriers are  said to be finding it extremely difficult to procure forex to either purchase spares for aircraft, which have developed faults, otherwise known as Aircraft on Ground (AOG), or payment for repairs of aircraft in offshore locations.

Investigations by The Nation revealed that many airplanes on the fleet of local carriers are on the waiting list for routine maintenance, but lack forex to purchase spares and meet obligations. Forex crisis was cited as part of the reasons why one of the oldest indigenous carriers – Aero Contractors – temporarily suspended scheduled operations, recently.

Indeed, in the last few months, the Umbrella body of local carriers – Airline Operators of Nigeria (AON) – has been lamenting the scarcity of forex, noting that it was one of the major challenges facing the business.

AON spokesman Prof. Obiora Okonkwo said: “Airlines carry out most of their activities in the United States dollars which today, sells for over N700/$1; and is sadly also, in short supply. To say the least, airlines are in a ‘life and death’ struggle to secure the forex that is urgently needed to acquire spare parts to ensure the regular routine and scheduled maintenance of aircraft.”

According to Okonkwo, access to forex is a major influence on howc quickly a grounded aircraft can be fixed and restored for flight operations, which impacts greatly on the reliability of schedules, growth of the industry, as well as economic growth and sustainability.

However, forex crisis is only an addition to the list of woes of operators in the nation’s aviation industry. For instance, the over 27 foreign carriers operating into Nigeria are groaning over difficult in repatriating over $464 million trapped in the country.

Expectedly, the development has since drawn flaks from international aviation organisations, including the International Air Transport Association (IATA), which last week, berated Nigeria for what it termed an ‘undiplomatic conduct.’

IATA a few months ago listed Nigeria among some African countries, which are holding on to revenues accruing from ticket sales by foreign carriers operating in their countries.

It’s Director-General/Chief Executive Officer, Mr. Willie Walsh, at its conference on Doha, berated African countries, including Nigeria for taking steps to undermine the growth of air transport on the continent by withholding airline funds. He said carriers operating in the continent have over $1 billion trapped.

“We are looking at ways to get these funds out. It is really having an impact on the airlines and the recovery of the market as well because airlines will be reluctant to bring capacity into markets where they can’t repatriate their money.

“It affects national growth and additional capacity. If you can’t get your money out, I am sorry, it is a simple business decision, and you are not going to give additional capacity to the market.

“Airlines are looking to recover their money and they are not going to put their funds into markets that they have no confidence in. I think this is a significant factor against recovery in the continent.

“It is unfortunate because it would affect the consumers, they are not going to get the choice, they are not going to get the competition and they would not be able to get the choice that they have been getting if the funds were not blocked. They are big issues, really big issues,” Walsh fumed.

Already, one of the affected airlines – Emirates- said it will suspend flights into Nigeria effective September 1, 2022, citing ongoing difficulties in repatriating trapped funds in Nigeria amounting to $95 million by the Central Bank of Nigeria.

In a statement, Emirates Airlines said: “Emirates has tried every avenue to address our ongoing challenges in repatriating funds from Nigeria, and we have made considerable efforts to initiate dialogue with the relevant authorities for their urgent intervention to help find a viable solution.

“Regrettably, there has been no progress. Therefore, Emirates has taken the difficult decision to suspend all flights to and from

“Nigeria, effective September 1, to limit further losses and impact on our operational costs that continue to accumulate in the market.

“We sincerely regret the inconvenience caused to our customers.

“However, the circumstances are beyond our control at this stage. We will be working to help impacted customers make alternative travel arrangements wherever possible.

“Should there be any positive developments in the coming days regarding Emirates’ blocked funds in Nigeria, we will of course re-evaluate our decision. We remain keen to serve Nigeria, and our operations provide much needed connectivity for Nigerian travelers, providing access to trade and tourism opportunities to Dubai, and to our broader network of over 130 destinations.”

Apparently throwing his weight behind Emirates’ decision, IATA Regional Vice President for Africa and Middle East, Kamil Alawadhiit, berated the Nigerian Government for withholding $$64 million funds belonging to foreign carriers, pointing out that such unfair practice prompted Emirates Airlines to stop flying into Nigeria effective September 1, 2022.

