Buhari, call off the Shindig

In about a week from now Muhammadu Buhari will be sworn as the president of the Federal Republic of Nigeria, and will face huge challenges in governance, namely; insecurity, unemployment, infrastructural deficiency and corruption amongst many others.

One key headache is unemployment, which is a time bomb for any discerning observer of Nigeria’s current economic predicament. The rate of unemployment is scary, despite the recent 7% rate of unemployment claim by the Nigeria Bureau of Statistics (NBS), thus requiring an urgent leapfrog strategy to overcome this monster.

One major area this could be achieved is in the travel sector, which has a multiplier effect in creating jobs faster than most sectors. Studies show that Travel & Tourism (T&T) is a particularly attractive option for stimulating development in rural and low-income countries and regions that have previously relied heavily on subsistence agriculture, natural resource extraction, or informal self-employment. Travel and tourism development may also be welcomed by local populations because it can generate stable employment and income while promoting cultural heritage and traditions—all elements of a destination that are particularly attractive to visitors.

The annual economic impact research carried out by World Travel and Tourism Council (WTTC) and Oxford Economics found, in part, “that T&T direct employment is expected to grow at an average 1.9 percent per annum over the next 10 years, compared with 1.2 percent each year through to 2022. This premium can be partly explained by the continued rise in T&T demand from emerging markets. Indeed, looking at the economic impact of Travel & Tourism as a whole, Oxford Economics expects the industry’s contribution to GDP to grow at an average annual rate of 4.2 percent over the next 10 years, stronger than overall global growth predictions of 3.6 percent.

Still, with 8 million direct employees in Africa, Travel & Tourism is one of the leading employers in the region, surpassing the direct job creation of each of the chemicals, manufacturing, auto manufacturing, communications, mining, and financial services industries.

The study further states: “Of the increase of 66 million T&T jobs forecast worldwide in the next 10 years, 62 percent are expected in the Asia Pacific region, an expected overall growth rate of 1.9 percent per annum from 2012 to 2022. Within the region, India and China were directly responsible for 48 percent of T&T jobs worldwide during 2011, compared with 43 percent across all other sectors of the economy. In Asia, there are seven times as many T&T jobs as auto manufacturing jobs and five times more than chemicals manufacturing jobs. Travel & Tourism directly employs nearly as many people as the region’s entire education sector.

Despite the glamorous opportunities this sector offers to stimulate economic growth, Nigeria has never taken advantage of this, obviously because of the over-reliance on the oil and gas sector. Now that the sector is facing trying times, it was time the government put some focus on this employment generating sector, and take bold steps to leapfrog the economy.

The first challenge is to appoint a visionary person as minster of aviation, an industry that is a major catalyst to economic development the world over. For the records Nigeria is not looking for a person who’s proud to build runways, fix the air conditioners in our departure lounges, or renovate our airports. No! Nigeria wants more, and deserves more.

We need a creative and innovative person who will drive our Nnamdi Azikiwe International Airport, Abuja and the Murtala Mohammed International Airport, Lagos to become in 20-30 years 50-70 million throughput per annum destinations. A visionary that will drive our flag carriers to have over 70 aircraft in 5 -15 years carrying over 50 million passengers annually, employing indigenous pilots, engineers, mechanists, stewards, etc, creating a global hub, like Dubai, London, Mumbai, Rio de Janeiro, Beijing, etc. Is this hyperbole? No, this is for real. And very possible. Of course this is not a dream that will happen in two years, but a solid foundation can be laid that will serve successive governments to push this dream to reality in the next twenty years. After all forecast by the global Pricewaterhouse Coopers says Nigeria is likely to be in the top ten economies of the world by 2050 – that is about 35 years from now.

The minister should set up a solid think tank of Nigerian local and international experts to fashion out a 40-50 year master plan for the sector comprising, all stakeholders including opposition political parties. We need a harmonized plan agreed by all parties to succeed successive governments. That way we are sure of continuity of implementation of the agreed masterplan.

However some quick fix are needed by the incoming government:

  • The Nigeria Civil Aviation Authority (NCAA) should put a moratorium for the issuance of Air Operators Certificate (AOC) for a minimum of 5 years. This would help minimize the high mortality rate in the industry which incapacitates growth and expansion, and help current operators to grow and have solid base. The triangular profitable routes of Lagos, Port Harcourt and Abuja cannot sustain the high capacity in the market, and this partly explains the high rate of attrition in the industry. Any new carrier who insist on entry must be given “unprofitable routes” for 3-5 years before being designated on bigger routes. This strategy is currently being applied in some economies including Saudi Arabia, Brazil and even Ghana.
  • The idea is that we must develop policies to enhance our local carriers to grow, knowing that the option of a national carrier is not feasible, with the high debt profile of our country and the need for huge investments in infrastructure and social,services.
  • Another major area is for Nigeria to renegotiate all Bilateral Air Services Agreement (BASA), especially with some EU, African and Middle Eastern countries, A situation where Africa’s largest aviation market does not benefit the host country is unbearable and unacceptable. All extra flights beyond one or two points of entries must be operated with a Nigerian carrier on commercial agreement, code share or interline agreement – that will help grow indigenous carriers through added stream of income.
  • The NCAA must be fully autonomous of the ministry of aviation, while government can set targets for the latter to measure it’s achievements.
  • Government must avoid the bait of setting up a national carrier in whatever guise. The revenue currently available to the government doesn’t even permit such a venture. Notwithstanding government must support independent carriers to grow and be strong. These carriers must show sound investment and financial discipline before receiving any government support. This could be in terms of guarantees to secure equipment and being designated on some foreign routes.
  • Undertake a strategic Public Private Partnership (PPP) with a global airport brand to develope Lagos and Abuja airports. This must be done in a transparent bid, digital to the GSM bid that brought MTN, Econet – Ajrtel, Glo and Etisalat. Crucially the plan should include harmonizing current rail plans with future airport expansion to create a seamless rail to air link and vice versa. This will enhance easy movement of goods and passengers in and from the airports.
  • The quest to make Nigeria a global travel hub can be achieved, very easily. We have the population and the market. While other African economies rely on foreign markets for their travel sector to boom, Nigerians form a bedrock of the travel market, combining with foreign business travelers. The premium market in Nigeria is one of the biggest in the world terms of yield, where atimes the 26 foreign airlines are unable to meet demand in peak periods. Nigeria probably has the top 10 yields in the world, especially in premium traffic, where airlines make the most of their revenues. In 2012 foreign airlines repatriated snout $1 billion from Nigeria. How much has Arik and Aero brought into this country? Nigeria must find a way to benefit from this market. The sooner the better.