There is respite for Nigeria’s distressed transport sector over the increase in the Ministry of Transport allocation of N262 billion as against the N202 billion it received in the 2016 budget which represents an increase of 29.7 percent.
With the privileged consideration to the transportation sectors comprising the rail and aviation transport sectors, market watchers say the President Muhammadu-led administration is coming to terms with the stark realities of delivering dividends of democracy to the people.
Another key capital budget intervention in the Transport sector according to the 2017 budget proposal would be the allocation of N213.14 billion as counterpart funding for the Lagos-Kano, Calabar-Lagos, Ajaokuta-Itakpe-Warri railway, and Kaduna-Abuja railway projects.
On how the rail sector has fared in the outgoing 2016 fiscal year and expectations on the improved 2017 budget, Frank Nneji, managing director and chief executive of ABC Transport plc said that, against public expectations, nothing much happened in the out-going year as the government parastatal is still grappling with many challenges.
The ABC Transport Plc boss said with the N262bn allocated to the transport sector for 2017, he expects government to fast track policy action by encouraging private participation in railway network development and expansion.
During the year, Federal Government went into talks with GE Electric of United States about its intention to commit the sum of $2billion as concessionaire to inject life and vibrancy into Nigeria’s rail sector.
Some followers in the industry experts have in many fora expressed concern over the wasted opportunities by Nigeria because adequate attention has not been paid to a well-structured railway corridor.
Jakpa Phillip, a transport consultant and Diaspora Nigeria in Calgary also raised concerns over the N2.25billion allocation into the railway in the last few years and called for proper management of the expected 2017 allocation into the sector.
For the aviation sector that had groping under paucity of funds to run the sector, there may be hope for 2017 as the budget has received an increase of 29.7 percent.
This is coming at a time when the aviation is struggling with aviation fuel scarcity, shortage of dollar to carry out mandatory activities, poor infrastructures and lack of funding.
Tayo Ojuri, an industry expert and Chief Executive Officer, Aglo Limited, an aviation support service, said the sector at this point is really in need of funds to help the industry get back up again.
Ojuri however said that beyond just the budget, more pressing is the drive to follow through the process, and the policies, adding that this is what is missing in the sector.
Ali Magaji, Aviation finance consultant said that most of the airlines owe Asset Management Corporation of Nigeria (AMCON) substantial amount of money beyond the capacities of their balance sheets, which reveals that it is getting increasingly difficult for investors to source financing options.
He explained that there is a very high interest rate regime from local commercial banks, poor credit rating to access foreign funding, over-regulated financial system impeding simple and genuine foreign currency transactions.
He identified financing models for Nigeria in the aviation sector and these include targeted and effective subsidy from government, Intervention Guarantee Fund (IGF) with very low interest rate and longer tenure.
Industry watchers believe that the improved budget allocation could be a way forward to address the challenges facing the local airlines.
Olumide Ohunayo, Director of Zenith Travels said the Nigerian College of Aviation Technology (NCAT) Zaria, should be “privatized without delay.”
Ohunayo also said the Nigeria Airspace Management Agency (NAMA) should be “commercialized and reorganized with emphasis on IT applications,” while NIMET should be merged with NAMA” as one major revenue generating source for the government.
According to him, if the requisite autonomy is accorded the Nigerian Civil Aviation Authority (NCAA) and the Federal Airports Authority of Nigeria (FAAN) with professional reorganization, the revenue generated is sufficient to run the industry without hitches.
John Ojikutu, Secretary-General, Aviation Round Table, said budget is also a welcome idea but the airlines need to do also pay up their debts if they want to get to get best services as optioned in developed countries around the world.
Bankole Bernard, president, National Association of Nigeria Travel Agencies (NANTA) suggested that beyond just having an increased budget, the aviation sector should be taken away from transportation and let there be a standalone ministry for aviation and tourism to work effectively and efficiently.
