FG unveils sovereign-backed aircraft leasing plan to strengthen Nigeria’s aviation sector

The Federal Government has announced plans to establish a new aircraft leasing structure backed by a sovereign guarantee, in a move designed to ease aircraft acquisition challenges faced by Nigerian airlines and strengthen the country’s aviation industry.

The Minister of Aviation and Aerospace Development, Festus Keyamo, disclosed the initiative during a high-level meeting with airline operators and aviation stakeholders in Abuja, where discussions focused on the proposed Nigeria Aircraft Leasing Company.

Under the proposed framework, the government will not directly fund airlines or operate as a carrier. Instead, it will provide sovereign guarantees to support aircraft leasing transactions while taking a minority equity stake estimated between 5 and 10 per cent in the leasing vehicle.

According to Keyamo, the structure is designed to address long-standing challenges in aircraft leasing, particularly difficulties faced by foreign lessors in repossessing aircraft from Nigeria when lease agreements break down.

He explained that the sovereign guarantee will cover two critical areas: legal recognition of aircraft title and safety certification, as well as ensuring repossession rights in the event of default by airline operators.

“The sovereign guarantee would bind all government agencies to cooperate on repossession, with the government itself liable if they fail to do so,” he said.

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Keyamo noted that the special purpose vehicle for the leasing company is currently being incorporated and is expected to be completed within weeks, while fundraising efforts are ongoing with reported strong interest from global investors.

The minister highlighted previous regulatory challenges that discouraged foreign leasing firms from operating in Nigeria, explaining that aircraft deregistration by the Nigerian Civil Aviation Authority was often insufficient to guarantee repossession.

He said other agencies, including Customs, had in some cases created legal or procedural hurdles that delayed aircraft exportation even after deregistration.

“The sovereign guarantee is meant to ensure that once deregistration is done, all government agencies are bound to cooperate fully,” he stated.

Keyamo added that while the government’s equity stake would remain minimal, it would allow the state to benefit financially from its enabling role in the leasing structure.

He also clarified that the initiative is not aimed at directly stabilising the naira but rather at reducing foreign exchange pressure associated with aircraft leasing and maintenance.

The minister stressed that the policy is part of a broader strategy to strengthen domestic airlines, which he described as critical to Nigeria’s aviation ecosystem.

He noted that unlike several African countries where national carriers are state-owned or heavily subsidised, Nigeria’s aviation sector is dominated by private operators who require structured government support to remain viable.

“All over Africa, major airlines are government-owned or heavily supported. In Nigeria, private operators carry the burden, so the government must support them to survive and thrive,” he said.

According to him, improving aircraft availability will help reduce frequent flight cancellations and operational disruptions in the country’s aviation sector.

Speaking on behalf of airline operators, Managing Director and Chief Executive Officer of Ibom Air, George Uriesi, praised the initiative, describing it as a transformative intervention for the industry.

He said the leasing structure would significantly improve access to aircraft and reduce financing costs for operators.

“Already our hands are tied behind our back in the wrestling ring. What the minister has done is untie our hands by providing a Nigerian leasing company that will give us access to aircraft at reduced interest rates,” Uriesi said.

He added that the ability to pay lease obligations in naira would further ease financial pressure on airlines struggling with foreign exchange volatility.

Aviation analysts say the proposed leasing framework could mark a turning point for Nigeria’s aviation sector if effectively implemented, particularly in addressing aircraft shortages and improving fleet stability.

However, they caution that success will depend on strong institutional coordination, legal enforcement of guarantees, and investor confidence in Nigeria’s regulatory environment.

Industry observers also note that while sovereign-backed leasing structures are common globally, their effectiveness depends on consistent policy execution and transparency in governance.

As the special purpose vehicle moves toward incorporation and fundraising progresses, stakeholders say attention will now shift to how quickly the plan translates into operational relief for Nigeria’s struggling airline industry.