“IATA is disappointed that the amount of airline money blocked from repatriation by the Nigerian Government grew to $464 million in July.

This is airline money and its repatriation is protected by international agreements in which Nigeria participates.

“IATA’s many warnings that failure to restore timely repatriation will hurt Nigeria with reduced air connectivity are proving true with the withdrawal of Emirates from the market. Airlines cannot be expected to fly if they cannot realize the revenue from ticket sales.

“Loss of air connectivity harms the local economy, hurts investor confidence, impacts jobs and peoples livelihoods. It’s time for the Government of Nigeria to prioritise the release of airline funds before more damage is done,” Alawadhiit said, in a statement.

Last week, Aviation industry safety watchdog and think tank group – Aviation Round Table Safety Initiative (ASRTI), also expressed dismay over the appalling handling of accumulated foreign airline funds trapped in the CBN. It also described as unacceptable the non-allocation of forex to the affected carriers.

The ASRTI berated the Nigerian Government for violating extant articles  in all bilateral air services agreements it signed with

other countries, which expressly requires Nigeria to facilitate transfer of earnings to foreign carriers.

In a statement last Friday, ASRTI spokesman, Mr. Olumide Ohunayo, said the Federal Government is under obligation to allow designated carriers the right to convert and remit to its country on demand, local revenues in excess of the sum locally disbursed.

According to Ohunayo, the refusal of the government to allow foreign carriers repatriate their trapped funds is already serving as a disincentive to investors in the aviation sector.

“In all Bilateral Air Services Agreement (BASA), an Article in the agreement — transfer of earnings, clearly states that each designated airline shall have the right to convert and remit to its country on demand, local revenue in excess of sums locally disbursed. Conversion and remittance shall be permitted without delay in accordance with the prevailing foreign exchange regulations.

“International trade is bound by agreements which are sacrosanct and respected. Nigeria cannot do otherwise if we crave the attention of investors in our industry.

It’s important to state that foreign airlines sold these tickets at the official IATA rate and cannot be expected to go to the parallel market to source, convert and remit as opined in some quarters. “The CBN should do the needful as enshrined in the BASA agreements.

These funds should have been remitted at the official rate on date of sale immediately the Airlines get clearance after paying the local obligations, including taxes.

“The damage that our action has done to the Nigerian image as an investment friendly nation is far reaching, while the citizenry is faced with high fares, reduced capacity and limited travelling options, which will worsen if we continue on this trajectory.

In the light of the forgoing, the Chairman of Finchglow Holdings, Mr.Bankole Bernard, said palpable anxiety has gripped foreign carriers operating flights into Nigeria over fears of naira devaluation by the Federal Government.

He said if the currency devaluation sees the light of day, the over $464 million ticket revenues belonging to foreign airlines could lose significant value.

The Nation learnt that the inability of the affected carriers to repatriate their funds has forced some to cut flight frequency into the country, raise air fares arbitrarily as well as implement other measures.

Two carriers namely, Emirates and British Airways recently announced plans to cut flights into the country. Bernard confirmed the development when he said the agitation by the foreign carriers was fueled by mistrust with the Federal Government.

He said though the issue of trapped funds was not new, its effect on air travel in Nigeria was forcing passengers to cough up more funds to purchase tickets for overseas trips.

Bernarnd said: “This is not the first time that we are facing the issue of trapped funds. This also happened, I think in 2016 when the total trapped fund of the airlines was far higher than whatever we have now.’’

“It was about $750 million then and they were making a particular comparison because at that time, Venezuela was also going through the same challenges and they owed a lot more to the extent that Lufthansa had to stop flying to Venezuela.

“Then, some of the things we noticed were reduced capacity, air tickets became more expensive and that is exactly what we are seeing now.

“But, one critical reason they are more agitated is that in 2016 after their money was held back without being repatriated, Nigeria devalued its currency and as a business person, they felt that if they had taken their money out, they would not have been affected by the devaluation.”

Bernarnd said foreign airlines are now nursing the fear that if the currency is devalued, it means that they would have lost several percent of that money they intend to repatriate.

