Unions to shut down Arik Air operations – NAN

By Adekunle Williams/Solomon Asowata

The unions in the aviation sector have directed the commencement of a joint strike at Arik Air, with effect from Dec. 20, over the airline’s failure to pay seven months salary arrears and other anti-labour practices.

The unions gave the directive in a strike notice obtained by the News Agency of Nigeria (NAN) in Lagos on Monday.

NAN reports that the notice was signed by Mr Olayinka Abioye, General Secretary,  National Union of Air Transport Employees (NUATE), and Mr Frances Akinjole, General Secretary, Air Transport Senior Staff Services Association of Nigeria (ATSSSAN).

It was also signed by the General Secretary of the National Association of Aircraft Pilots and Engineers (NAAPE), Mr Aba Ocheme.

The unions said the strike would continue indefinitely, until their demands are met by the management of Arik Air.

Their demands include: “That the management of Arik Air allows total unionisation of its employees, in compliance with extant labour laws and with respect to the constitution of the Federal Republic of Nigeria.

“The management of Arik Air recalls all sacked employees who have been victimised for their roles in the effort to bring about unionisation in Arik Air.

“Payment of salary arrears for seven months, with a commitment to pay salaries as at when due, henceforth.”

They also called for the immediate review of all employee remunerations which had remained the same since the inception of Arik Air, over ten years ago.

The unions further demanded for immediate commencement of negotiations of Conditions of Service to be concluded within four weeks and remittance of Pension, Tax, and statutory deductions to the appropriate authorities.

They also urged the management of Arik Air to comply with the Nigerian Expatriate Quota law.

“Towards the full realisation of the strike, all aviation workers, in complete solidarity with their enslaved comrades in Arik Air shall withdraw all services being rendered by third parties.

“The aviation workers will be supported by Nigerian workers from all other sectors throughout Nigeria, to underscore the seriousness of the matter at hand.

“In the above respect, all ground handling services, security clearance for Arik Air ticket holders, marshalling, aviation fuel supply, air traffic control, safety inspection, etc, will be completely withdrawn.

“All Arik Air employees, aviation workers, and other stakeholders are hereby enjoined to ensure full compliance with this directive please,” the unions said.

    FG budgets N185bn for new initiatives – Punch

    The Minister of Budget and National Planning, Sen. Udoma Udo Udoma, said in Abuja the Federal Government had earmarked N185bn in the 2017 budget for new initiatives.

    Udoma announced this at Public Presentation of the 2017 Budget Proposals in Abuja. 

    President Muhammadu Buhari presented the budget proposal of N7.30tn to the National Assembly on December 14.

    The minister identified the initiatives as the Social Housing Programme; Special Economic Zone Projects; Export-Expansion Grant; and Recapitalisation of the Bank of Industry.

    He said, “Some of the new initiatives are the provision of the N100bn for new Social Housing Programme which the aim is to create a one trillion Fund. The government contribution is N900bn.

    “Fifty (50) billion for Special Economic Zone Projects. The Minister of Investment has indicated that what is actually required is about N200bn. So, the rest will from the private sector.

    “It is going to be Public Private Partnership (PPP), we are going to partner with private sector to get them to contribute toward building this Special Economic Zone Projects.

    “Our aim to stimulate export has led us to the revival of the EEG (Export-Expansion Grant). This time in form of the tax credit and we voted 20 billion for that.

    “Also, we intend to recapitalise Bank of Industry and Bank of Agriculture and we voted 15 billion for that.’’

    Udoma said that the new initiative would support economic diversification and inclusive in the government’s growth- drive.

    He said that the thrust of the budget was to partner with the private sector and development capital to leverage and catalyse resources for growth.

    The minister said that much of the capital provision would be directed at the projects which would facilitate economic growth, diversification and competitiveness.

    Other areas of focus, he said, would be to improve ease of doing business, jobs and social inclusion, and improved governance and security.

    He said, “The spending focus will be on critical economic sectors that have quick transformative potentials such as infrastructure, agriculture, manufacturing, solid minerals, services and social development.”

    The president said that N2.24tn, representing 30.7 per cent of the 2017 budget, would be committed to capital expenditure, aimed at pulling the economy out of recession as quickly as possible.

    Buhari said the capital expenditure was increased from N1.8tn in 2016 to N2.24tn in 2017.

    The President also announced N2.98tn as recurrent expenditure for the 2017 fiscal year.

