Nigeria Aviation in the year 2016 was characterised by difficulties, surprises and low operational capabilities due to recession, scarcity of aviation fuel, government policies amongst others.
With new government in place and a new Minister of Aviation, Senator Hadi Sirika on board, the year was even more demanding in terms of policy making and other operational frameworks. With aviation placed under Ministry of Transportation, the situation becomes even more difficult as airlines have to grapple with the bureaucratic red tape of relating with two brand new ministers at a time.
Although the government proposed concession of four viable airports -Lagos, Abuja, Kano, Port Harcourt in May, 2016, the debate on whether to concession or not, balkanised stakeholders in the industry, creating the fulcrum of debates and developmental discourse in the sector throughout 2016.
One of the major events that heralded the year in the aviation industry was the suspension of flight operations by three airlines in a row within a week. The airlines which shut operations due to recession and high cost of aviation fuel, foreign exchange, charges, etc were Aerocontractors, FirstNation and Arik. Although FirstNation and Arik recommenced operations after stoppage but Aerocontractors is yet to resume flight after over four months of suspension of flight operations.
The true position in the year was that airline operators barely survived in 2016, having been burdened with a lot of challenges, includ¬ing lack of aviation fuel, foreign exchange, manpower, multiple taxation, charges etc. Many of them were on the verge of being declared insolvent, just as the major ones are no longer reliable, with epileptic flight operations characterised by delays, flight cancellations, fare hike and general poor customer services.
To caution the effect of recession, the Federal Government on behalf of foreign airlines and domestic operators under the aegis of Airlines Operators of Nigeria (AON) got the Central Bank of Nigeria (CBN) to include airlines operating from Nigeria in the Inter-Bank Foreign Exchange market through forward settlement.
As part of the restructuring process by the new minister and to make proper placements in the agencies, the Aviation Ministry initiated demotions, sack and other changes at the Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency NAMA and Nigerian Civil Aviation Authority NCAA.
It was also in this year under review that the Nigeria Air Traffic Controllers Association (NATCA) declared a state of emergency on what it described as the epileptic working condition of communication facilities in the Nigerian airspace, urging the Federal Government to investigate the claims and also request urgent reforms within three months.
Despite recession and gloomy picture of the industry outlook, aviation in 2016 recorded some positive feats. First was the election of the FAAN MD as President of Airports Council International ACI Africa; re-election of President of the International Civil Aviation Organization (ICAO) Council, Dr. Olumuyiwa Bernard Aliu and the opening of Nigerian office by renowned aircraft maker, Airbus.
Apart from the achievements above , three more airlines in Nigeria obtained their audit certification from the International Air Transport Association (IATA). Medview Airline, Allied Air and Dana Air obtained the International Air Transport Association (IATA) Operational safety Audit (IOSA) certification in 2016.
Sadly some major airports in the country, especially Nnamdi Azikiwe International Airport, Abuja and Murtala Mohammed International Airport, Lagos experienced a high surge in drug related offences with the National Drug Law Enforcement Agency living up to its expectations.
To improve airport services, FAAN in November, commissioned 3 ultra-modern carousels and conveyor belts at the D-Arrivals of the Murtala Muhammed International Airport (MMIA) as part of efforts to reduce delays and fast track departure formalities of arriving passengers. The facility is one of many projects embarked by the Federal government to hasten passengers’ facilitation at the airports to keep pace with the growing traffic which has been on the increase since the commencement of the remodeling project, and the immense growth of the country as the fastest growing economy in Africa.
Although the Aviation Minister had pledged to restructure the AVSEC but stowaway incident which occurred in early December, whereby a lifeless body was found in one of the engine wheels of Arik aircraft in Johannesburg further put a question mark on the airport security system in Nigeria.
Also towards the end of the year, workers of Bristow Helicopters closed down the company, due to their displeasure over the treatment given to them by the management.
