May 30, 2023

Nigeria Transport Hub

…the epicentre for all transport modes

High interest rates, short term funding hinder aviation infrastructure regeneration

3 min read

Mr Abiola Lukeman Lawal, Managing Director, Quorum Aviation Services Ltd

Nigeria’s banking and financial institutions in actual terms, are not design abinitio to address the much-touted infrastructure decay in the air transport sector of the national economy nor to finance any arm of the aviation value chain.

This view was expressed by an operator who had weathered the storm for ten years in the Nigerian business climate, Mr Abiola Lukeman Lawal, Managing Director, Quorum Aviation Services Ltd, QASL.

Mr Lawal who spoke at the Aviation Safety Round Table Initiative, ASRTI, Business Break Fast Meeting, BBM, for the third quarter, noted that the prevailing interest rate of 9 per cent that the Central Bank of Nigeria, CBN, still prides itself is still far too high to influence profitable operation in Nigeria.

He said aviation business at all times is such a contest that happens in the global level, and not in any country’s domestic terrain and as such comparison with what obtains in other climes, would help establish a very far appraisal.
The QASL helmsman said in another clime, various aviation enterprises access funding for long term capital project from between zero to five per cent maximum.

He noted that the best rate for long term capital projects in Nigeria as touted by the CBN is unarguably, unsustainable. He called on the government arm saddled with the fiscal and monetary policy to give the issue very urgent consideration.

Lawal asked how would a player in air transportation in Nigeria who sourced long term fund for 9 percent, compete with those that sourced funding at zero or two per cent and whose local currencies are strong against most international currencies such as the dollar, USD or pound sterling.

He said any capital sourced at 9 per cent in the business environment in Nigeria, for any long term infrastructural upgrade, would be dead on arrival.

The QASL Chief Executive Officer lamented on the hostile business environment that prevailed in the country and described it as another cog in the wheel of progressive business initiative.

Abiola Lookman Lawal noted though sadly that most Nigerian financial institutions are not configured for long term funding. Most financial packages Nigerian banks brandished are for short tenor hence it would amount to a mismatch if short term fund was granted for a long term project.

He asked if any participant at the BBM zoom meeting had experienced the much advertised “Ease of Doing Business” in any facet of their business transactions in Nigeria.

The CEO, Quorum aviation however advised that not just that a single-digit interest is needed but funding that would not exceed 5 per cent maximum.

He said international investors and partners such as African Development Bank. AFDB, International Finance Corporation, IFC, World Bank, among others need e explored.

Earlier President of ASRTI, Dr Gbenga Gabriel Olowo welcomed participants to the breakfast event though it took off at noon and assured them that the subject was crucial to the virility of aviation in Nigeria and shall be x-rayed

Former International Civil Aviation Organization President, Dr Olumuyiwa Bernard Aliu, advocated for collaboration among industry players and the government.

He advocated for cooperation with the government and collaboration among stakeholders to provide a formidable force to attract funding for continuous developmental projects that will accommodate the steady and sustainable growth Africa would experience as the Pandemic gets better management by the international communities and governments

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