    He said, having reviewed the trends in the global oil industry, the government decided to set a benchmark of 42.5 dollars per barrel and a production estimate of 2.2 million barrels per day for the 2017 fiscal year.


    CBN calls for bids in special fx auction – Businessday

    The central bank on Monday asked banks to submit bids for a “special currency auction” to clear the backlog of matured outstanding dollar obligations for selected sectors of the economy, traders said on Monday.

    The central bank instructed commercial lenders to submit backlog dollar demand from fuel importers, airlines, raw materials and machinery for manufacturing firms and agricultural chemicals for a special forex intervention.

    Nigeria is in its first recession in 25 years, caused by low global oil prices which have cut the supply of dollars needed to fund imports. Attacks by militants on pipelines in the oil-rich Niger Delta since January have reduced crude output, reducing dollars earned.

    The dollar shortage in the OPEC member, whose crude sales make up two thirds of government revenue, has caused many companies to halt operations and lay off workers, compounding the economic crisis.

    Traders said the central bank plans to sell “funded forwards of two to five months tenor” dollars to the targeted sectors at an auction ahead of the closure of the forex market for the year.

    The central bank is expected to close all foreign exchange transactions this Friday ahead of its financial year end and the Christmas period.

    The naira currency has traded around 305.5 naira to the dollar on the official interbank market since August, while it was quoted at 487 to the dollar on the parallel market on Monday.

    Two weeks ago, the bank had asked commercial lenders to submit bids for a special intervention auction targeting fuel importers, but the result of the auction has not yet been released, traders said.

    Africa’s largest economy has suffered from an acute shortage of jet oil used by airlines in the last few months, causing many operators in the sector to refuel from neighbouring countries, while flight cancellations by local airlines have become commonplace as a result of the shortages.

    On Monday, the Nigerian National Petroleum Corporation said it had imported about 38.7 million litres of aviation fuel, which it said “represented about 26-day sufficiency”, as part of its “ensure a hitch-free air travel across the country during and after the yuletide period”.


    Apart from clean water, access to adequate food is a primary necessity for the world at large and agriculture is the hub of food production. However, the oil boom of the 1970s made the Nigerian government look away from the agricultural industry, with cocoa as its main cash crop.

    But now, Nigeria’s dwindling oil revenue has caused the federal government and key stakeholders to rethink and re-strategise in favour of agribusiness. As part of efforts to bring Nigeria out of the current recession, Bank of Agriculture (BOA), has disbursed 21.5 billion naira to 107,200 farmers nationwide.

    During the Agric-empowerment program which took place at Osogbo, the state capital of Osun, the Bank of Agriculture Zonal Manager, South-West Region, Mrs Idiat Folorunso announced the beneficiaries of the fund. The program was initiated by a leading traditional monarch in Yoruba land, the Ooni of Ife, Oba Adeyeye Enitan Ogunwusi, because of his dedication to cocoa revival in the western Nigeria.

    Consequently, with cocoa farmers getting old, so are the trees and the youth are not being motivated enough to emulate the weak generation of farmers. Folorunso stressed that the bank will always encourage young farming entrepreneurs and that the initiative is created to foster food production towards promoting self-reliance for major agricultural products.

    The need to boost cocoa in Africa not only Nigeria is generating serious concern among the stakeholders in the cocoa industry and hence the need to organise various forums for stakeholders to look for a way of improving the productivity, competitiveness, market access.

    To work towards an increasing agricultural productivity, farm land must be rehabilitated, varieties must be utilised to maximum and planting of shorter generation of trees to close the deficiency gap must be embraced.

    For instance, Kip Tom, an Indiana farmer explains how technology has enhanced soil testing, the analysis of soil can tell the amount of fertiliser needed for a particular land of cultivation. Now, with a more modernised form, Tom says for effective productivity a consultant applies algorithms to soil testing in order to make proper corrections for years to come.

    Farmers, who have access to funds, can afford to purchase high-quality cocoa plantlets. These helps farmers revitalise their crops with disease resistant and higher-producing trees.

    Likewise, maximising available resources, over a three-year period, a typical cocoa farmer will be able to double her farm income and even triple it in the 4th – 5th year.

    Current productivity levels are simply not enough to support the cocoa farmers in order to make future provisions for their families. However, farmers can begin to reinvest in their own farm and build them to their full potential.

    Now, to make an effective plea, farmers with the purpose of enjoying better bargain for their products should have easy access to proper allocation, with the Bank of Agriculture loans.

