Banking sector, Keyamo and Nigeria’s $1trn economy

At the recent commencement of Enugu Air airline on July 7, 2025, the confirmation of Fidelity Bank Plc as financing partner for Nigeria’s newest commercial airline, suggests the emergence of a pattern and specialization of financing in the capital-intensive aviation sector. With Fidelity Bank also being the  financial partner of Air Peace- the largest airline carrier in West and Central Africa, the  specialization of Nigerian commercial banks in support business development in capital intensive sectors, becomes a proposition to be explored in other sectors of the Nigerian economy, towards enhancing Nigeria’s economic complexity, its socioeconomic development, and meeting the country’s goal of increasing gross domestic product (GDP) from the current $243 billion to $1 trillion by 2030. Integral to this is the dynamic policy disposition of Festus Keyamo, Nigeria’s Aviation Minister, through the option of harmonizing some of the existing domestic aviation manufacturing and engineering capacities, in support of the government’s broad economic goals.

Though the country’s current GDP of $243 billion represents a significant economic decline from its $574 billion GDP in 2014, its economic history however suggests that coordinated policy reforms can facilitate significant economic growth. From a country that faced significant balance of payment crises in the 1980s due to slumps in commodity prices, especially crude oil, it took the government of General Ibrahim Babangida (IBB) from 1985-1993 to begin structural economic reforms in sectors such as telecommunications, finance, broadcasting and education- many of which were fully implemented by the President Olusegun Obasanjo administration of 1999-2007. These policy reforms contributed to Nigeria becoming Africa’s largest economy in 2014. In the telecoms sector, Decree 75 of 1992 was followed by the Nigerian Communications Act (NCA) of 2003, which led to an increase from 400,000 fixed phone lines and less than 200,000 regular internet users in 1999, to 172.9 million phone users and 141.9 million internet users in April 2025. The telecoms and ICT contribution to GDP has also increased from 3.08 percent in 2001, to 17 percent in 2024.

In the financial sector, the BOFIA Decree of 1991 and its amendments, plus the 2005 banking sector reforms, led to the establishment and international expansion of Nigerian financial institutions such as Fidelity Bank Plc, which began operations of its United Kingdom subsidiary FidBank UK in July 2023. The liberalizing nature of the policy possibly enabled the bank to take a chance on the risky and capital intensive aviation sector with Air Peace in 2014, leading to the airline growing to become the largest carrier in West and Central Africa. Air Peace has grown from its first aircraft to now over fifty-one aircrafts, creating over 50,000 direct and indirect jobs, and operating flights to other parts of Africa, Europe, Asia, Middle-East and the Caribbean. The recollection of the challenges in funding a risky capital intensive aviation business as shared by Dr. Nneka Onyeali-Ikpe, the Managing Director of Fidelity Bank Plc in 2024, however provides some more deduced lessons on how policy coherence can enable funding in other capital intensive sectors of the Nigerian economy towards its $1 trillion GDP growth plan.  The bank’s support to Enugu Air’s plan to grow into an international airline is therefore feasible, given the institutional support to, and experience with Air Peace since 2014.

The growth in the aviation sector is therefore influenced by the policy synergy between the liberal economic policies that led to the establishment of commercial banks such as Fidelity Bank, and the liberal aviation policies that have continued with Keyamo as aviation minister. In the words of Olubunmi Kuku, the Managing Director of Federal Airports Authority of Nigeria (FAAN), “The private sector took the initiative, introducing fresh capital, contemporary management practices, and a competitive spirit… Nigeria has emerged as a testament to the efficacy of market-driven solutions. Our aviation sector now contributes approximately $1.7 billion to our GDP.” It is however important to note that passenger figures have declined by 27 percent from 2024, and the sector’s contribution to GDP has decreased in recent times with air transport sector contracting by 0.81 percent in Q1 2025, the sixth consecutive quarterly decline, which underscores the need to consolidate liberal reforms.