“The only way we can reduce or stop this agitation is that there should be a communiqué from the government, which will give them some assurances that the country is not planning to devalue and this won’t affect them and that they will repatriate their money as it were,” he suggested.

The President of National Association of Nigeria Travel Agencies (NANTA) Mrs. Susan Akporiaye, appealed to the CBN to take urgent steps to resolve the trapped funds belonging to  foreign airlines operating in the country.

She said the issue, if not properly handled, could wane the confidence of investors into the aviation sector. She said the current situation presents a real threat to the industry and the continuity of their business as travel professionals, bearing in mind the potential jobs losses and the attendant national economic losses as the world is gradually coming out of the pandemic era.

Akporiaye said NANTA was worried that foreign airlines may resort to taking out lower inventory in the system resulting in high cost of tickets from the Nigerian market. She stated, for instance, that a six hour trip to London may attract a fare rate of about $2000 or more and also encourage tickets sold outside the country to flood Nigeria,  thus affecting the survival of Nigerian travel agents and consequent loss of taxes and levies from such transactions.

The NANTA boss said if the matter is not handled quickly, a bleak future worse than the pandemic awaits Nigeria travel operators.

“As Nigerians, we are patriotic and have presented our country well in the global travel industry and rightly felt disturbed that Nigeria is

on the brink of a wrong narrative at the just concluded 78th Annual General meeting of IATA in Doha, Qatar on the account of airlines’

trapped funds.

“We are by this outing once again,  appealing to the CBN,  the Ministry of Aviation and the office of the Vice President to speedily

intervene to bring down the amount of trapped funds to help resolve the operations of these airlines,” she said.

Globally, free trade zones are credited with possessing the capacity to drive industrialisation, diversify the economy, create jobs, and generate Foreign Direct Investment (FDI). But, Nigeria’s push in the past 30 years to leverage the scheme to enjoy these deliverables has been undermined by myriads of challenges, including infrastructural deficit, unnecessary interference by multiple government agencies, and insecurity. However, stakeholders have moved to create a more robust template for a globally competitive free trade zone scheme in Nigeria. Assistant Editor CHIKODI OKEREOCHA reports.

In other jurisdictions where Free Trade Zones (FTZs) or Special Economic Zones (SEZs) were adopted as a model to fast-track industrialisation, diversify the economy, create jobs, and generate Foreign Direct Investment (FDI), they literarily worked magic.

Countries such as China, United Arab Emirates (UAE), Singapore, Ethiopia, Malaysia, and even neigbouring West African country, Ghana, have leveraged FTZs, which are designated areas for promoting trade openness and investment facilitation, as a dynamic instrument for growth and development.

Sadly, however, efforts to replicate the success of the FTZ model in Nigeria have not been hugely rewarding. The impact of the adoption, in 1992, of the FTZ model on Nigeria’s trade, investment and economic outlook has not been significant 30 years after.

Africa’s largest and most populous economy has so far lagged behind other countries in leveraging FTZs to significantly boost FDI, achieve rapid, inclusive and sustainable industrialisation, create jobs, and diversify her export earnings, much to the chagrin of the Federal Government and the operators of the 43 FTZs.

For instance, 30 years after the scheme’s operation, cumulative investment stood at about $20 billion, according to the Minister of Industry, Trade and Investment, Otunba Adeniyi Adebayo; only 25, 000 jobs have been generated against the scheme’s projected capacity for 300, 000 direct jobs.

The minister, who made this known at last week’s inauguration of the new Nigeria Export Processing Zones Authority (NEPZA) Lagos Office and the unveiling of the Special Economic Zone Security Unit in Lagos, said last year, Nigeria generated N250 billion in foreign and local direct investments.

He added that the country realised N25 billion in Customs duty payments, and N55 billion in local import backward linkages; Nigeria also raked in N500 million in Pay-as-You Earn (PAYE) taxes, while the scheme created 25, 000 new jobs, and transferred skills for 5, 000 employees.

Most operators of the FTZs and indeed, other critical stakeholders considered these benefits that have so far accrued to Nigeria in 30 years of the scheme’s operation as mere drop in the ocean. This is so because in about 30 years after the first free zone was established in 1985, in Jebel Ali area in Dubai, the UAE has emerged the destination of choice for global trade and investment.

