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| Nigeria’s Minister of Aviation, Stella Odua |
Proposal by the Ministry of Aviation to acquire 30 aircraft for Nigerian airlines is no doubt an acknowledgement of the crisis in the nation’s aviation sector, characterised by the poor finances and low operational capacity of domestic airlines. Sadly, the solution the Ministry is advancing is no solution, as it is bound to result in gross waste of public funds rather than boost capacity in the sector or enhance the safety of passengers. In effect, a public spending spree is being proposed as a solution to structural problems in a sector dominated by private sector players.
This painfully underscores the Federal Government’s lack of a coherent economic policy framework. As one part of the government preaches the gospel of free market enterprise and private sector investment, another hatches plans to squander public funds on what the private sector could be encouraged to do well.
The Ministry of Aviation had first floated the idea of starting a government-funded “national carrier”, an idea that was condemned as a definite means of wasting public resources given the sad experience of Nigerian governments running commercial enterprises.
But it is even more bizarre for government to think of acquiring 30 aircraft on behalf of airlines that have been founded and are managed by private investors. No official has offered any details about how the proposal will be implemented. Will the aircraft be given as gifts to the airlines? If not, how will they pay back to the government? Who will pay the insurance costs?
What mechanisms have been put in place to ensure the aircraft are well maintained and the government recoup its investment? There is no indication that the Ministry of Aviation has even held any consultation with the intended beneficiaries of this “benevolence.” All this despite the fact that even the Minister of Aviation has acknowledged that the N200 billion the Federal Government shared out to domestic airlines in a 2009 intervention has not enhanced the capacity of Nigerian airlines. There are allegations that the funds were mismanaged and diverted to other purposes. Yet no one is being investigated or prosecuted at the moment.
There is no rational justification why the Federal Government should fund or acquire aircraft on behalf of private investors in the aviation sector. Such a suggestion will merely enrich some people in the public sector and airline operators. It will not build capacity in the nation’s aviation sector.
Nigeria’s experience with public utilities, including a national airline, is that they become drainpipes in which public funds disappear while their managers grow stupendously rich, even as operations and customer service standards irredeemably plummet. It is time government left management of services the private sector can provide. It is illogical for the Ministry of Aviation to hand over assets worth additional billions of naira to the same companies that, in its acknowledgement, mismanaged N200 billion three years earlier.
The cost of domestic flight in Nigeria is sometimes twice as expensive as flying to European countries. The role of government is to formulate policies to create incentives for experienced, efficient and responsible operators to invest in the Nigerian aviation sector while poorly managed and under-resourced ones are made to exit. Government objective should not be to shower the latter with even more billions of public funds.
Nigerians should not be subjected to risk their lives or pay exorbitantly for air travel in solidarity with any airlines. Government should also continue to review its policies that may cause increase in the financial burden on airlines beyond what is considered fair and efficient in other countries.
The plan to acquire aircraft on behalf of airlines is part of a pattern of expanding government spending and role to the detriment of developing the private sector. Despite all their lapses and the magnitude of their investment requirements, telecoms firms operate successfully in Nigeria without relying on government largesse. This is an outcome of good policy and firm regulation, which ought to be replicated in the aviation sector.
In many countries, airport management is being handled by private firms. Sadly, the Federal Airports Authority of Nigeria (FAAN) has consistently acted to frustrate private investors. The Ministry of Aviation should spend its fiscal and managerial resources on strengthening services in the sector.
This is primarily to ensure safety, rather than use public funds to compete with the private sector. The policy confusion inherent in its action undermines the government’s capacity for coherence in policy making, and raises posers about possible political motives. The Federal Government should show concern about the focus of this administration’s economic policy strategy.
Culled from The Guardian.
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