Keyamo’s strategic policy framework can include three objectives of sustainable financing; consolidating and developing existing domestic aviation manufacturing capacities; and using his current international position for economic diplomacy. For sustainable financing, his policy approach can include working with monetary and fiscal policy authorities, towards negotiating single-digit lending rates approved by the Central Bank of Nigeria (CBN) and provided by commercial banks with proven capacity in supporting capital intensive aviation, aerospace and transportation Nigerian companies. Making it official through the Monetary Policy Committee of the CBN ensures that it is a sustained policy, not an ad hoc intervention that is unsuitable for long-term sector financing.  Furthermore, the ecosystem covered by this finance policy approach should include the manufacturing of aerospace parts, as the global aerospace parts manufacturing market was valued at $966.13 billion in 2024 and is expected to grow from $1.013 trillion in 2025 to reach $1.485 trillion by 2033.

For domestic aviation manufacturing, Nigerian companies such as Innoson Vehicle Manufacturing (IVM) which was able to manufacture spares for some of the European made fighter jets of the Nigerian Air Force since 2016, will be able to increasingly manufacture spares for civil aviation, and tap into the global $966 billion global aerospace parts manufacturing market. With its proven aerospace engineering capacity, what IVM requires is policy direction similar to that of the United States (U.S.), through which U.S. government post war policies enabled Boeing Company to develop both its civil aviation Boeing aircrafts, as well as its defense arm known as Boeing Defense, Space & Security (BDS). A formalization of domestic civil and defence aviation spares manufacturing for domestic and export revenue, will be a major legacy of Keyamo. This policy approach will feed into other parts of the value chain, such as the maintenance, repair, and overhaul (MRO) facilities where Nigeria’s Aero Contractors is operational, with Ibom Air also building its MRO facility in Uyo. The global aircraft MRO market size was estimated at $90.85 billion in 2024, with growth projections for $120.96 billion by 2030.

On economic diplomacy, Keyamo can utilize his position as Chairman of the Council of Ministers of the Banjul Accord Group (BAG) States of West Africa, in attracting other countries to utilize Nigerian manufactured aerospace spares, MRO facilities and other services. An example of how such diplomacy and his liberal policy disposition work together can be deduced from the 2025 agreement that allows Nigeria’s XE Jet become the technical partner for Air Sierra Leone, the new flag carrier promoted by the government of the West African country, which should lead to forex earnings for Nigeria, and technical know-how export.

There are results that support the minister’s liberal policy dimension. The approval for Enugu Air’s operations has a liberal policy bent, given that the airline will commence operations with a partnership agreement that allows it utilise the Air Operator Certificate (AOC) of XE Jet, until the NCAA’s five-phase certification processes of Enugu Air’s AOC are completed. This liberal policy bent is also evident in Cally Air, owned by the Cross River State Government, whose two new aircrafts which it took possession of on July 2,2025 will operate under ValueJet’s AOC.

For someone with legal tutelage from Chief Gani Fawehinmi- and its somewhat socialist bent, Keyamo’s liberal policy disposition is commendable. His policy efforts were instrumental to Nigeria signing the Cape Town Convention (CTC) practice direction on September 12, 2024, which enables Nigerian airline operators access aircraft on more affordable dry lease terms. A coherent policy synergy with finance sector after this CTC treaty can ensure that the less optimal among the 31 airports across the country become more operational, leading to the recruitment of more pilots, engineers, controllers, increase current 39 certified airline operators, and significantly enhance its contribution to GDP. While expectations from the CTC direction are to be moderated because of the global backlog of aircraft deliveries, which the International Air Transport Association (IATA) and industry estimate at a record 17,000 planes that will take 14 years to fulfil, the development of domestic spares manufacturing and MRO will ensure increased availability of existing aircrafts.