This, to a large extent, came on the strength of UAE’s 45 FTZs and two financial free zones (Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market). Approximately 30 of the FTZs are located in Dubai and are vital to its economy, accounting for 41 per cent of Dubai’s total trade.

Dubai’s FTZs also generated a combined total of $118 billion in trade value in 2017.1 The Jebel Ali Free Zone (JAFZA)—established in 1985—accounts for almost 32 per cent of the total FDI flowing into the UAE and for roughly 24 per cent of  Dubai’s annual Gross Domestic Product (GDP). In  2015, JAFZA alone generated trade worth $87.6 billion.

The Chinese economy also owes its towering status in global trade and commerce to its vibrant FTZs. The Asian Tiger has successfully latched on the model to control the world’s markets, logistics and services, with its SEZs contributing 22 per cent of China’s GDP, 45 per cent of its total national FDI, and 60 per cent of exports.

China’s SEZs are also estimated to have created over 30 million jobs, increased the income of participating farmers by 30 per cent, and accelerated industrialisation, agricultural modernisation, and urbanisation. In all the zones, multiple institutional incentives such as free movement of goods and people and preferential taxation are provided.

But, why has Nigeria’s push to join its peers in the international community to savour the mouth-watering benefits of a FTZ or SEZ failed to yield the desired result? How come that the adoption and implementation of the same model that helped re-energise other national economies such as China, UAE, Brazil, Malaysia, and a host of other countries failed to put Nigeria on sound and competitive footing internationally?

More importantly, why are operators of Nigeria’s 45 FTZs who are supposed to be smiling to the bank with proceeds from their investments currently screaming blue murder and pointing accusing fingers at government agencies and institutions for allegedly undermining the scheme?  The Nigeria Economic Zones Association (NEZ Association) was emphatic that at a time an increasing number of countries are employing SEZs as a veritable tool for fostering sustained economic growth, technological innovation and specialised skills transfer, Nigeria seems to be lagging behind in this direction.

The Executive Director of the association, Mr. Toyin Elegbede, put the blame for Nigeria’s situation at the doorstep of policy inconsistency, problematic legal, regulatory and institutional frameworks, which, according to him, have continued to contribute to the lack of development and peak functionality of the free zones scheme in Nigeria.

The occasion was a Stakeholders’ Forum organised by the association, in collaboration with the Nigeria Export Processing Zones Authority (NEPZA) and the Oil and Gas Free Zones Authority (OGFZA) in Lagos, last week. Its theme was “Streamlining Free Zone operations for global competitiveness,” and it was aimed at discussing and addressing the challenges facing operators in the SEZs in Nigeria.

NEZ Association began operation about a year ago, and was established to provide a common platform for interaction among special zone operators, their relevant stakeholders and government regulatory agencies towards finding solutions to challenges to operating an FTZ in Nigeria.

Incidentally, government regulatory agencies and other institutions are not unaware of the issues identified by Elegbede as holding the FTZs down. For instance, the Managing Director of Oil and Gas Free Zones Authority (OGFZA), Umana Okon Umana, said lack of infrastructure, interference by other agencies and institutions in the running of the scheme contribute to its lack-lustre performance.

Without mincing words, Umana accused agencies such as Federal Inland Revenue Service (FIRS), Industrial Training Fund (ITF), Corporate Affairs Commission (CAC), Nigeria Customs Service (NCS), and institutions such as Committees of the Senate and the House of Representatives etc. of clogging the wheel of progress by interfering in the running of the scheme.

He identified other challenges facing free zone operators to include lack of infrastructure, lack of adequate legal framework or clarity thereof, noting: “The net impact of these challenges is that they have undermined the scheme and led to unnecessary interference and conflicts.”

The Chief Financial Officer, Lagos Free Zone, Mr. Ashish khemka, also lamented that not much had been done to make the values of the FTZs in Nigeria emerge. Noting that the success of many countries was based on the development of FTZs, he said lack of understanding, overlapping interventions of regulatory authorities and agencies hindered the scheme’s successes in Nigeria.

