Daily Insight – Nigeria’s Aviation Sector: Any need for Government participation?

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Barely two months after the Federal Government of Nigeria (FGN) unveiled its proposed national carrier project (Nigeria-Air), the project has been “suspended in the interim” according to the Minister of State for Aviation. On one hand, the development came in as a surprise considering the initial commitment of the FGN to the project despite public outcry. On the other hand, the resources that have been committed to the project could have easily been deployed to some more pressing uses.

While we query the viability of the FGN’s participation in the aviation industry in the first place, we are worried about the implication of the development on the government’s commitment to other economic matters and ultimately the critical reforms required across the key sectors of the economy such as transportation, power, oil & gas, healthcare, and the much-touted economic diversification.

Compared to Nigeria’s huge population size, rising middle class and huge demographic attraction, other activities in the sector such as the air-freight (consisting of shippers, airliners, leading courier firms) and aviation handling, remains dominated by a handful of companies such as UPS, DHL, NAHCO, and SAHCOL. Thus, much work is still needed to unlock hidden potentials across the sector. Our view remains that the FGN’s focus should be on creating an enabling environment rather than an outright participation.

UNITED CAPITAL RESEARCH

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