On the part of the agency and to put an end to Airlines indebtedness to Aviation Agencies arising from the 5% Ticket Sales Charge/Cargo Sales Charge(TSC/CSC), the Federal Government in December gave 1st January, 2017 as the deadline for airlines operating in the country to automate their remittance / payment systems forthwith.
The aviation industry in Nigeria however promises to improve in the coming years, especially 2017. With the forex concession given to both foreign and domestic airlines, the airline business will boom once again.
Giving ear to decisions of stakeholders on the concession arrangement mooted by federal government in May 2016 and adherence to Senator Adamu Aliero led Senate Committee on Aviation and Senator Ben Murray Bruce led committee on privatization will do the industry a lot of good.
Beyond that, proper handling of dearth of aviation fuel, foreign exchange policy, concession arrangements, taxation and total government intervention in the sector would return the Nigeria Aviation sector to its pride of place at the global arena in 2017.
2016: Nigeria Maritime Industry At A Glance
The maritime industry which happened to be the second revenue earner for the Federal government aside oil experienced gloom in 2016.
The ban placed on 41 items by the federal government in 2015 from accessing the Foreign Exchange Market had a negative effect on the industry in 2016 that once experienced a bubbling berths at the ports in 2015 became a shadow of itself.
Also, failure of government to review some of its trade policies such as high Customs tariff on imported used and new vehicles through the seaports, Fish quota and 70percent Customs tariff on rice importation.
Resuscitation of National Shipping Line
After so many years, Government yielded to the call of experts who have advocated for the resuscitation of the National Shipping Line.
The Federal government through the Minister of Transportation, Mr. Rotimi Amaechi, set up a Ministerial committee on resuscitation of the National Shipping Line headed by the Executive Secretary of the Nigerian Shoppers’ Council, Barr. Hassan Bello.
Amaechi said the Federal Government is working on the establishment of a national shipping line to ensure the maximum exploitation of the potential of the maritime industry.
He also explained that the new national carrier of ocean-going vessels would not be funded via the Cabotage Vessel Financing Fund (CVFF).
However, reacting to the proposed new shipping line, former President, Chief Olusegun Obasanjo, advised the federal government against resuscitating the defunct Nigerian National Shipping Line (NNSL).
Obasanjo blamed the demise of NNSL on the lack of professionalism and high level corruption at the time. He said: “NNSL had been liquidated, they tried Nigeria Unity Line, it collapsed.
Nine brand new ships were specially built for Nigeria and we did not take delivery of some of them until I left office in 1979. When I came back in 1999, NNSL had been liquidated with all 19 ships and the five already in existence gone. Two of the ships were missing for almost two years and it was discovered that one military man was using them all over the world without accountability.”
Obasanjo urged the present administration to ‘think out of the box’ and come up with what should be done to grow the maritime industry.
However, experts have projected that five million Nigerians would be employed if the Nigerian National Shipping Line (NNSL) is refloated.
Capt. Thompson William, was expedient for Nigeria to have ships and engage in shipping business to create employment opportunities for the youth. The maritime expert, however, advised that professionals should be engaged to supervise and kick off the resuscitation of the defunct NNSL without delay. He explained that Bangladesh and India equally passed through the same process and came out with success.
20 Shipping Companies leave Nigeria
Groaning under intense hardship imposed by government policies and global economic crunch, over 20 shipping firms exited the nation’s shores in 2016.
According to the Maritime Workers Union of Nigeria (MWUN) some of the companies that have already made an exit include Mitsui O.S.K Line, Nippon Yusen Kasha, Taiwan’s Evergreen Line, Messina Line, Hapag-Lloyd and Gold Star Line (GSL), among others which were forced to withdraw from the West Africa route due to growing losses as a result of declining volumes.
The President General, MWUN, Anthony Emmanuel Nted, bemoaned the poor state of the ports, terminal and work environment in the maritime industry.
Nted revealed that about 20 shipping firms have left the shore of the country because of low traffic occasioned by government importation policy.
According to him, Nigeria as an import-dependent country cannot suddenly ban the importation of the principal goods being generally consumed in the country.