    Above all, to ensure that the country’s cocoa remain competitive alongside other cash crops like coffee, rubber and oil palm farmers need better propagation technologies and improved varieties capable of withstanding today and tomorrow’s threat.

    However, Oba Ogunwusi emphasised that strong partnerships needed to be put in place to raise the price determinant of cocoa for farmers and not only for the end users of cocoa.

    Therefore, the marketing board for cocoa should be re-established so that farmers can have direct access to multinational and indigenous companies that make use of the crop.

    Although, the Bank of Agriculture’s Anchor Borrowers Program (ABP) is the most recent scheme that provides support through the supply of inputs and technical advice to farmers, another 40 billion naira has been put away for special purposes to ensure proper implementation of the program nationwide.

    This time last year – The Nation

    By: Sanya Oni

    A couple of days from now, Christendom will roll out the drums to celebrate one of the most epochal days on its calendar – Christmas. For a good number of Nigerians, it’s time of reflections on a year arguably one of the most challenging in recent memory. No doubt, for the vast majority of Nigerians, describing the impending yuletide as bleak is probably an understatement. It’s like passing through a hell corridor. From the blue-chip forced to recalibrate operations in the terribly inclement operating environment; the small business bowled over by the asphyxiating monetary and fiscal policies to families forced to reset household priorities at a time of fast-shrinking incomes, there are just about enough tell-tales of a year better described as rough. Were Nigerians asked today to list their fears and concerns in the order of priority, it is predictable what the list will look like: Economy; Economy and Economy – in that order. Like it was in the beginning, everything stands – or falls apart – with the economy.
    Talking about reflections, yours truly recalls that the same concerns ushered in last year’s Christmas. Indeed, so terrified by the relentless battering of the naira by the forces ranged against it, I wrote a piece published December 15, 2015 titled – Naira: What’s going on? Today, not only do I find the views expressed still relevant today, the reality, sadly is that things have gotten worse.
    Here is what I wrote then. Enjoy.
    “If the wailing of the business class has not reached the ears of the landlords of the villa, it must be due to either the impervious nature of the walls, or the pig-headedness of the dwellers of that rarefied abode of power. After months of shouting themselves hoarse about how much the stifling policies of the apex have come to hurt the real sector with no one pretending to have heard, the crunch may have finally come with the naira hitting the nadir trading at N260 to the greenback at the parallel market in the past week.
    That development seems the closest sign to the troubling times that lie ahead, particularly in an in an economy which manufactures next to nothing and which exports only crude to finance its obsessively compulsive consumption habits. The exception perhaps would be Godwin Emefiele’s world of utopia where monetary policy comes close to doing nothing or where economic management is locked on autopilot!
    Today, the naira is practically fixed at N197-N199 per dollar; it’s been so since Emefiele’s apex bank put the brakes on banks’ ability to buy foreign-exchange from autonomous sources, followed by its tightening of the noose on importers of some 40-odd items, ranging from toothpicks, glass to rice.
    Several months on, the real sector complains of delay in the processing of Form M to import their raw materials and spares. The organised private sector, in particular cannot seem to make sense of what is going on. Businesses with outstanding settlement before the new policies commenced were particularly hardest hit with many unable to remit their due payments. Bills for collection, the facility which allows companies to ship in goods for weeks, months before paying back has dried up because of default arising from inability to transfer fund giving rise to credibility issues. In summary, very limited activities appear to be going on in the productive sector.
    Meanwhile, the apex bank, like the Federal Government, insists on living in denial. And while the former swears by heaven that it has enough forex to finance all legitimate imports, virtually every sector of the economy complains of being ill-served by its current forex regime. The situation reminds me of the story of a surgeon who after a delicate operation pronounces the operation successful only that the patient had succumbed fatally to the knife! The surgeon, as you might imagine in this case is the CBN which insists that everything is fine; the patient of course is the economy currently reeling under the threat of extinction and with it the hordes of disparate players being criminalised essentially by the apex bank’s stifling monetary policies!
    All of these – unfortunately – would hardly have mattered were the policies to be seen as delivering on their objectives. The reality is that this is far from being the case! One ready proof is the sinking naira – no thanks to the booming parallel market fostered by the CBN; the other is the constriction forced on the economy by lack of access to forex. The derivative is the parallel economy where no one can truly claim to be in charge.
    Of course we know what the situation is at the moment. Despite the so-called restrictions put in place, our ever the smart Alec club of importers have practically made nonsense of it with their heavy patronage of the alternative but hugely expensive parallel market. Now, thanks to the piggy banks of rich Nigerians in Diaspora or the club of Nigerians with fat off-shore accounts, you can access all your forex requirements without having to go through any financial institution provided you are ready to pay premium. One financial sector operative actually told yours truly last week that these accounts – which at the moment appear inexhaustible despite its attendant risks – are available to settle all manners of foreign exchange transactions but only at rates far above that obtainable in the local parallel foreign exchange market! With daily reports of trafficking in Automatic Teller Machine (ATM) cards and with recent reports of young Nigerians swallowing foreign currencies, there appears to be no limits to the desperate measures being adopted by Nigerians to beat the CBN measures. Given the situation, would anyone still be talking about respite for the naira anytime soon?
    Is that what we bargained for? Has anyone out there yet figured out how the measures will get our factories roaring back to life? Today, with barely $30 billion in reserves – just about enough to finance seven months of imports, and with oil prices hitting a new low over of $36 a barrel at the weekend, some levels of control of foreign exchange utilisation have become somewhat inevitable. But while I would go as far as to argue that a return to the ancien regime of mindless liberalisation is neither desirable nor wise, I would also make the point that the current foreign exchange regime cannot and should not be seen as an end in itself. If anything, the goal should be an economy that is less dependent on imports for its day to day requirements.
    This is where the CBN ought to have taken the views of the organised private sector more seriously in the making of the controversial policy. Insularity, in the current situation, is neither unhelpful nor productive. I say this because the business class wear the shoes; hence they ought to know where it hurts the most. The truth is – the restrictions are simply not working as it ought to. Moreover, it seems to me that the challenge facing the economy isn’t so much about curbing the influx of foreign goods as it is about giving the local entrepreneur the muscle to produce those goods locally and more competitively. Thus far, it has not…”
    That was exactly a year ago. The question is – has anything changed? You be the judge.
    Merry Christmas to you, dear readers.

