High interest rates bane of rapid growth in the aviation sector
The government’s failure to adopt a specific policy that will extend credit facilities to aviation investors from government-owned financial institutions is one of the factors that have stalled the growth of the aviation industry. aviation, industry stakeholders said.
Stakeholders noted that as a capital-intensive company, which is a catalyst for the nation’s economic growth and known to create thousands of jobs, the industry should be supported by long-term loans. low-interest term to help airlines and other related businesses in the industry grow. .
They identified the lack of support from financial institutions, lack of economic development, political assaults and lack of expertise as some of the main obstacles to the growth of the sector in Nigeria.
During a one-day virtual workshop organized by the Aviation Round Table (ART) in Lagos on the theme: âFinancing Nigeria’s Aviation Infrastructure Gap with Private Capital: Challenges and Prospectsâ, they stressed that for the sector to grow rapidly and be able to meet some of the infrastructure challenges, the collaboration of the private sector and government was necessary.
Dr Bernard Aliu, founder of International Partners for Aviation Development, Innovation and Sustainability (IPADIS), said there was a need to inject private capital to fill the myriad of infrastructure gaps found in the aviation system. African.
Aliu said industry players were wrong to confuse ownership with source of funding, adding that investors should also be able to differentiate management from corporate governance.
He also called for the immediate economic development of African aviation, a clear civil aviation policy and master plan, a dynamic liberalized aviation market, socio-political and economic stability, a favorable institutional legal and regulatory framework and solid ethics, the responsibility of private organizations to develop the sector.
Quorum Aviation Services CEO Mr. Abiola Lawal said Nigeria faces three major challenges: economic / financial, legal framework and policy / policy.
None of the Nigerian banks were ready to finance aviation activities, he said, while various government interventions had failed due to high single-digit interest rates.
Lawal argued that high interest rates between 20 and 22 percent for industry investors would only bankrupt industry players and organizations.
He added that the Central Bank of Nigeria’s (CBN) intervention funds at an interest rate of nine percent were too high to support business in the sector, adding that in other climates investors are stepping up. loans at a maximum of two percent.
TAL Helicopters CEO Olufemi Adeniji said rail and road transport has failed in Nigeria due to the great insecurity in the country, but regretted that the aviation industry has yet to fully exploit the opportunities.
He observed that the lack of planning and non-compliance with the ease of doing business agenda by government agencies further compounded the sector’s problems.
âThe ease of doing business is not working in Nigeria. It’s a shame. I brought Boeing Company to Nigeria, but the same company ended up going to Ghana with a grant.
âFunding is a major issue in the Nigerian aviation industry. We really need to change direction if we are to be taken seriously.