“Hence, the current government policy on importation though with the best intention seems to be wreaking more havoc on the economy and ought to be reviewed urgently,” he said.
He, therefore, urged the Federal Government to review the ban on the importation of rice, wheat, vehicle spare parts and industrial machinery until the nation is able to produce for local consumption.
He added that the failure to do this would encourage smuggling, diversion of ships to neighbouring countries, idle ports, retrenchment of workers, unemployment and general loss of revenue to government.
6000 Maritime jobs lost in 2016
The maritime sector has lost 6,000 jobs to economic recession in addition to closure of many companies in 2016.
President-General, Maritime Workers Union of Nigeria (MWUN), Anthony Nted, said 6,000 jobs were lost to economic recession in addition to closure of many companies
According to Nted, INTELS Nigeria Limited alone had sacked about 3000 workers so far because recession.
He told the delegates who are members from the union across its four branches that: “The situation is so terrible that over 6,000 members of our union have lost their jobs since the recession and many more are to go,thus exposing the lives of their families into serious jeopardy”
He said that loss of job was affecting the union as more workers were faced with insecurity, which had exposed the lives of their families to jeopardy.
The MWUN leader said that it had become more difficult to protect the jobs of members in various branches, as the union had not been able to discuss review of conditions of service.
Customs Sacks 46 officers for corruption
One of the major highlight in 2016 was the sack of no fewer than 46 officers by management of the Nigeria Customs Service for corruption, bribery, ship release scam and certificate forgery.
The officers were dismissed after an investigation panel found them guilty of various offences that include corruption and theft.
In a statement by the Customs Public Relations Officer, Wale Adeniyi, he said the actions taken by the service on the officers were painstaking and in line with the public service rules.
He said: “Twenty-nine senior officers of the Nigeria Customs Service have been dismissed for various acts of gross misconduct. The dismissed officers are among forty-four (44) senior officers who were punished for actions capable of compromising national economy and security.”
Continuing, he said: “Ten other officers were retired from service, while the appointment of one was terminated. Four officers were given written warnings to be of better conduct while another four officers who were investigated and tried for some offences were exonerated.”
Adeniyi also explained that some of the sacked officers include a deputy-comptroller; five – assistant-comptroller; seven – chief superintendent, and four – superintendent, among others.
“All the officers were served with queries indicating offences committed, before they made appearances before the special investigation committee. The committee’s recommendation was discussed and approved by the customs management,” Adeniyi added.
FG Bans Importation Of Used, New Vehicles Through Land Borders
The Federal government in December banned importation of vehicles into Nigeria through the land borders.
According to the statement, the ban would kick off from January 2017.
“The ban is sequel to a Presidential directive restricting all vehicle imports to Nigerian seaports only.
“The restriction on importation of vehicles follows that of rice, whose imports have been banned through the land borders since April 2016.
“Importers of vehicles through the land borders are requested to utilise the grace period up till Dec. 31, 2016 to clear their vehicle imports landed in neighbouring ports.
NIMASA Appoints Consultant To Recover $5billion Debt
The Nigerian Maritime Administration and Safety Agency (NIMASA) appointed a debt recovery firm, Snecou Financial Services Company Limited to assist in its revenue generation.
NIMASA said the move is in a bid to shore up its revenue amidst the huge debt it is being owed.
The debt, according to sources in NIMASA, is in the region of $5 billion.
The agency said the contract, which also has the company serving as a recovery agent for debts owed the agency is for a period of two years in the first instance with an option for renewal.
It added that the approval for this contract was recently granted by the Tenders Board (PTB) of the agency at its 55thsession which held in the Agency’s head office in Lagos.
“Given the urgent need to recover the agency’s debts which is in billions of naira, the agency sought and obtained approval for a “Certificate of No Objection” from the Bureau of Public Procurement (BPP) in line with the Public Procurement Act (PPA), “it stated.
“According to the contractual agreement already endorsed by both parties, the contract is based on a success rate of 13 per cent using a benchmark of $19,753,012.36 and N239,607,155.52 monthly revenue while a maximum cap of 15 per cent success rate is payable on any new revenue head discovered by the consultants within the contract period.
