Foreign direct investments usually flow from multinational corporations in developed countries to less-developed. However, Nigeria’s political instability, negative growth outlook, high inflation, and extravagant government spending has reduced the attraction of long-term investments
From 2017 until 2016, Nigeria’s FDI averaged 1348.23 USD Million, reaching an all time high of 3084.90 USD Million in the 4th quarter of 2012 and a record low of 501.83 USD Million in the fourth quarter of 2015.
Nick Fadugba, a Chief Executive at African Aviation (AA) believes that the aviation sector holds the key to unlock the potential of Nigeria’s socio-economic development and according to him,
1. If issues related to policy, operating business environment, civil aviation regulations, aeronautical charge regime and the template for airport concessions are not put in place, the industry may risk losing out in getting the right funding for projects and business.
2. The government needs to rework policies that will guarantee fidelity to contractual agreements on airport concessions and leases in order to attract the right funding.
3. There is a lack of access to finance, but financiers need some level of trust that their investment will not be jeopardised due to inconsistency policies by the government.
4. Although many investors in Europe and America see Nigeria as a good investment haven, they are, however, worried about government’s inconsistent policies that could trap their funds.This challenge accounts for the high premium insurance underwriters put on asset financing in Nigeria as it affects aircraft leasing, terminal management and other businesses.
5. A lot of financiers are ready to move funds to support businesses in environment where the policy is stable, and until Nigerian government addresses the issue of inconsistent policies on airport concessions, status of registration of aircraft, aircraft leases, and related issues, we may not see the right funding.
6. The country’s aviation sector would fair better if the issues are properly addressed, including entrenching a flexible civil aviation regulations. When these are put in place, funding would flow in because that was what investors were concerned about.
7. People are more comfortable to invest their money in climes where the policy is stable and where there is fidelity to contractual agreements. The absence of these account for the stunted growth of the aviation sector.
8. Players in the sector should form clusters that would encourage the government to take a deeper look at issues bordering on aviation financing, regulations, policy and aeronautical charges to sustain the growth of the industry.
9. One of the ways to foster such cooperation is for operators to pull resources and expertise to set up aircraft maintenance centres, because of the enormous costs required for infrastructure, tooling and personnel, the option of pooling will make it affordable in the overall interests. The era of doing it alone is no more fashionable.
Do you agree that the aviation sector is the answer to improving Nigeria’s foreign direct investment?