AON urges FG to reconsider decision to sign AfCFTA treaty

Nogie Meggison, Chairman, Airline Operators of Nigeria


By Sade Williams


The Airline Operators of Nigeria (AON) has called on the Federal Government to reconsider its decision with the planned signing of the African Continental Free Trade Area (AfCFTA) Treaty which is scheduled for signing by African Heads of States on March 21 – 22, 2018 in Kigali, Rwanda.


AON Chairman, Capt. Nogie Meggison made the call for caution on the heels of the Single African Air Transport Market (SAATM) that was recently signed into effect by African Heads of States in Addis Ababa, Ethiopia on January 28, 2018, which he considers a hasty decision in the light of several unresolved concerns that have the potential of impacting the Nigerian economy negatively.


He explained that just like SAATM, African Passport, Continental Financial Institutions (Currency & Taxes), the AfCFTA is a flagship project of the African Union Agenda 2063 and is aimed at creating a single continental market for goods and services, with free movement of business persons and investments.


The AON Chairman warned that Nigeria cannot afford to rush into signing of AfCFTA which will give unfettered access into the Nigerian market and is likely to erode the good work Government has so far put in place to diversify the economy and reverse the gains of the present administration in reviving the economy out of recession.


Using the signing of SAATM as an example, Meggison advised that Government should slow down on the implementation and stressed that some of the concerns of AON as regards the potential impact if hastily implemented on the Nigerian economy and Nigeria as a whole as well as the future of our youths include the following:


A. Unresolved Challenges Associated With Visa Free Movement*


The basic issue of visa free movement of people and trade is an integral aspect of SAATM and AfCFTA that will go a long way to determine the fairness of the project.


Sadly, it is a well-known fact that it is a herculean task for Nigerians to get visas to travel into many African countries. Nigerians require over 34 visas to travel within Africa alone. This is an issue that needs to be addressed first before the full implementation of SAATM or the signing of AfCFTA.


For instance, a country like Ethiopia, which is a strong pusher of this Treaty, makes 45% of its income from Nigeria, yet it has not employed

Nigerians as Air Crew or Ground Technical staff, drains our beloved country’s resources to contribute 32% of their national GDP at the expense of the Nigerian economy and our ailing youths who have no jobs, and capital flight on our scarce foreign exchange.


It is worthy of note that Ethiopia has a Visa on Arrival policy for over 40 countries. But sadly, and with disrespect, Nigeria is not included among them.


B. Uneven Taxation & Multiple Charges*


While the initiative is a laudable idea and could be considered as a step in the right direction, we are however concerned that the timing is not right as there are several unresolved issues faced on daily basis by Nigerian airlines and Manufacturers.


These border on unfriendly policies, high interest rates, levies, VAT, unavailability of forex, multiple taxation, charges and fees, and a hostile operating environment all of which puts Nigerian local businesses at a disadvantage to other African States that are largely government owned and heavily subsidized.


For instance, foreign airlines are exempted from VAT both in Nigeria and in their home country. But Nigerian airlines have to pay VAT.


JetA1 is a lot cheaper in many other African countries and mostly subsidized by the government for their airlines. On the contrary, airlines in Nigeria are made to pay exorbitant prices in excess of N250 per litre for the same product.


Availability of electricity supply is still a huge challenge for Nigerian businesses and the tariffs are too high compared to those across the continent.


Similarly, Customs Tariff (Importation Duty, Levies and Taxes) is not uniform across the continent. This poses a challenge to the AfCFTA because it will impact significantly on its success and gains or otherwise to Nigeria.


There is also the risk of foreign countries carrying out sharp practices in importation of a product like rice, cement or fertilizers which can be re-bagged off shore and sold fraudulently onshore as rice from another African country as a way of taking advantage of the AfCFTA. This will further reverse the gains of the Buhari administration to make Nigeria self-sustaining.


Furthermore, airlines in Nigeria are made to pay various kinds of navigational charges which they should ordinarily be exempted from in line with global best practice. These charges range from Terminal Navigational charges to enroute navigation charges, Over-flight charges, clearance charges, and extension charges. Even foreign airlines don’t pay enroute charges or extension charges in their country which the local airlines are forced to pay in Nigeria.


The above are just a few of the 37 Multiple Charges airlines in Nigeria have to pay which is pushing the financial envelope of airlines to the extent that airlines are now groaning under the pressure and some are going bankrupt.


Yet Nigerian airlines which are 100% privately funded are expected to compete with other government owned airlines across Africa in a single air transport market. The same goes for the manufacturers and Nigerian businesses that have to take a loan at over 25%.


C. Unrealistic Competition & Unfair Trade*


Only 23 countries out of 54 nations in Africa (less than 50%) have committed themselves to SAATM. Those countries yet to sign the Treaty no doubt, are trying to protect their markets until they can realistically compete in the single market space.


The question therefore is why is Nigeria in a hurry to sign the AfCFTA Treaty when we are yet to put our domestic industry in order first and empower our domestic businesses to effectively compete.


Nigeria is simply not ready to handle the level of unfair competition that the full implementation of SAATM or the signing of AfCFTA will bring upon the country. It will be counter productive.


A full implementation at this time will mean loss of jobs for our youth and a mortgaging of our beloved children’s future.


D. Lack of Adequate Consultations*


The 2006 Civil Aviation Act makes it clear that there should be adequate consultations with the airlines before introduction of any decision that is likely to have an impact on their operations and overhead costs.


AON considers it as unfair and a complete disconnect that airlines who are the fulcrum of the implementation of SAATM/AfCFTA were not carried along in the decision process leading up to the signing of a Treaty and Firm Commitment to the process which will ultimately affect the future aviation of Nigeria in many years to come and the survival of our airlines who are not in a level playing field with most of the other African airlines that are 100% government funded or subsidized.


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