Nigeria Airline operators raise concerns over signing of Africa single free trade area

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The Airline Operators of Nigeria (AON) has called on the Federal Government to reconsider its decision on the proposed signing of the African Continental Free Trade Area (AfCFTA) Treaty by African Heads of States on March 21 – 22, 2018 in Kigali, Rwanda.

Speaking in an interview, AON Chairman, Captain Nogie Meggison cautioned that Nigeria could ill afford to rush into signing the AFCTA , which will grant unfettered access into Nigerian market with potential to reverse the gains of reviving the economy.
He said his position was predicated on the recent signing of the Single African Air Transport Market (SAATM) by African Heads of States in Addis Ababa, Ethiopia on January 28, 2018.

He described the pact as a hasty decision in the light of several unresolved concerns that could impact negatively on the Nigerian economy.
Using the signing of SAATM as an example, Meggison advised that Government should slow down on the implementation and stressed that some of the concerns of AON as regards the potential impact if hastily implemented on the Nigerian economy and Nigeria as a whole as well as the future of our youths.

He listed the unresolved issues to challenges associated with visa free movement.

He said :”The basic issue of visa free movement of people and trade is an integral aspect of SAATM and AfCFTA that will go a long way to determine the fairness of the project.

Megisson said : “Sadly, it is a well known fact that it is a herculean task for Nigerians to get visas to travel into many African countries. Nigerians require over 34 visas to travel within Africa alone. This is an issue that needs to be addressed first before the full implementation of SAATM or the signing of AfCFTA.

“For instance, a country like Ethiopia, which is a strong pusher of this Treaty, makes 45 per cent of its income from Nigeria, yet it has not employed Nigerians as Air Crew or Ground Technical staff, drains our beloved country’s resources to contribute 32 per cent of their national GDP at the expense of the Nigerian economy and our ailing youths who have no jobs, and capital flight on our scarce foreign e xchange.

“It is worthy of note that Ethiopia has a Visa on Arrival policy for over 40 countries. But sadly, and with disrespect, Nigeria is not included among them.”

On uneven taxes and unfair charges , Meggison said while African Union Agenda 2063 is a laudable idea and could be considered as a step in the right direction, the AON is however, concerned that the timing is not right as there are several unresolved issues faced on daily basis by Nigerian airlines and Manufacturers.

He went on :” These border on unfriendly policies, high interest rates, levies, VAT, unavailability of forex, multiple taxation, charges and fees, and a hostile operating environment all of which puts Nigerian local businesses at a disadvantage to other African States that are largely government owned and heavily subsidized.

“For instance, foreign airlines are exempted from VAT both in Nigeria and in their home country. But Nigerian airlines have to pay VAT.

“JetA1 is a lot cheaper in many other African countries and mostly subsidized by the government for their airlines. On the contrary, airlines in Nigeria are made to pay exorbitant prices in excess of N250 per litre for the same product.

“Availability of electricity supply is still a huge challenge for Nigerian businesses and the tariffs are too high compared to those across the continent.

“Similarly, Customs Tariff (Importation Duty, Levies and Taxes) is not uniform across the continent. This poses a challenge to the AfCFTA because it will impact significantly on its success and gains or otherwise to Nigeria.

“There is also the risk of foreign countries carrying out sharp practices in importation of a product like rice, cement or fertilizers which can be re-bagged off shore and sold fraudulently onshore as rice from another African country as a way of taking advantage of the AfCFTA. This will further reverse the gains of the Buhari administration to make Nigeria self sustaining.

“Furthermore, airlines in Nigeria are made to pay various kinds of navigational charges which they should ordinarily be exempted from in line with global best practice.

“These charges range from Terminal Navigational charges to enroute navigation charges, Over-flight charges, clearance charges, and extension charges. Even foreign airlines don’t pay enroute charges or extension charges in their country which the local airlines are forced to pay in Nigeria.

“The above are just a few of the 37 Multiple Charges airlines in Nigeria have to pay which is pushing the financial envelope of airlines to the extent that airlines are now groaning under the pressure and some are going bankrupt.

“Yet Nigerian airlines which are 100 per cent privately funded are expected to compete with other government owned airlines across Africa in a single air transport market. The same goes for the manufacturers and Nigerian businesses that have to take a loan at over 25 per cent .”

On unrealistic competition and unfair trade, Meggison said Only 23 countries out of 54 nations in Africa ; less than 50 per cent have committed themselves to SAATM.

“Those countries yet to sign the Treaty no doubt, are trying to protect their markets until they can realistically compete in the single market space.

“The question therefore is why is Nigeria in a hurry to sign the AfCFTA Treaty when we are yet to put our domestic industry in order first and empower our domestic businesses to effectively compete.

“Nigeria is simply not ready to handle the level of unfair competition that the full implementation of SAATM or the signing of AfCFTA will bring upon the country. It will be counter productive.

