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Dirty fight for Nigeria’s sky and forex

Dirty fight for Nigeria’s sky and forex
March 31
17:12 2016
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Anyone still doubting the manipulative influence of multinationals in the political economy of Third World countries like Nigeria only needs to pay more attention to dispatches from our aviation sector lately. With the nation falling on hard times in the last eighteen months over the steep drop in oil price and the $28b foreign reserve barely enough to pay 5-month import, the Central Bank has literally had to ration dollars to users the way food packet is shared in a typical war situation.

For the first time in a long while, Nigerian parents are officially told point-blank to source forex to offset tuition of their wards schooling abroad. Tightening of the forex screw at the official source has made the parallel market dearer with the dollar going for N320 against N199 at the CBN. Suddenly, shopaholics are learning abroad to endure the shame that credit cards issued by local banks are worthless beyond Nigerian borders.

Genuine businesses are wailing. The gnashing of teeth appears even more severe among the rent-collectors and opportunists who, over the years, had perfected the scheme of exploiting the nation’s liberal economic climate to make free money, pay little or nothing as tax, and then cleverly sidestep the lax fiscal framework to hurl their loot back to their home countries.

This time, only a few saw the hurricane coming. So, many now find themselves drenched, thigh-deep in dirty greasy water. For 2015 alone, British Airways and other foreign carriers claim they have a backlog of $1.3b they are unable to repatriate home because of the Federal Government’s new restrictive forex policies.

But whereas hapless Nigerians have little or no choice but to swallow the bitter pill, not so with foreign capital, which typically shares little or no affinity with the nation or her people other than the carnal desire to exploit and profit. To be sure, being unable to show empathy in the circumstance is no crime; being soulless is what actually defines capitalism in its finest tradition.

In what brings to a new height a psychotic desperation to access the Nigerian vault, the empire fired warning shots on behalf on its own last week. Two Nigerian competitors on the Lagos-London route namely Medview and Arik Air were targeted. Part of the sordid story was exclusively carried by LEADERSHIP Wednesday.

According to the newspaper, the European Organization for the Safety of Air Navigation (Eurocontrol) had written Arik Air, indisputably Nigeria’s biggest indigenous carrier today, a nasty letter. It sought to recover ongoing navigational charges, setting an unreasonable deadline, falling which its wide-bodied aircraft would be impounded at its next touch-down at London Heathrow. The said claims were yet to be reconciled as Arik Air insists on 594,000 Euro while Eurocontrol says 715,000 Euro.

The timing was most curious. The payment demand was reportedly emailed to Arik Air’s London/Lagos office by 7pm on Thursday (March 24), with March 30 as the deadline. Of course, the letter only arrived after office hours on the delivery day. It is very easy to smell the mischief in the air. Good Friday (March 25) and Easter Monday (28) were publicholidays in Nigeria. So, technically speaking, the Nigerian carrier had just one clear day to pay the sum even when the account had not been reconciled!

For clarity, navigational charge is what an airline pays for using the airspace of the country of destination. Ironically, whereas Eurocontrol is willing to smash the Nigerian carrier with sledge-hammer, BA and Virgin Atlantic themselves are said to be owing Nigeria’s aviation authorities including NCAA and NAMA tens of millions of dollars in back taxes and levies. Yet, no one has served BA or Virgin any threat or deadline in Nigeria!

Ironically, until the current forex crisis, BA had always enjoyed free ride in Nigeria and had, over the years, repatriated billions of Pounds Sterlings home unhindered. In fact, it pioneered the Nigerian airspace during the colonial rule and for close to a century had been making a kill on the Lagos-London route documented today as its most lucrative in its global operations.

Indeed, the exploitation of the Nigerian traveler has been ongoing for as long as anyone can remember with the regulatory authorities either looking the other way or keeping a conspiratorial silence. For instance, the Nigerian traveler pays 76 percent more than a passenger traveling from, say Accra (Ghana), to Europe in the premium class of any European carrier on the West African route. Whereas the cost of a first class ticket on a European carrier on the Lagos-London-Lagos route is about N1.4m (off peak), the cost of Accra-London-Accra is about N774,000.

In response to the forex constraint, BA has since January downgraded its flight instrument to Nigeria from B747-400 (406 passengers) to B777-200ER (217). Yet, it is finding it exceedingly difficult to fill the seats on the smaller aircraft because more and more Nigerians are now patronizing Medview and Arik Air, which not only offer cheaper tickets but also gladly collect Naira from passengers. For instance, whereas  Arik Air charges an average of N600,000 for business class, BA charges double of that for the same class.

On its own, Virgin simply fired all Nigerians in its employ who happened to be less than twenty members of the cabin crew. Following criticism, it tersely explained that they were no longer useful in its operations!