“In other words, Snecou Financial Services Company Limited will be paid 13 per cent of only the revenue that is above the threshold of the approved benchmark in the course of the contracting period. Similarly, Messrs. Snecou will also be entitled to a maximum of 15 per cent of new revenue streams discovered during the period, “ the agency said.
Peterside also noted that the agency’s debt is around $4 billion to $5 billion, which has necessitated an urgent need to recover them in order to develop requisite infrastructure for the maritime industry.
“Debts owed NIMASA by various operators in the maritime industry had grown exponentially over the last five years even necessitating an investigation and convocation of a Public Hearing by the House of Representatives Committee on Maritime Safety, Education and Administration in June this year.
The contract is expected to recover the debts and channel the funds into developing critical infrastructure as well as knowledgeable manpower for the industry.
2016 ICT: Year Of Regulatory Actions, 4G LTE Networks
Information and Communications Technology (ICT) acted as a catalyst to many segments of the Nigerian economy like the booming e-commerce, banking, insurance and financial services, software and IT enabled services etc., and triggered a widening of the revenue base of the federal government into non-oil sectors.
Year 2016 started with the news that MTN Nigeria had acquired Visafone Communications Limited, Nigeria’s former Code Division Multiple Access (CDMA) network operator, to help MTN launch 4G LTE broadband services using Visafone’ 800MHz spectrum licence. The transaction was at a cost of $238,498,957 (N47.4 billion).
The acquisition was later opposed by Etisalat Nigeria who went to court to quash the deal but lost their case at the Lagos High Court, Ikoyi. However, in October, it emerged that NCC only approved the acquisition of 100 per cent shareholding and transfer of subscribers of Visafone to MTN Nigeria but was yet to take a decision on the spectrum licence transfer.
The same month, Minister of communications, Barrister Adebayo Shittu gathered the ICT industry stakeholders to the first Communication Sector Retreat held in Ibadan, Oyo State where a roadmap to drive the industry was articulated and unveiled.
Danbatta’s 8-Point Agenda
In January also, executive vice chairman, Nigerian Communications Commission (NCC), Professor Umar Garba Danbatta unveiled his eight agenda that will guide his administration within the next five years. The agenda will promote innovation, investment, competition and consumer empowerment using communications platforms of today and the future.
According to the NCC boss agenda will facilitate broadband penetration; improve quality of service; optimise usage and benefits of spectrum; and promote ICT innovation and investment opportunities. It also includes facilitation of strategic collaboration and partnership; protection and empowerment of consumers from unfair practices; promote fair competition and inclusive growth; and ensure regulator excellence and operational efficiency.
Improved QoS, Broadband
Danbatta has been tackling poor quality of service (QoS) and other issues in the industry, paying attention to Affordability, Accessibility and Availability of service to Nigerian consumers within the available resources. Under his watch, broadband penetration has moved from 14 per cent to 20.95 per cent.
Danbatta has articulated a regulatory framework that will enable strategic and systematic licensing and deployment of broadband infrastructure across Nigeria. He has also set up a Broadband Implementation Monitoring Committee within the NCC to give proper assessment and regular appraisals of the plans.
He has also encouraged the re-farming of various frequencies to improve their efficiency. Spectrum monitoring has been improved to ensure sanity in the industry, resulting in the realization of more than N47 billion within the period.
Implementation of DND Facility
NCC banned unsolicited pre-recorded voice calls and text messages by network operators and Value Added Service (VAS) providers with effect from July 1with the implementation of 2442 Do Not Disturb (DND) short code platform. The facility has helped to reduce marketing messages from operators and third party services.
These include bulk SMS, VAS promos, etc, which have become a nightmare for consumers. The DND 2442 facility when activated has given telecom consumers the freedom to choose what messages to receive from the various networks thus helping to improve quality of service on the networks.
