The contribution of Nigeria’s aviation sector to Gross Domestic Product (GDP) fell from $0.7 billion to $0.3billion in2016, a 57percent fall, as a result of poor infrastructure around the nation’s airport and unfavourable government policies, experts tell BusinessDay
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Aviation, which contributed $0.7 billion to the country’s GDP in 2014 has continued to dip, as the sector currently contributes $0.3billion at 0.4percent.
“While the aviation sector in other countries has continued to contribute immensely to GDP, in Nigeria , it is still grappling with infrastructural deficits and unfavourable government policies that have made it remain at the level where it is till date,” Tayo Ojuri, Chief Executive Officer, Aglow Aviation, told BusinessDay, in a session with the company’s editorial staff.
Ojuri said with the strategic position of Nigeria in West Africa, the country’s population, the number of flights emanating and landing at the country’s airport and the number of airlines using its airspace, aviation should be contributing more significantly to the country’s GDP but for poor infrastructures and policies.
The aviation sector contributes NGN 119 billion (0.4percent) to Nigerian GDP. This total comprises: N59 billion directly contributed through the output of the aviation sector (airlines, airports and ground services), N34billion indirectly contributed through the aviation sector’s supply chain; and N27 billion contributed through spending by employees in the aviation sector and its supply chain.
In addition, there is N78 billion in ‘catalytic’ benefits through tourism, which raises the overall contribution to N198 billion or 0.6percent of GDP. The aviation sector supports 159,000 jobs in Nigeria. This total comprises: 44,000 jobs directly supported by the aviation sector; 64,000 jobs indirectly supported through the aviation sector’s supply chain; and 51,000 jobs supported through spending by the employees of the aviation sector and its supply chain.
In addition, there are 130,000 people employed through the catalytic (tourism) effects of aviation.
Experts say these employments are not commensurate with the potentials that the country possesses, adding that if the infrastructural gaps are bridged and government implements the right policies, then the country will see significantly larger contributions from the aviation sector.
BusinessDay’s checks show that the United Kingdom’s aviation sector contributes $60.9billion to that country’s GDP at 3.6percent. In the United Arab Emirates, the aviation sector’s contribution to GDP is $26.7billion, at 2.1percent. Egypt contributes $0.9 at 1.2percent, Kenya contributes $0.2billion at 1.1percent, while in Nigeria, it is just 0.4percent to its GDP.
Nogie Meggison, Executive Chairman, Airline Operators of Nigeria (AON), told BusinessDay that Nigeria’s natural advantages alone cannot make the sector contribute immensely to its GDP, rather there is a need for amenities that will ensure passenger facilitation.
“At the Murtala Muhammed Airport, there are no amenities for transit passengers. So, passengers will not want to spend money to transit from Nigeria. Rather, they transit Dubai, where there is accommodation, free food and music among others,” he explained.
Meggison added that there is an urgent need to upgrade airport runways, lights and terminals. Citing an example of Dubai, Meggison observed that Dubai leveraged its geographic location to become a natural hub between the East and the West. “If Nigeria becomes a hub for Africa, that will mean more taxes from food, hotels and landing charges from airlines. Aviation is not airline only; there is a service that goes to it,” Meggison said.
Girma Wake, former Managing Director of Ethiopian Airlines, said the whole of Africa is waiting for Nigeria to get things right in aviation, adding that the sub-region needs maintenance, repair and overhaul (MRO) facilities and the natural place for that should be Nigeria.
OR Tambo International Airport, now called Johannesburg International Airport, is recorded as the largest and busiest airport in Africa, with about 28 million passengers passing through its terminals every year. Cairo International Airport, handles more than 13 million passengers every year, making it the second busiest airport in Africa.
Cape Town International Airport , another South African Airport with more than eight million passengers every year, comes third. However, Nigeria’s Murtala Muhammed International Airport (MMA1) located in Lagos, is the busiest in West Africa, with less than seven million travellers passing through its gates every year.
Bernard Bankole, president of the National Association of Nigerian Travel Agencies (NANTA), also observed that poor government policies are retarding the growth of the country’s aviation business and the opportunity to attract international investment.
Bankole noted that some of the foreign airlines have left, as a result of these bad government policies, one of which failed to place the actual value of the naira for a long time, leading to the trapping of about $600 million of international carriers funds being stranded before the devaluation of the currency which left the airlines in a quandary.
“Bad government policies are frustrating our business. Even the new policies on foreign exchange came late when a lot of damages had been done. Even the new policies are not even clear. The airlines have now stopped selling cheaper fares to Nigerians and are now selling higher fares and it is our people who are suffering the consequences,” he said.
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