Nigeria Requires $5b to Fix Air Cargo Infrastructure
Nigeria will require over $5 billion investment to fix air cargo infrastructure in at least 24 of its airports nationwide to position it as one major player in the air cargo/ freight, courier, logistics, and agro-allied value chain, the managing director/chief executive officer of red star express Plc, Auwalu Badamosi Babura has disclosed.
Babura, who disclosed this in an interview with The Nation, in Lagos said without sufficient investment and intentional policy to drive the growth of air cargo in Nigeria, the expected gains from the eco-system would not be achieved.
While calling for advocacy by industry players to impress on the government to create a more enabling environment for the value chain to thrive, Babura said some intensive intervention, including an estimated $30 trillion lifeline to modernize economic infrastructure in the next three decades remains key in unlocking the huge potential in air cargo business.
Besides the huge capital injection, which could be leveraged through private sector participation, Babura said the federal government must take urgent steps to address lingering challenges affecting the growth and development of air cargo.
He listed them to include: fluctuations in aviation fuel price, regulatory bottlenecks with bilateral air services agreement with the United Kingdom and the United Arab Emirates as well as high cost of ground handling equipment.
He listed other constraints including poor airport infrastructure and absence of economies of scale, extremely high insurance premiums, high taxes and cost of operations, and other factors.
Babura canvassed the re-negotiation of bilateral pacts with the United Kingdom, and United Arab Emirates’ airports/ terminals for Nigerian airlines.
He said: “Air cargo could be a major contributor to Nigeria’s gross domestic product, with the total air freight forwarding business/market projected to reach $178 billion by the end of 2024. This is hinged on the fact that Nigeria’s GDP recovery depends on air cargo development.
“For this to happen, the federal government through the Central Bank of Nigeria (CBN), must initiate a policy to support freight forwarders involved in export have access to foreign exchange for international settlement of partners.
“Subsidies should be given to airlines and cargo handlers who do not have enough foreign exchange liquidity in their asset base to safeguard jobs and investment as well as explore opportunities for tax reductions.”
On other measures to be taken by the government, Babura said: “The federal government should develop and deepen specialized temperature control storage and processing warehouses for pharmaceuticals and agro-perishable.
“Nigeria’s air freight market can scale through electronic commerce, cross-border shipping, and direct currency settlement by applying no duties for small items.
“As of 2018, Lagos International Airport remains the largest in terms of freight kilometres. There remains an urgent need to deepen cargo traffic across other cargo passenger airports.”
The Red Star Express boss said if the government fixes some of the listed challenges, Nigeria is projected to reach over 19 million tonnes kilometres of air cargo by 2025 with adjustments expected from the impact of COVID-19.
But, to take Nigeria to the projected level of growth, the government, Babura insisted, must take urgent steps to re-write the narrative, in fixing the convenience of airport operations which still puts it in poor rating as sixty-eight out of over 150 nations in the air trade facilitation index.
He said: “We must make frantic efforts to improve from the poor rating of number thirty-sixth among 135 nations in the electronic freight friendliness index. Work hard enough, to step higher from the current rating of number 127th among 136 nations in the enabling trade index.”