    Nigeria to provide dollars to airlines, fuel marketers in special fx auction -traders – Reuters

    LAGOS Dec 19 (Reuters) – Nigeria’s central bank on Monday asked banks to submit bids for a “special currency auction” to clear the backlog of matured outstanding dollar obligations for selected sectors of the economy, traders said on Monday.

    The central bank instructed commercial lenders to submit backlog dollar demand from fuel importers, airlines, raw materials and machinery for manufacturing firms and agricultural chemicals by 1500 GMT for a special forex intervention. 

    Nigeria is in its first recession in 25 years, caused by low global oil prices which have cut the supply of dollars needed to fund imports. Attacks by militants on pipelines in the oil-rich Niger Delta since January have reduced crude output, reducing dollars earned.

    The dollar shortage in the OPEC member, whose crude sales make up two thirds of government revenue, has caused many companies to halt operations and lay off workers, compounding the economic crisis.

    Traders said the central bank plans to sell “funded forwards of two to five months tenor” dollars to the targeted sectors at an auction ahead of the closure of the forex market for the year.

    The central bank is expected to close all foreign exchange transactions this Friday ahead of its financial year end and the Christmas period.

    The naira currency has traded around 305.5 naira to the dollar on the official interbank market since August, while it was quoted at 487 to the dollar on the parallel market on Monday.

    Two weeks ago, the bank had asked commercial lenders to submit bids for a special intervention auction targeting fuel importers, but the result of the auction has not yet been released, traders said.

    Africa’s largest economy has suffered from an acute shortage of jet oil used by airlines in the last few months, causing many operators in the sector to refuel from neighbouring countries, while flight cancellations by local airlines have become commonplace as a result of the shortages.

    On Monday, the Nigerian National Petroleum Corporation said it had imported about 38.7 million litres of aviation fuel, which it said “represented about 26-day sufficiency”, as part of its “ensure a hitch-free air travel across the country during and after the yuletide period”. (Reporting by Oludare Mayowa and Camillus Eboh; Editing by Alexis Akwagyiram and Toby Chopra)


    Mobile money’ll attract many unbanked to financial sector in 2018 – Odunowo – Vanguard

    By Peter Egwuatu

    The Managing Director and Chief Executive Officer, CEO, Funds and Electronic Transfer Solutions Limited,  FETS,    a Central Bank of Nigeria, CBN – licensed mobile operator , Mrs. Omotade Odunowo, in this exclusive interview with Vanguard spoke on impact of cashless economy, mobile money, e-commerce and payment systems as they affect the financial sector and economy in general.