Keyamo’s liberal economics perspective plus the private-sector push by Governor Peter Mbah of Enugu State, has also led to the July 31, 2025 decision of the federal government to approve the full business case for the 30-year concession of Akanu Ibiam International Airport in Enugu, which is expected to complete and operationalize the airport’s cargo terminal by a private consortium and harness its non-aeronautical commercial revenue streams, such as conference centres and shopping malls, as done with modern airports globally. He was also instrumental to securing land rights at Heathrow Airport for one of Nigeria’s flag carriers Air Peace from October 26, 2025, after the airline commenced flights to Gatwick Airport in March 2024 with his support.

The economic structure of Nigeria’s aviation sector underscores the necessity of macroeconomic policy that enables banks with sector specialization such as Fidelity Bank, to provide the required support that can support wider economic goals. With public debt burden rising to $97 billion and debt-to-revenue ratio of 65 percent leading to government funding constraints, aviation agencies of government such as FAAN and Nigerian Civil Aviation Authority (NCAA), earn most of their operating revenue from taxes and levies from airlines. Data from Airline Operators of Nigeria posit that the government earns more revenue from the gross income of airlines, than the airlines earn. Therefore, the ability to grow the aviation sector’s contribution towards a $1 trillion economy, relies a lot on revenue from airlines. Strategic monetary and fiscal policies that can enable commercial banks sustainably partner with this capital intensive sector, are therefore essential for national development goals.

Developing the ideal financial policy mix for the aviation and aerospace sector, can also have cascading outcomes for other critical and capital-intensive sectors of the economy such as shipping, which belongs to the same broad transport sector as aviation. With over 80 percent of goods globally being transported by maritime means, the World Bank describes maritime as the ‘backbone of global trade’. With the ocean economy having estimated annual turnover of between US$3 and 6 trillion according to the United Nations (UN), the inability of many Nigerian shipowners to participate effectively in the supply chain of the maritime sector, has hampered the sector’s domestic development, job creation and economic growth in Nigeria. The most recent instance is the preference by Dangote Petroleum Refinery and Petrochemicals (650,000 bpd capacity) for Angolan ships, in the shipment of its crude and refined products, instead of Nigerian shipping companies.

The key challenge remains the lack of funding for the acquisition of adequate vessels for such cargo operations by Nigerian ship owners, according to the association of Nigerian ship owners. This is despite the Cabotage Vessels Financing Fund (CVFF) which was established under the Coastal and Inland Shipping (Cabotage) Act of 2003, but with disbursement yet to begin two decades after. The CVFF has estimated accruals of $360 million – $700 million, with single digit interest rate, loan tenure of eight years, with NIMASA providing 50 percent of the capital, banks contributing 35 percent, and the remaining 15 percent provided by the beneficiary/shipowner. However, the maximum of $25 million available to each applicant can only serve minimally, given the sums required to procure the kind of cargo vessels that will make Nigerian shipping companies globally competitive.

Therefore, a more robust policy that is not necessarily ‘interventionist’, but more sustainable and similar to what is proposed for aviation and aerospace sector, is required. Nigeria has attempted a similar CVFF in the past with the Ship Acquisition and Ship Building Fund (SASBF) of 1993, managed by the National Maritime Authority (NMA) – the predecessor to NIMASA. The SASBF did not meet the objective of expanding indigenous fleets, due largely to mismanagement and loan defaults. The fact that the current CVFF has taken about two decades without disbursement is evidence of its unsustainability, as no viable shipping company can survive if it waits that long for sustainable funding.

Given the experience of Fidelity Bank in aviation, and the transportation sector similarities between aviation and shipping, the government can be strategic in working with Fidelity Bank for a feasible roadmap that will enable the bank partner with Nigerian companies towards the acquisition and long-term management of Supermax, Suezmax or Aframax sized vessels ultra-large container vessels (ULCVs). These ULCVs will enable Nigerian shipping companies become internationally competitive, similar to how the bank has worked with Air Peace to become competitive in Africa, Europe and Asian routes.