“A full implementation at this time will mean loss of jobs for our youth and a mortgaging of our beloved children’s future.”

He said promoters of the project director d not consult widely with stakeholders before signing on to SAATM.

Meggison said :” The 2006 Civil Aviation Act makes it clear that there should be adequate consultations with the airlines before introduction of any decision that is likely to have an impact on their operations and overhead costs.

“AON considers it as unfair and a complete disconnect that airlines who are the fulcrum of the implementation of SAATM/AfCFTA were not carried along in the decision process leading up to the signing of a Treaty and Firm Commitment to the process which will ultimately affect the future aviation of Nigeria in many years to come and the survival of our airlines who are not in a level playing field with most of the other African airlines that are 100 per cent government funded or subsidized.

“This also applies to the Manufacturing sector that has equally complained of inadequate consultations with their members.”

He said the project suffers Lack of Impact Assessment Studies, as airlines were only invited for a briefing on what has already been concluded without seeking the opinion of airlines and aviation entrepreneurs .

Meggison noted :””We are not aware of any Impact Assessment Studies done by the government to ascertain thelikely impact of such an immediate implementation of SAATM/AfCFTA on the Nigerian domestic airline market, the economy in terms of capital flight and on the employment of our teeming youths who cannot find jobs as things currently stand.

“It is the firm belief of Airline Operators of Nigeria (AON) that the SAATM/AfCFTA programmeis targeted at Nigeria. We believe this is so because Nigeria has the largest population in Africa, is currently the largest economy in the continent, has a young population that travel extensively around the world.

“Furthermore, Nigeria is about the only country in Africa with lucrative multiple destinations with significant traffic to various parts of the continent. While we have about six to seven entry points, about 80 per cent of the other countries only have one. This creates an imbalance in market access and puts Nigeria at a disadvantage.

“For instance, Nigerian Airlines can only fly into Accra in Ghana; Kigali alone in Rwanda; Addis Ababa only in Ethiopia; or Abidjan as a single destination in Côte d’Ivoire.

“Yet all these airlines can fly freely into virtually all our major entry points including Lagos, Abuja, Port Harcourt, Kano, Kaduna, Enugu, and Calabar taking our Nigerian traffic out of the country and thereby resulting in huge capital flight to the detriment of domestic airlines, the Nigerian economy and loss of jobs.”

Meggison went on :” Government is yet to come up with a clear policy or mandate of what we want to achieve by signing the AfCFTA or how we will gain from it as a nation. While the AfCFTA has clear objectives, Nigeria as a nation is yet to come up with clear goals that reflect the interest of the AON, MAN or Nigerian Entrepreneurs in general.”

Meggison recommended that though AU 2063 Agenda for a Single African market is laudable, Government needs to temporarily halt its implementation and come up with a clear policy on how we can maximize the potential.

He said :” In the light of the above stated concerns therefore, we hereby call on government to take a second look into the SAATM/AfCFTA Treaty by considering the following recommendations before Nigeria signs the AfCFTA Treaty on March 21 – 22, or commence the full implementation SAATM.

” We call for Immediate consultations with Nigerian Community of Entrepreneurs and Experts on Trade Policies to review the SAATM/AfCFTA impact on the Nigerian economy and finding a way forward that will take into consideration the interests of Nigerian businesses in order for them to benefit significantly.

” There is an urgent need for government to immediately conduct an Impact Assessment on the domestic business environment.

“National Interest must be given priority and protected at all levels in the implementation of SAATM/AfCFTA by putting Nigeria and its youths first.
” Government needs to Empower domestic airlines and manufacturers to compete favourably by removing VAT and other Multiple taxes and create a more business friendly environment in line with the government’s policy of Ease of Doing Business.” There should be Provision of better infrastructure and support services to allow Nigerian businesses compete effectively.

“AON, MAN and other Professional Bodies should be involved in the formulation of Market Access, Tariffs and International Treaties, Agreements, MoUs or any other national decision that has to do with Nigerian businesses.” Said he:

“It is worthy of note that about 80 per cent of the Nigerian GDP is generated from the private sector. To this end therefore, Airlines, Manufacturers and other businesses provide critical socio-economic services to the Nigerian economy and should not be treated as secondary subjects in the implementation of decisions which directly affect their operations and has the potential of strangling them out of existence without due consultations. ”

While we believe the AU 2063 Agenda for a Single African Market (SAATM/AfCFTA) is a good idea, we humbly appeal to government to pause and reappraise the benefits of the Treaty to Nigeria and should come up with a clear policy on how best to take full advantage of the single market agenda by putting Nigeria first and protecting our overall interest rather than rushing to sign Treaties and implementing agreements that will reverse the gains of this present administration and jeopardize the future of our children.”

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