    Excerpts: What has been the impact of mobile money on the cashless policy initiated by the Central   Bank of Nigeria, CBN? 

    The emergence of mobile money in Nigeria has created another effective channel for the cashless policy by the CBN which is gradually gaining ground in the industry. Has the cashless policy impacted on the Nigerian economy? Managing Director, FETS Limited, Mrs. Omotade Odunowo In general, the adoption of cashless policy is meant to stimulate the economy with increase in employment, reduction of cash robbery, reduction of cash related fraud, theft and corruption. As the cashless economy in Nigeria continues to expand, there is growing reduction in the cost of banking services, banking security and safety risks and positive turnaround in banking related corruptions. All these have in turn boosted the modernisation of the Nigerian payment system. Currently, this policy has helped to reduce the notes and bills circulating in the economy, which then reduces handling operation cost and cash related crimes.

    How safe is the use of mobile money and what is the limit it can accommodate for the day?

    Mobile money is relatively safe as it has both first and second level security features and also requires a personal identification number (PIN) that we advise customers not to share with anybody. So, it is quite safe. Not many people know the difference between internet banking and mobile money.

    Are the two the same or are they related?

    They are similar in that they can both be used to transfer money electronically. While internet banking involves having a bank account and internet, Mobile money requires just a mobile phone and an active phone  number, thus expanding financial services to areas where the conventional banking infrastructure is lacking. A lot has been said about using the mobile money platform to get to the unbanked population of the country. How effective has this been? Mobile money works with the aid of a robust agent network. This has been an effective way of closing the financial inclusion gap in Nigeria, in the sense that the mobile money platform has opened opportunities for all individuals to access financial services and closed the usual limitations such as inaccessibility, illiteracy to mention a few.

    Mobile money will bring many unbanked to the financial sector and thus boost the economy.  It has been a slow and steady progress based on the huge investment needed to penetrate the rural areas, but we have leveraged on relationship with organisations with deep rural penetration and our target is to get at least 25 percent of the unbanked on our platform by 2018 because we believe that the Nigerian economy can only grow when all these people are included in the Nigerian financial system.

    Can you tell us a bit how the mobile money really works?

    How would customers receive money on their phone? Customers can either register using our USSD code (*610#) or download the app on their smartphone devices, register and get a unique pin. This creates an electronic wallet system that enables customers to make transactions such as airtime top up, bank transfer, cardless transactions, pay utility bills from their wallet. Customers can fund their wallets (pay money on their phone) using their debit cards or by visiting our agents. Let’s talk about your flagship product, the fetswallet.

    How does it work, do I need a bank account to open the fetswallet account?

    No, you don’t need a bank account. All you need is a mobile phone and an active phone number. To be able to use the mobile money platform.It suggests one must be connected to a network. What happens when one ports from one network to another? Will that affect one’s fetswallet account?  The phone number serves as the unique identifier. As long as this number remains the same it doesn’t affect the fetswallet account.

    Do all mobile phones support the fetswallet or must one have a smartphone?

    Yes – All mobile phones can access/support fetswallet and it is not limited to smartphones. Smartphones can access fetswallet either through the fets application or by direct browsing on the internet while non smart phones can access this via USSD CODE i.e. *610#.

    How do you keep your  mobile money account secure? 

    The pin given when you register is not to be shared with anyone and if you forget your pin, you can call our customer service center for a pin reset.

    Why is NCC involved in the mobile money?

      The Nigerian Communications Commission (NCC) as the independent national regulatory authority for the telecommunications industry in Nigeria is responsible for creating an enabling environment for competition among operators in the industry. Since Mobile money is a form of electronic financial service platform, the NCC is involved to ensure that the challenges in the digital financial services sector are resolved as well as guarantee the integrity of the services they provide. Do you have plans to open fets outlets across the country, especially in the rural areas where the unbanked Nigerians live? Yes, fets coverage and agency network is pan-Nigerian and we are constantly extending our reach across the various territories.

    Apart from the fetswallet, what other products and services do you offer your customers? 

    Our other products include ‘fetspoint,’ which is a payment aggregation solution, ‘fetstraq’ which is a payment and goods monitoring system, ‘fetsremit’ which is a platform for disbursement and fund remittance, and we are constantly trying to develop new products to meet the needs of our customers.

    How will fets benefit a user, be it clients or customer, agent or merchant?

