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Nigeria is a very poor country — Bayo Onanuga

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2 years ago

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February 13, 2024

By

Feyijimi Emmanuel

Nigeria is a very poor country — Bayo Onanuga

The Presidency has described Nigeria as a “very poor” country, saying the wealth of the country is overestimated.

Special Adviser on Information and Strategy to the President, Bayo Onanuga, stated this in an interview on Arise Television on Monday, February 12, 2024.

According to Onanuga, Nigeria is still a very poor country considering its low per capita income, compared to other African nations. He said, “Nigeria is a very very poor country, to be honest. I think our wealth is overestimated,”

On the state of Nigeria’s economy and the administration’s efforts to ensure stability, the presidential aide said, “I think we have a poor estimation of the wealth of the country, we are a very poor country.”

The presidential aide added that with the removal of subsidies on petrol and the unification of the exchange rate, the administration “is hoping that the pressure on our finances will reduce.”

Related Topics:#BreakingNews Arise Television Bayo Onanuga Inflation National news

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Rising Tensions Between Regulators and Airlines The financial strain has coincided with renewed friction between the Nigeria Civil Aviation Authority (NCAA) and the Airline Operators of Nigeria (AON), following disputes over the remittance of statutory charges and the delivery of regulatory services. Operators say the situation reflects deeper systemic liquidity stress across the sector, where airlines are increasingly unable to meet overlapping obligations imposed by aviation agencies while maintaining operational stability. A Layered and Fragmented Tax System At the centre of industry complaints is what operators describe as a “multi-layered and excessive” taxation structure involving the NCAA, the Federal Airports Authority of Nigeria (FAAN), and the Nigerian Airspace Management Agency (NAMA). Airlines such as Air Peace, Ibom Air, and United Nigeria Airlines are subject to a range of compulsory charges, including the 5% ticket levy, passenger service charges, value-added tax on tickets and aviation inputs, and other operational deductions collected at different stages of the value chain. Industry players argue that the system creates cash flow distortions because several charges are collected upfront or deducted at source, leaving airlines with reduced working capital for day-to-day operations. Beyond ticket-based deductions, carriers also face landing fees, parking charges, overflight fees, navigation levies, and ground handling costs. Combined with jet fuel, which accounts for a significant share of total operating expenses, analysts say profitability on many domestic routes has been severely constrained. Leasing Constraints and Foreign Exchange Pressure Airlines’ challenges are compounded by difficulties in aircraft acquisition and leasing, which remain essential for fleet expansion in the absence of strong local financing options. Most carriers rely on wet and dry lease arrangements from international lessors. Wet leases, which include aircraft, crew, maintenance, and insurance, allow quick capacity deployment but are costly and typically paid in foreign currency. Regulatory limits also restrict their use to short-term arrangements. Dry leases offer more operational control and long-term stability but are increasingly difficult to secure. International lessors often view Nigeria as a high-risk environment due to concerns over aircraft repossession and currency volatility, resulting in higher insurance premiums, security deposits, and financing costs. As a result, airlines are frequently forced into short-term leasing agreements, exposing them to exchange-rate fluctuations and operational disruptions that contribute to flight delays and cancellations. Fuel Costs Deepen Financial Strain Jet A1 fuel remains one of the largest cost drivers in the sector, further squeezing margins across domestic routes. With fuel expenses, taxes, and leasing obligations combined, industry analysts say many airlines are operating with extremely narrow or unstable margins. Operators warn that without coordinated policy reforms, sustained profitability and expansion in the sector will remain difficult. Calls for Structural Reform Aviation stakeholders are calling on the federal government to streamline overlapping charges, review the newly introduced 5% levy, and consider removing VAT on aviation inputs to ease cost pressures. 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