Nigeria’s aviation sector has struggled to lift off over the past decade, with its contribution to the nation’s gross domestic product (GDP) lagging far behind African peers.
Despite its vast potential to spur economic expansion through infrastructure development, job creation and tourism, the sector’s impact on Nigeria’s GDP has remained disappointingly minimal.
According to the National Bureau of Statistics (NBS), the aviation sector’s contribution to the nation’s GDP stood below 0.5 percent from 2013 to 2023, a stark contrast to the remarkable growth recorded by countries such as Ethiopia, Kenya, and Egypt during the same period.
Seyi Adewale, chief executive officer of Mainstream Cargo Limited, told BusinessDay that Nigeria can aggressively build its aviation infrastructure to enhance its GDP contribution.
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“Likewise, there are contributions the sector adds that may not be easy to identify in NBS analysis,” he said.
Adewale explained that countries such as Egypt and Ethiopia have better aviation infrastructure than Nigeria, noting that the nation must put in place Maintenance Repair Overhaul (MRO) equipment, cold chain, capacity to effect c-check, among others, to boost the sector.
GDP contributions
In 2013, the aviation sector contributed a 0.4 percent to Nigeria’s GDP, according to the NBS. Fast forward to 2023, and the sector’s contribution had only edged up to 0.7 percent of the national output, as per a report by the International Air Transport Association (IATA).
This paltry contribution is a far cry from the sector’s potential, and stakeholders attribute it to the country’s inability to attract the right investors and poor infrastructure.
On the other hand, Ethiopia, aviation contribution to GDP moved up from 0.1 percent in 2013 to 5.7 percent in 2023, with the sector contributing approximately $1.54 billion to the country’s GDP.
Similarly, Egypt’s aviation sector contributed 5.3 percent to the country’s GDP in 2023, equivalent to $21.1 billion in economic activity.
In 2013, aviation’s total contribution to Kenya’s GDP stood at 1.1 percent of GDP, but this rose to 3.1 percent in 2023, according to the International Air Transport Association (IATA).
South Africa’s aviation sector however saw a decline over the period. The aviation’s contribution to South Africa’s GDP dropped from 2.1 percent in 2013 to 1.5 percent but was still higher than Nigeria’s.
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Experts weigh in
Olumide Ohunayo, industry analyst and director of research at Zenith Travels, told BusinessDay that investments are key to improving contributions to GDP. He noted that the investments should improve cargo and passenger numbers on local and international routes.
“For this to happen, we need to rejig our registration and the security of the country to attract investors and protect investors’ investments. Investors want to be sure they can bring money in, generate money and repatriate it. They want to see that the environment is protective of investment,” Ohunayo said.
He noted that the sector is seeing few investments by state governments, stressing that passengers must also have disposable income to be able to boost the industry through patronage.
“In Nigeria, aviation struggles to grow due to multiple factors, including limited access to affordable capital and high operating costs, which are worsened by low purchasing power that reduces demand.
“Specifically, airlines face challenges such as scarce aviation fuel, fluctuating oil prices, and the devaluation of the naira, making it hard to maintain the narrow profit margins. This financial strain is compounded by many Nigerians’ low purchasing power, shrinking the market for air travel,” Samuel Caulcrick, former rector of the Nigerian College of Aviation Technology (NCAT), told BusinessDay.
He said the aviation sector generally operates with thin profit margins, making it sensitive to rising costs and limited access to affordable capital.
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“Nigerian airlines encounter high costs due to factors such as fuel scarcity, volatile oil prices, and substantial taxes. A significant number of the people in Nigeria have low buying power, rendering air travel unaffordable for many potential customers and thus restricting airlines’ customer base,” Caulcrick said.
He said the devaluation of the naira considerably impacts prices, as it raises the cost of imported goods and services that airlines depend on, putting additional financial pressure on them.
“These financial challenges have compelled some airlines to cut flight routes or cease operations entirely in an attempt to manage escalating costs. This rollercoaster has greatly impacted the contribution of the industry to Nigeria’s GDP.”