    Fets brings financial services to Nigerians who were either under-banked or unbanked. It provides a seamless and convenient channel of payment for the customer, instant value for goods and service for merchants, a source of revenue and employment for agents, and a bespoke payment solution for our corporate clients. If we may ask, how do you get paid for the services you offer? We charge a small percentage on each transaction.

    With the current uncertainty in the forex market, how do you settle your international transactions for your clients, or are transactions on the fets platform limited to Nigeria?

    Transactions on fets platform are limited to Nigeria as we are a mobile and electronic payment company regulated by the CBN to transact in Nigeria.

    How has the current state of the economy affected fets?

    Well, we have had to continuously modify our commission structure to meet the changes in the business of our clients. The current level of inflation has also led to a corresponding rise in cost of agent acquisition. Mobile money services that allow customers to transfer funds using their phones have proved hugely popular in some other parts of Africa like Kenya.

    How do you plan on making it more effective in Nigeria? 

    The success factor of mobile money business is agent network. As such we plan to leverage this across the country and develop more customer-friendly services like easy access to loans, micro insurance and healthcare Mobile money has been terminated in some countries recently;

    do you think fets and other mobile money operators can keep mobile money running in Nigeria?

    Yes – there is a huge potential for mobile money in the downstream market of the economy. Our duty is to enlighten people in the retail space on the benefits of using mobile money. As a mobile money company, fets has the responsibility to continue to support government policies that facilitate mobile money operations in the downstream sector.

    What has changed for your potential clients?

    The current economic situation has affected everyone. This has made most companies to look for an indigenous solution that can provide an effective payment processing system at a reasonable cost, which we have tried to provide in the FMCG, Utility and retail space.

    Why would fets be considered at all as a prime platform for financial transactions?

    For us at fets, it’s all about security, ease of use, robust technology, valued added services, no downtime, seasoned IT professionals, user friendly app. What are the current challenges in the industry? Same as has been said. High cost of agent development, lack of proper awareness/information about mobile money and a low percentage of government to people business channeled through mobile money companies.

    Read more at: Vanguard

    How forex scarcity threatens airlines’ insurance payment – The Sun

    Stories by Louis Ibah

    A fresh crisis is brewing in Nigeria’s domestic airline industry as operators say the scarcity or high cost of foreign exchange (forex) is frustrating efforts to pay insurance premium on aircraft used in the country.Lloyd’s of London, the world’s leading insurance market, has also issued a warning to Nigerian airline operators saying it might be forced to blacklist the country in the face of continued failure of some operators to fulfill their obligations of paying their premiums to the insurer regularly. Insurance cover is a mandatory requirement by the Nigerian Civil Aviation Authority (NCAA) for all airline operators in the country which must include the aircraft, passengers and other third party liabilities in case of an air crash.

    The root of the crisis
    Most airlines in Nigeria charge passenger fares in naira (the local currency). However, the inability of the local insurance and re-insurance industry to fully handle in the past, huge risks associated with air crashes given their low capitalisation which mars the speedily payment of compensation or indemnity to airlines and victims, has forced most Nigerian airlines into getting their aircraft insured abroad, especially with Llyod of London.
    This often entails either getting forex at official rate from the CBN or changing the naira earned from ticket sales into either the dollars or pound sterling at parallel market rate. In recent months, the value of the naira against the dollars for instance has crashed to N470 to $1, thus making it very exorbitant to source for the dollar at the parallel market. Chairman, Airline Operators of Nigeria (AON), Capt.  Nogie Meggison told journalists that the scarcity of forex was responsible for the inability of airlines to pay mandatory premiums to foreign underwriters. “The airlines say they have Naira; but that they can’t pay the premiums due to forex constraints,” said Meggison.
    But the other factor is that the Nigerian aviation industry is ranked among “the high risk countries” meaning that airline owners in the country could pay a triple of what is paid in other countries. And because of an existing local content law which tends to prohibit airlines dealing directly with foreign insurance firms, what local airlines do mostly is to hire Nigerian insurance brokers to assist get insurance for their aircraft abroad.

    Weak local insurers
    The Nigerian insurance market is grossly unable to effectively underwrite risks in aviation because of the high exposure of an average $500million for just one airplane to cover hull, war and third party liability. When this figure is multiplied by the number of aircraft operating in the country, it becomes clear that Nigerian insurance companies cannot cope considering the enormous volume of financial resources needed to cover all those aircraft of which the total coverage value will be in excess of $6bn.
    Representatives of Lloyd’s of London market who were in Nigeria recently, still maintained  that the Nigerian aviation industry  is a high risk market. They however noted that local airline brokers are not paying their premium.
    To this end, they cautioned that in view of the fact that airlines brokers in Nigeria have in recent times failed to pay their premiums the Lloyd’s market might have no other choice than to blacklist the country.

