Nigeria Lost Over $2b To Election Shift – NAHCO Boss

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FREEPRESS — The acting managing director of Nigerian Aviation Handling Company ( NAHCO ) Aviance Plc, Mr Norbert Bielderman said that Nigeria has lost over $ 2 billion worth of foreign direct investment to other countries due to postponement of the general elections from February 14, 2015 to March 28, 2015 respectively .

He said the postponement of elections in Nigeria has occasioned the loss of confidence for existing and new investments which have found their destinations to other countries .

Bielderman spoke in Lagos at one day Nigeria cargo summit organised by NAHCO .He said the business environment in Nigeria has become more challenging in the face of the high costs of doing business as well the devalued Naira .

He said :”‘Election postponement impact on the economy is analyzed to be worth over $2Billion as cost and investor loss of confidence for existing and new Foreign Direct Investment that may have found its destination to other countries. “

He further said :”‘Today’s Economy 2015 is a crucial year because of elections and its associate intrigues. It’s therefore no surprise that our economy has been badly hit and worsened by the election postponement.

“There has been travel bans from many European countries and this has negatively impacted the aviation sector. Nigeria’s foreign reserves is significantly depleted and our national account is in deficit.

“The crash in oil price and consequent impact on the nation’s revenue earnings, exchange rate move from N155/$ to N205/$ within a six month period at the interbank and Central Bank of Nigeria’s final closure of the Royal Dutch Auction System is a testament to the fact that all is not well with our economy.

” Implicitly, Naira has been devalued to between 30-40 per cent and this will necessary cause inflation if government does not put in place deliberate measures to mitigate against an upsurge in price across industry.We expect inflation to rise up to 10 per cent or more soon. Furthermore, the cost of fund have also significantly risen with bank interest rates now up to about 26 per cent. This will lead to massive job losses within the private sector and for them to survive this trying time.”

He said :” In Aviation, the domestic airlines would be worst hit because of current ticket prices are not in sync or responsive to current realities.This is due to unhealthy price wars and pursuit of market dominance at the domestic side of airline business. Domestic air tickets are still significantly low despite increase in airport charges and taxes .

“These domestic carriers still maintain their aircraft in USD and aviation fuel has not significantly been reduced if at all. In our opinion, we suggest that these domestic airlines come together and agree a base rate for air tickets in order not to compromise safety and the regulator would do well to step in and analyze their current book positions and act accordingly. Nigeria cannot afford another air mishap!

The international carriers are more better positioned to survive this challenging time because their ticket price/ rates are USD based and this hedges them from witnessed Naira depreciation although the capacity of the very important middle-class to purchase international travel tickets will reduce.

“We expect they would save rather than spend in months ahead due to rising cost of living, potential job losses, rising children school fees etc. Also, the travel warnings and/ or ban from European Union countries for their citizens coming into Nigeria has assured that many flights from Europe to Nigeria have been either flying half empty to near empty. “

He further said : “The negative factors that I have posited prior that limits aviation this current year may be summarized to include Naira Depreciation , High Exchange Rate , High Interest Rates , unreasonable Domestic Air Tickets , Elections and associate Violence , Political Economy – Static Aviation Fuel Price , High Airport Taxes, Charges, Ground Rents and Concession Fees.

Aviation business like any other business is set up to make profit and to create shareholder value and these negative supervening factors may lead to cost saving methods that may compromise service standards and safety.“

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