New Entrants, Race for 4G LTE Services
In April, NatCom Development & Investment Limited, trading as ntel, commenced commercial operations of its 4G/LTE-Advanced network in Lagos and Abuja providing superfast internet access that enables high-definition voice, data and video services built on the 900/1800 MHz frequency bands.
In May, Bitflux Communications, a consortium of three companies including VDT, BitCom and Superflex which paid $23.25 million for the 30MHz slot of the 2.3GHz spectrum in February 2014 finally deployed a long term evolution (LTE) data network in the country enabling it to operate as a mobile virtual network enabler (MVNE), supporting multiple MVNO operations on a single hosted platform.
In 2016, other telecom networks like Smile Communication Nigeria Limited, Inter C (formerly Intercellular), Globacom, MTN Nigeria and Etisalat Nigeria have all launched Fourth Generation Long Term Evolution (4G LTE) technology services on their networks to give subscribers faster speed voice, video and data services.
N330bn Settlement of Simcard Fine
In June, MTN Nigeria and the Nigerian Communications Commission (NCC) eventually settled the landmark N1.04 trillion fine imposed on the operator for flouting the simcard registration directive with the fine reduced finally to N330 billion ($1.671 billion). This amount includes the “goodwill” payment of N50b billion earlier made on February 24, 2016 by MTN to the government.
By the terms of agreement, MTN has paid N30 billion into NCC’s Treasury Single Account (TSA) with the Central Bank of Nigeria (CBN) in June while the remaining balance will be discharged as follows: N30 billion on 31 March 2017; N55 billion on 31 March 2018; N55 billion on 31 December 2018; N55 billion on 31 March 2019 and N55 billion on 31 May 2019.
MTN’s NSE Listing Move
At the end of August, MTN Nigeria declared its intention to list part of its operations shares tentatively by next year and announced the appointment of Stanbic IBTC Capital and Citigroup as transaction advisors. This set the capital market agog, with stakeholders saying it will attract renewed attention to the Nigerian Stock Exchange (NSE) and push other multinational companies (MNCs) to list their shares.
2.6GHz Licence Auction
In July, MTN paid $96 million for the 2.6 Gigahertz spectrum licence auction that was conducted a month earlier.MTN had emerged the only qualified bidder after expressing interest for Six (6) Lots out of the Fourteen (14) Lots on offer and paid the bid deposit as specified by the Information Memorandum (IM) on the auction.
MTN completed the payment after it was notified by the NCC that it had won. Few months later, it used the spectrum to launch 4G LTE service. The 2.6GHz spectrum opens the space for the delivery of present and future generations of broadband services to subscribers.
Telecom growth
According to the National Bureau of Statistics (NBS), the Nigerian telecommunications sector contributed N1.41billion to the country’s Gross Domestic Product (GDP) in the first quarter of 2016 in real terms. In the second quarter 2016, the sector contributed N 1.580 billion to GDP or 9.8 per cent, which represents an increase of 1.0 per cent points relative to the previous quarter.
Despite the recession in the economy, the telecom sector contributed N1.398 trillion, or 1.11 per cent in the real terms to the Gross Domestic Product (GDP). With anticipated new investments in the areas of broadband Infrastructure in the next few months, the sector which already has about $68 billion total investments so far is likely to add more to the national GDP.
The sector continued on its giant strides reach 158 million subscribers and is expected to end the year by about 162 million lines in addition to about 100 million internet users.
Communications Service Tax
In March, the telecom space erupted in furore following the presentation of a bill entitled ‘Communication Service Tax Bill (“CST” or the “Bill”) 2015’, which seeks to impose, charge and collect nine per cent Communication Service Tax (CST) levied on service fees payable by users of electronic communication services. The bill if passed into law will tax voice calls, SMS, MMS, Data and Pay TV subscriptions used by subscribers.
Chairman of Association of Telecommunications Companies (Alton) Engr. Gbenga Adebayo said the industry is already over burdened with taxes and levies and if government adds the CST, it will drive away investments in the sector saying “multiple taxation on our industry has remain one of the most critical risk to the growth if the sector” he said.
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