Posted by Sade Williams
Chief Executive Officer (CEO), Quorum Aviation, Mr. Abiola Lawal has identified several factors hindering investments in aviation infrastructure, saying there is need to address these components if the projected N1.5 trillion infrastructure gap would be bridged.
Speaking virtually at the aviation Safety Round Table Initiative (ART) Q3 Breakfast Business meeting themed: Funding Aviation Infrastructure Deficit in Nigeria Using Private Capital: Challenges and Prospects; he also canvassed Public Private Partnership (PPP) arrangement as solution to the issues, stressing that opportunities for the private sector is huge but must be done under the right conditions.
While recommending improved access to capital at low single digit rates to help investors boost investment, he said: “In Nigeria, there is relatively low Return On Investment (RoI) and relatively high risk. There is also limited access to equity capital, in addition to lack of specialised domestic Private Equity (PE) firms with aviation focus and capacity.
Apart from the economic and financial challenges, the Quorum boss identified legal frameworks as well as politics and policies as major challenges that negate the conditions for investment stressing that once the micro tenets of these challenges are resolved, the nation can start bridging the aviation infrastructure gap.
Lawal said inconsistent legal framework, inability to enforce contractual agreements as well as extremely long cycles to put contracts together was an issue explaining that as part of the Asaba Airport Concession Consortium, it took about five years for government to put the concession together.
“Asaba Airport concession took us almost 5 years. The current government concession of four airports will take a similar timeframe.”
He stressed that there must be infrastructure law for PPP to protect investors and these must be enforceable and not dragged in court for years.
He further talked about the challenge of government and continuity of policy as well as transparency in the process of any investment in the sector, stressing that there should be consistency in government policies over long periods of time.
Lawal, who canvassed 2.5% single digit debt for a long term tenure of between 10 to 20 years as opposed to what currently entails which is a high cost of capital with interest rates going at 20% Average with banks and at very short tenures, said it was too short for infrastructure funding .
He also decried that while Nigeria was celebrating the 9% interest rate on the intervention funds, that it was quite a high single digit as other countries were given at almost 0% interest rate.