By now seeking to get Medview and Arik Air off the Nigeria-UK route, Eurocontrol’s two-prong agenda is easy to recognize. Travelers would be forced to patronize BA or Virgin in the short term, and in the medium term, possibly force Federal Government to direct the CBN to allow the European airlines repatriate back home billion dollar it harvested in Nigeria last year. During her January visit to Nigeria, one of the undisclosed objectives of the IMF managing director, Christine Lagarde, was said to be a strong case for forex to be provided Air France, BA and others to cart home their profits.

Beyond the angle reported by LEADERSHIP Wednesday, the story is told that beforeEurocontrol’s drastic step against Arik Air last week, agents of BA had made high-level presentation to the CBN in what seemed its last-ditch attempt to make the Nigeria’s exchequer grant its request. But the CBN governor, Godwin Emefiele, was said to have told the lobbyists point-blank that much as he sympathized with foreign airlines unable to convert their naira savings to forex and repatriate home, the overall health of the Nigerian economy was his priority for now. If BA and others were to take out their $1.3b in one fell swoop, Nigeria’s foreign reserve will instantly drop by more than five percent!

They were told that a Nigerian carrier, Arik Air, is experiencing the same difficulty elsewhere like Angola, an oil-rich country. The story is told that Arik Air is today unable to access ticket sales return amounting to over $2m due to forex crisis also being experienced by the African country, but the Nigerian carrier is willing to exercise patience “in spirit of African solidarity.”

Leaving the CBN disappointed, the same lobbyists were said to have secured next an appointment with the Finance Minister, Kemi Adeosun. But told BA may be forced to close shop if their request was not met, Minister only smiled and reportedly said: “That means more business for Nigerian-owned carriers then.”

By official records, yearly spend by government people on foreign tickets amount to a whopping N20b.

Having failed at the CBN and the Finance Ministry, the persuaders were said to have secured the services of an influential aide to reach out to the President with a view to making him get the CBN “do the needful” for the “sake of 2,000 Nigerians working in the foreign airlines.”

While its remains to be seen whether President Buhari will finally succumb to the relentless lobbyists, to me, two weighty questions are invariably brought into bold relief by the ongoing chess-game in the aviation sector. One is the sustainability of a system that empowers foreign airlines to milk so much and cart away same at will without necessarily benefitting the local economy other than giving few demeaning jobs to Nigerian citizens.

To stir up public sympathy, BA and others readily bandy “2,000 Nigerian work-force” today.  But industry insiders are quick to dismiss this as a shameless lie. Usually, the only jobs reserved for Nigerians for the billions of dollars carted away annually are no more than messengers, baggage handlers and ticket officers on the counter. No less disturbing, therefore, is the loud silence of the relevant workers union on an issue that does not only underline patriotism but also speak directly to the Nigerian worker’s interest.

Chris Aligbe, an aviation aficionado captured the ugly trend in a recent interview thus: “These people come into Nigeria and employ mostly foreigners while our own people are not considered. Now, they claim that they have about 2,000 staff. From where did they come from?”

The second issue is the seeming collusion of our own officials to shortchange their own fatherland. Sustained whistle-blowing over the years by some patriotic elements like the National Association of Nigerian Travel Agencies (NANTA) have fallen on deaf ears as these foreign airlines continue to smile to the bank. It is now open secret that rules are not enforced simply because the enforcers have been captured by these foreign interests. For a bribe or commission, they readily turn a blind eye to the discriminatory prices and allocate more in-country-wide slots to these airlines without getting anything in return as required under the Open Skies Agreement. No country ever develops that way.

For instance, BA today maintains multiple entries in the country. It took a titanic diplomatic battle before Arik Air was allowed to land at Heathrow from Lagos years back. When the Nigerian carrier attempted to add the Abuja-London route, the British establishment resorted to familiar dirty tricks by imposing arbitrary charges designed solely to bankrupt its operations. After fighting the losing battle for about a year, Arik Air was left with no option than shut the Abuja-London route. Still seeking to extend its frontiers, Arik Air also ventured into Dubai. But no one can compete favorably against Emirate which is heavily subsidized by the UAE government.

Against this sordid backcloth, the urgency of reform in the all-important aviation sector in Nigeria can’t be overstated. Sorely needed is a bouquet of policies deliberately formulated to empower local airlines to compete internationally. That is where the real money is. It is simply a chicken-and-egg situation. Without considerable financial war-chest, our local players can’t break into the big circle, much less compete favorably.

Lots of enthusiasm was expressed when Hadi Sirika was named Minister of State for Aviation. At least given his modest experience as a helicopter captain, many saw a break with the past when complete novices deployed there. But in case he truly possesses any clear vision to change things, evidence is yet to be seen. As one insider put: “It is like our Oga pilot is still floating in the air. Several months after assuming office, he’s yet to bring himself down from his high horse to even engage the airline operators and other stakeholders with a view to charting a way forward.”

Honestly, things can’t continue this way.

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September 18, 2018USDGBPEUR
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