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Nigeria is in recession – BBC

Published

10 years ago

on

August 31, 2016

By

Feyijimi Emmanuel

The British Broadcasting Corporation (BBC) reported on today that the Nigerian economy has finally fallen into recession. The British news agency reported that latest statistics showed that the economy shrunk again around the middle of the year. “Nigeria has slipped into recession, with the latest growth figures showing the economy contracted by 2.06% between April and June. “The country has now seen two consecutive quarters of declining growth, the usual definition of recession,” BBC reported.

But the news has rubbed Nigerians the wrong way. Many of those who commented on the official page of the British news agency lashed out at President Muhammadu Buhari for allowing such a terrible fate to befall the country in just 15 months. Some accused Buhari of being too old and outdated in his methods of running the economy while others believe that his seeming lack of ideas put Nigeria in this situation.

Related Topics:British Broadcasting Corporation (BBC)Nigerian Economy President Muhammadu Buhari recession

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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. 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