The blue economy is therefore essential to meet the country’s target of growing to a $1 trillion economy by 2030, which requires a growth rate of 15 percent, while the current rate is below 4 percent. Most $1 trillion economies have thriving indigenous shipping companies. It is therefore commendable that Clarion Shipping West Africa Limited, a Nigerian logistics firm has acquired the first Nigerian-owned container shipping line MV Ocean Dragon with capacity 349 Twenty-foot Equivalent Units (TEUs) and IMO number 9508770, which arrived Nigerian waters on July 1, 2025. This is a major step in indigenous shipping development and an opportunity for Nigerians to actively participate more effectively in global maritime business. The vessel complements the African Continental Free Trade Agreement (AfCTA), by serving Nigeria and the African region through direct connection to local and continental ports, eliminating delays previously experienced due to indirect transits and risks associated with road transportation.

The company runs internship and mentorship programmes, particularly targeting female graduates in marine logistics and engineering, and is building regional partnerships and logistics networks that will serve landlocked African countries through Nigeria’s coastal advantage. 70 percent of its crew are Nigerians, while over 90 percent of its team are Nigerian, which made the Managing Director of Nigerian Ports Authority (NPA) Abubakar Dantsoho to highlight the feat as an alignment with the ‘Nigeria First’ policy of the current government.  The company has, however, highlighted the challenges with accessing funding as its main challenge, which further underscores the policy proposition for strategic financing of capital intensive sectors.

While not underestimating the amount of policy work required to consolidate Nigeria’s financial sector in a way that allows its financial institutions support the development of competitive homegrown businesses in capital-intensive economic sectors, contemporary geopolitics makes it more imperative, especially as policies of the current United States government are leading to some major changes in foreign trade and financial flows, alongside changes to international rules-based-order. This will likely lead to less foreign investment by the world’s largest economies, as FDI net inflows to Nigeria has dropped from $8.84 billion in 2011 to $1.08 billion in 2024. The policies that led to the liberalization and development of the telecoms, finance, broadcasting and education sectors were developed by Nigerian economists such as Dr. Kalu Idika Kalu, Oba Olu Falae, Dr. Chu Okongwu, among others. Dr. Ngozi Okonjo-Iweala was instrumental in the liquidation of Nigeria’s $30 billion foreign debt in 2006. Therefore, the policies that ensure sectoral development for $1 trillion economy by 2031 can come from within Nigeria.

Circling back to aviation, what banks such as Fidelity Bank can do with their current experience on an expanded scale, is to develop financial models that can provide state governments across Nigeria with underutilized airports, opportunities for sustainable increase in aviation and aerospace activities within their states, for socioeconomic development. Also, the aviation and education ministries can work towards Fidelity Bank staff teaching as Professors of Practice in Nigerian universities and institutes, in aviation and aerospace management programs. That way, aviation students, pilots and managers will gain better understanding of aviation financing in Nigeria and possibly West Africa, for knowledge transfer, all round training and capacity development.

Aviation is key driver for socioeconomic development, as it serves as catalyst for other sectors. For Nigeria to meet its $1trillion GDP target by 2030 from the current $243 billion, opportunities in capital intensive sectors such as aviation have to be harnessed. The liberal policy approaches of Festus Keyamo as aviation Minister need to be complemented with single-digit finance policy approved by the CBN, for organisations such as Fidelity Bank to continue supporting aircraft acquisition for different airlines. The Minister can also consolidate and further develop the existing domestic capacities of Innoson Vehicle Manufacturing which has been manufacturing aviation spare parts since 2016, through policies that encourage dual-purpose manufacturing companies, as the U.S. government did with Boeing. He is also expected to utilize his multilateral leadership as Chairman of the Council of Ministers of the Banjul Accord Group for economic diplomacy, by sourcing new markets for Nigerian aviation and aerospace companies. These policy models can also be useful in the maritime sector, which facilitates over 80 percent of global trade. Put together, the financial sector and policy enablement from the aviation sector can support the expansion of Nigeria’s maritime and capital intensive sectors, in a manner that facilitates feasible economic growth to meet the government’s aim of a $1 trillion economy by 2030.

Dr. Uwanaka writes from African University of Science and Technology, Abuja. [email protected]