The Federal Government also admitted that the scheme has so far under-performed. Adebayo conveyed this thinking during the stakeholders’ forum that “it was observed that the FTZs are, for the most part, unable to meet the expectations of the nation,” noting that despite the social and economic potential, operations within the FTZs are impacted by challenges.

Some of the challenges, from his own perspective, include “infrastructural deficit, limited financing, and sometimes, misalignment of interests between operating firms and government agencies. Also, there are concerns around administrative bottlenecks with respect to multiple agencies coordinating various FTZs.”

Changing the narrative

Sad as Nigeria’s experiment with FTZs as a game-changer may have been in the past three decades, a new dawn may be in the offing, one that promises to be win-win for operators of the FTZs, the government and indeed, Nigerians.

Apparently motivated by concerns that the FTZs  had not delivered on the expected contributions to employment, government revenue and export proceeds as envisaged in various national development plans, Adebayo said, as part of efforts to reposition the scheme, the ministry, in December 2020, temporarily suspended the issuance of new free trade zone licences.

The ministry also went a notch higher, establishing a committee to review the issues of ambiguity between supervisory authorities and the performance of licences and recommend the  reforms to unlock the FTZs’ true potential as an instrument of growth and diversification.

Adebayo also revealed that a robust and strategic plan that would improve the performance of the zones had been developed, one that would improve the performance of the zones.

“The advent of the African Continental Free Trade Area (AfCFTA) has necessitated the revival, reform and expansion of the zones and my ministry is taking steps to make the inactive FTZs functional while ensuring the removal of bottlenecks in the operation of active zones,” he added.

Adebayo reiterated that FTZs posses the capacity to generate direct and indirect jobs and this is even more critical at a time unemployment is threatening the corporate existence of the nation. According to him, “industry experts estimate that a well-functioning free trade zone in Nigeria can generate upwards of 300, 000 direct jobs and 350, 000 indirect jobs”.

He also pointed out that FTZs can help shore up the government’s revenue and, ultimately, improve Nigeria’s fiscal position, especially given the volatility of oil prices in the international market. Besides, expanding Nigeria’s export capacity needs under the AfCFTA, he said, would mitigate the risk of Nigeria becoming a dumping ground for imports while boosting her foreign currency reserves.

For these to happen, the Managing Director, Dangote, Free Zone, Mr. Olayinka Akande, highlighted the need to fine-tune operations to include digitalised and more transparent systems that ensure that stakeholders had same set of directions at all times.

He also said a holistic portal that addresses every issue must be created to provide the same set of information to all stakeholders in real time to ease operations at the trade zones.

“Also, knowledge about free zones is still very sketchy to many people and this calls for the need to sensitise people on what FTZs are and what the expectations are to meet up.

“The government and management must periodically look at the provided incentives and gauge their competitiveness elsewhere to preserve the incentives of the zones,” Akande added.

The Deputy Comptroller-General, Excise Free Trade Zone, NCS, Mrs. Chinwe Ekekezie, announced that custom duty procedure was set to be fully automated before the end of this month. She said the only time officers of the Service would go for checks at the FTZs would be when there  is a doubt.

Mrs Ekekezie charged the public to draw the attention of the NCS to any illegalities by any of its officers to make sure the laws or reasons for creating the free zones are achieved. “There is the need for synergy, tolerance and purpose in addressing administrative challenges and this brings me to call for inter-agency corporation among all stakeholders of the free trade zones,” she said.

Other aspects of the push to create a fresh template for efficient and globally competitive FTZs in Nigeria include the unveiling of the new Special Economic Zones Security Unit, and the Federal Government’s directive that the validity period of licences for operators in FTZs across the country be extended to five years

The Managing Director, NEPZA, Prof Adesoji Adesugba, said the special security outfit was in line with international best practice, where, all over the world, there is a special unit to guard the investors and guarantee investors’ confidence in any special economic zone.

On the other hand, the Minister the extension of the validity of licences for FTZ operators was to mitigate challenges hindering their operation, noting that the directive also came on the heels of the Federal Government’s ease of doing business mandate.

Adebayo, however, stressed that yearly returns must be made by the operators following the directive on license expansion, assuring that before the end of this month, “all the issues with duty payment would be resolved.”