Tag: national carrier

After three years of planning, “the name, logo, colour scheme, structure, and types of aircraft of Nigeria’s national carrier were unveiled at Farnborough International Public Airshow on July 18, in London”. The government, according to the aviation minister, has set aside an initial $300 million and another $8.8 million for the airline’s take-off, covering aircraft acquisition and running costs for three years. Five of the projected 30 aircraft planned over five years are expected in Nigeria by December 19. The new national carrier, we are told, would operate 40 domestic, regional and sub-regional and 41 international routes. Other details include the selection of 81 routes for the commencement of operation of Nigeria Air. The minister listed some of the advantages of the new venture as job creation for pilots, aircraft engineers and other professionals; and Nigeria’s use of 78 Bilateral Air Service Agreements it had with other countries since 1970. And finally, we are assured the government had learnt a lot of lessons from the experience of the defunct Nigeria Airways, and was now determined not to repeat the mistakes.

Of course these assurances have not stopped concerned Nigerians from expressing some anxiety about government involvement in business especially in the light of what a Punch newspaper editorial recently described as “monument of waste” covering the defunct national air carrier and national shipping line, the four public refineries in Port Harcourt, Warri and Kaduna, of Ajaokuta Steel Rolling Company and Nigeria Railways Corporation”.

There are also those who believe government ownership of airlines is no more in vogue citing the privatization of British Airways after almost 80 years. Others also wondered why government want to dabble into an area where even  privately run local airlines such as Albarka, Okada, Oriental, Concord, Harka, EAS, Triad, Harco, Savannah, Bellview, ADC airlines, are known not to have survived our   hostile business environment.

Of course, playing the opposition game, the PDP has expressed doubt about the viability of the project. For Ologbondiyan, the party’s spokesperson, “the Buhari-led administration is on a fantasy trip to beguile Nigerians and pave further ways for its humongous corruption”.

But let us first address the fears of those who are apprehensive about state involvement in business especially in airline operations where both government and the private sector are on record as having failed the nation. The failure of both in my view underscores the need for a national carrier since the nation as a matter of honour cannot be expected to put her fate in the hands of foreign airlines. Having established that, I think the challenge for us is to find explanation for the failure of public enterprises and their private investor inheritors.

We must start by admitting state intervention in public enterprises is not new. The western societies having realised since the 1940s that market economy which is about the survival of the fittest cannot bring national development adopted the Keynesian macroeconomic model which supports government intervention in order to create an egalitarian society. Nigerian founding fathers also keyed into this by adopting adopted public enterprises as vehicles for development. Building on Nigeria Railway Corporation, National Electric Power Authority (NEPA) and about 50 other public enterprises inherited at independence, Ahmadu Bello built the biggest business conglomerate in Africa just as Awolowo made giant strides in education, communication and agriculture.

Of course back then the public enterprises performed their statutory roles because of the quality of leadership of NCNC, NPC and AG. The railways worked because the leader did not have private jets or bullet-proof cars. The hospitals worked because they would not use public fund to seek medical attention outside the country. And of course NEPA worked because they, like those they led, depended on it. They were also not patrons to importer of generators.

The problem therefore is not government involvement in business but the character of our new inheritors of power after the civil war. Between Babangida’s self-serving commercialisation policies and Obasanjo’s ill-implemented privatization policies, Nigerian investment of over a $100b was sold off for about $1.5b. Policies and enterprises they later inaugurated or set up were designed to help themselves and members of the political class. Thus Obasanjo’s OFN only benefitted Obasanjo and some retired generals who took advantage of the Land Use Decree to confiscate other people’s land across the country.

With Obasanjo as president in 2003, the Bill for the establishment of Petroleum Products, Prices Regulatory Agency (PPPRA) was passed into law and assented to by Obasanjo within three months even though PIB law had been pending for five years. PPPRA with staff strength of 249, supervised by an unwieldy 22-man strong board, earning a scandalously whopping salaries and allowances of N57.9 billion, became a vehicle through which PDP stalwarts and their children according to House report, forged documents to defraud the nation to the tune of N1.7trillion in one year.

Under President Jonathan, stalwarts of PDP or their fronts allegedly bought PHCN (the DISCOs and GENCOs). And as if to confirm that, Jerry Gana, a stalwart of PDP, led a delegation of beneficiaries of PHCN sale to beg government to buy equity shares in their new companies, solicit for import duty waivers as well as plead for government bailouts. The Punch newspaper editorial was to lament: “It is little wonder that the government, after selling the power sector to private operators, is still interested in arranging a N213 billion bailout for them”.

As for the PDP and its spokesman, they probably think Nigerians have short memories. But we have all not forgotten how a PDP effort to bequeath to Nigeria a befitting national carrier was sabotaged by PDP vultures. Princess Stella Oduah, the then minister of aviation at a stakeholders meeting presented a report of how “foreign airlines swindle Nigeria of about N3.7 billion yearly, violate Nigeria’s aviation laws and how foreign airline like British Airways swindle Nigerians by charging non-competitive fare of $10,070 for a First Class return seat from Abuja to London while the same facility through Accra costs $4,943,” to support the need for a national carrier.

But Amos Akpan, the Managing Director of Capital Airlines was to argue that “the money the airlines make is not enough to pay for the cost of their operation and service their debts”. This was followed by insistence of   the Managing Director of Jimoh Ibrahim’s defunct ‘Air Nigeria’, Kinfe Kahssaye, that ‘the key way to ensure that Nigerian airlines return to profitability is for the federal government’s support in terms of finance or tax waivers. After the arguments of these airline stakeholders who can also pass for PDP stalwarts, the minister of aviation, against the CBN advice, vowed through FAAN spokesman, Yakubu Dati, that government had ‘concluded arrangement to purchase 30 brand new aircraft for airlines to boost their operations.

But records show as at the time PDP left government in 2015, that domestic airlines like Arik, Aero and Air Nigeria whose managing director led the crusade and got N35.5 billion government bailout, were owing AMCON over $700m debt.

Where PDP frittered away $500m airline intervention fund on PDP stalwarts posing as airline stakeholders, Buhari has promised to give the nation a national carrier with “$300 million and another $8.8 million for the airline’s take-off, covering aircraft acquisition and running costs for three years”.

If public enterprises and their private sector inheritors have failed in recent times, it is probably because they were designed to fail. For instance, the current 350 Nigerians who appear to be ready to forfeit their assets rather than repay AMCON for their N1trillion toxic debt seem to confirm Professor Akinyemi’s thesis that most Nigerian billionaires made their monies through the state.