    The demerits
    According to Nogie Meggison with local underwriters not able to handle the risks in the industry, any attempt by Llyod to blacklist Nigeria will certainly have far-reaching consequences for the aviation industry.
    In his explanations, the Lloyd’s market accounts for about 92 per cent of reinsurance businesses of airlines globally, while 5 per cent is handled by the Russian market, Cyprus and others, while a mere 2 per cent is retained in other countries by their local firms.
    “Virtually 100 per cent of the aircraft being operated in Nigeria are re-insured in the Lloyd’s marke,” said Meggison. “Hence, Nigeria can’t afford to be blacklisted as a nation because this will have very grave and deleterious consequences, as the entire domestic airlines will shut down since airplanes can’t be operated without being insured,” he added. According to him,  it will take a lot of time for Nigerian airlines to switch to the secondary market of Russia and China, whose premium rates he said would have skyrocketed if Lloyd was to blacklist Nigeria.
    Meggison explained further, “A blacklist will certainly have a negative impact on the Nigerian economy arising from the inability to acquire aircraft from lessors with no insurance, total suspension of operations by airline charter and oil support helicopters, job losses, and other sectors being reinsured by Lloyds market such as oil rigs, vessels, high rise buildings, airports and terminal buildings etc.
    “Similarly, a downgrade or outright blacklist will mean very high premiums due to high risk levels.” he added.

    Way out
    Local airline operators want the Minister of State Aviation, Senator Hadi Sirika to take proactive measures to bail airlines out of the crisis. “Mr. Sirika as a matter of urgency should come to the aid of domestic airlines operating in the country by forging a joint working group with the Federal Ministry of Finance and the Central Bank of Nigeria to brainstorm and cross-fertilize ideas on how the nation can take exigent steps forestall a potential backlash on the Nigerian economy and totally avoid the downgrade/blacklist in the interest of safety and economic prosperity of the country,” said Meggison.
    The major reason why numerous compensation have not been paid to the victims of the many air crashes in Nigeria like the Sosoliso, EAS, Bellview, ADC, and Dana Airline is due to the weak capitalisation of the local insurance industry.
    Already, airlines plying local routes are crying that they may be heading towards an all-time-low profit for the financial year ending 2016 due to escalating cost of insurance, forex and fuel.
    Industry analysts have expressed the concerns that with the attainment of Category One Safety Rating by the United States Federal Aviation Administration, Nigeria should be considered a low risk country and that premium paid on insurance by local airlines should  therefore rank among the lowest in the world.
    However, one good option that analysts have suggested to achieve lower insurance premium for aircraft in Nigeria and one that will allow timely payment by airlines is a further consolidation of insurance companies to enable them boost their capitalisation to underwrite the huge risks associated with aircrafts some of them costing between N1billion to N20billion.


    Arik Air  introduces new Airbus 340 aircraft on London route

    Arik Air says to  cope with the demands of its international passengers on the London – Heathrow and New York JFK routes, it has leased a wide-body Airbus 340-300 from Portugal to supplement its wide-body fleet of two A330-200 aircraft. The airline also said it will be increasing its flight frequencies to key domestic destinations ahead of the Christmas and New Year festivities to cope with passenger demands.
    According to the  Managing Director of Arik Air, Mr. Chris Ndulue, the airline’s decision to increase flight frequencies on the domestic routes is predicated on the need to ensure that many Nigerians are able to travel home to share the joy of the season with family and friends.
    “For many of our guests, the Christmas and New Year period is a time when families wish to be reunited at the end of a busy year and Arik Air is very pleased to announce that on many of our domestic routes, the airline will be scheduling additional flights and operating larger aircraft to cater for the increasing demand,” said Ndulue.
    “Arik Air connects 18 destinations within Nigeria, 10 in West/Central Africa and three international destinations enabling the airline to bring more Nigerian families together this festive season than any other carrier.
    “Instead of the average 100 daily flights normally operated, Arik Air will, during the festive period, increase its daily flights to an average of 120,” he  added.
    Last week, the Nigerian Civil Aviation Authority (NCAA) sanctioned Arik Air for its inability to ferry passengers’ luggage over 48 hours after the airline’s arrival at the Murtala Muhammed International Airport, Lagos, from London. Arik Air was ordered to pay each passenger whose luggage was left behind in London $150. The NCAA said the airline had violated the Montreal Convention of 1999, which makes it mandatory for passengers and their luggage to arrive at the same time at their final destination or airport and under normal circumstances, the passengers ought to have arrived with their luggage.

    NANTA lauds aviation sector reforms

    The National Association of Nigeria Travel Agencies (NANTA) has applauded the efforts of the Federal Government in resolving the crisis in the aviation sector, noting that with the right policies, the sector could assist ongoing efforts to resuscitate the ailing economy.
    Speaking during a breakfast meeting with journalists in Lagos recently, the President of NANTA, Mr. Bankole Bernard, said in the last one year, the government had taken practical steps to address the myriads of problems in the aviation industry, notably the rot in infrastructure at some of the nation’s airports, the inability of foreign airlines to repatriate their incomes out of the country, the scarcity of foreign exchange to domestic airlines, waiver of duties on imported aircraft parts, fixing the bad runway at the Abuja airport, and stemming job losses in the industry.
    The NANTA boss who said the Federal Airports Authority of Nigeria (FAAN) gets $50 on each passenger that boards an international flight, and $10 on passengers flying on the domestic route, lamented the exit of some carriers out of Nigeria, saying the country was losing massively from the trend.  “Whenever a foreign airline is leaving the country, or a domestic airline shuts down, it is Nigeria that is the loser; jobs are lost and revenues are also lost,” Bernard said.
    He said given the need to boost revenue from the non-oil sector, it would be in the best interest of the country if the aviation and tourism sectors were merged into one ministry.
    “All over the world, it is the aviation sector that drives tourism. In 2017, tourism needs to be given the right attention so that we can derive maximum benefit from it. And to do this, we need to merge aviation and tourism into one ministry so that as we are developing the aviation industry, the tourism potential of the country is also harnessed and marketed to the outside world,” said Bernard.
    Under a recession we need to do things that will jump-start the economy, and tourism has the potential to do this,” he added.
    He noted that NANTA is proposing a good training programme with the Nigerian Institute of Tourism and Hospitality for members in order to boost their skills in marketing and attracting tourists into the country.
    He suggested a similar  training needs to be extended to the Nigerian Immigration officers at the international airports so that they will know how to handle foreign tourists coming into the country through the airports.

      Transaction in FMDQ OTC market hits N9.40trn in November – Vanguard

      By Nkiruka Nnorom

      Transactions in Over-the-Counter, OTC market rose by 17.88 per cent to N9.40 trillion, last month  cent  compared to value recorded in the previous month. Data from the FMDQ OTC Securities Exchange for November showed that Treasury Bills, T.bills’ transactions accounted for 48.22 per cent of the total value, while turnover in the foreign exchange, FX market, accounted for 19.72 per cent of total turnover. FGN bonds and unsecured placements/Takings accounted for 4.23 per cent and 2.37 per cent of total turnover respectively.

      During the month, turnover in the fixed income market settled at N4.93 trillion, 4.96 per cent or (N0.23trillion) decline over  the value recorded in the month of October. Transactions in the T.bills market accounted for 91.93 per cent of the fixed income market turnover; outstanding T.bills at the end of the month amounted to ¦ 7.27 trillion compared N7.30 trillion posted in the previous month, while FGN bonds outstanding value increased by 0.96 per cent to close at ¦ 6.57 trillion during the period under review.

      Trading intensity in the fixed income market settled at 0.63 and 0.06 for T.bills and FGN bonds respectively, with maturities between six months – one year being the most actively traded (¦1.26bn) in the period under review. The data also showed that short-end yields of the FGN bond yield curve declined by an average of 3.06 per cent, while yields across the medium- and long-ends rose by averages of 0.55 per cent and 0.71 per cent respectively.

      Member-to-member trades stood at $0.52 billion during the period under review, a decline of 6.62 per cent ($0.4 billion) compared with trades recorded in October 2016 and a decrease of 35.13 per cent ($0.28 billion) YoY, while Member-to-client trades increased by 34.81 per cent, ($1.18b billion) from the previous month and declined  by 40.92 per cent ($3.17 billion) year-on-year. Member-to-CBN trades stood at $0.85bn in November (October – $0.37bn), representing a decline of 77.39 per cent ($2.91 billion) YoY.

      Read more at:Vanguard