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Re: NIGERIA DESIGNATES FIVE AIRPORTS FOR FREE TRADE ZONE

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By Nuhu Adam

The recent announcement of the designation of five international airports – Murtala Muhammed International Airport Lagos, Nnamdi Azikiwe International Airport Abuja, Aminu Kano International Airport Kano, Akanu Ibiam International Airport Enugu and Portharcourt International Airport Omagwa – by the Minister of Aviation, Senator Hadi Sirka to support the implementation of both the African Continental Free Trade Area (AfCFTA) and the Single African Air Transport Market (SAATM) agreements is not only a welcome development but a commendable bold move by the government.

Of the five airports, Port – Harcourt airport has the advantage of a complimentary existing Onne Oil and Gas Free Zone. The logistics hub of this zone should take advantage and set the ball rolling immediately to sustain the gains for Oil and Gas cargo, while building capacity at the airport for agro allied export and others using the aviation logistics hub.

Practice in developed and developing countries indicates the existence of numerous and heterogeneous free zones as well as the different role which they have in the economic development of countries that have implemented them. Different industry-specific economic zones can be created to fill certain business needs with the ultimate goal of empowering the economic potentials of the countries in which they are situated. It is along this premise that we make bold to say the free trade zone would offer a huge potential for continental aviation given the potentials of Nigeria dominant market in the West and Central Africa.

The Nigeria aviation logistics hub is about to experience a game changer if the Free Trade zone is well coordinated and implemented and private sector driven.
Aside the increase in the dynamics of economic activities, it will also encourage the advancement of Foreign Direct Investments (FDI) in aviation value chain – OEM supply chain, FBO, capacity building and generation of new entrepreneurial opportunities in e – commerce fulfilment, this is in addition to the likely changes in the real estate market in the airport and its environs among other services.

Benefits accruable by the establishment of a Free Trade Zone
There are loads of advantages available to a company operating within a Free Zone including, but not limited, to the following depending on the model approved for the airport free trade zone:
• No pre-shipment inspection and issuance of Bank Form M required prior to shipment of material from the country of origin. Customers with Bank Bonds executed with the Customs can take their goods into the Nigerian territory after examination and within a very short time.
• While importing cargo the traditional way, you’re subject to clear your material and equipment and pay Customs Duty within 30 days. In the Free zone you are enjoying unlimited time to custom clear your consignment.
• This makes for increased shipments and cargo movements.
• Better cash flow management – Customs Duty Scheduling System. With a Bank Bond/Guarantee in place, you will be able to obtain Customs release of cargo required in the Customs territory. Payment of duty/perfection of Customs entries is then scheduled to be completed within 14 days after delivery – thus deferring Customs Duty payment and obtaining a better cash flow…… Not too sure with AfCTA
• This further translates into increased revenue and earnings in the associated private sector (airlines, clearing/forwarding agencies, banking/finance, services and supplies), increased government revenue and earnings (for Nigerian Customs, Nigerian Civil Aviation Authority, Federal Airports Authority of Nigeria, Cargo Handling Companies, Federal Inland Revenue Service, among others).
• Creation of job opportunities and entrepreneurial development of budding investors.
• Technology transfer and enhancement of local content participation in the nation’s Aviation industry.
• No VAT and withholding tax chargeable on Free Zone storage facilities, services and activities.
• No corporate and personal income tax payable.
• Easy facilitation of expatriate employees working in the Free Zone. No expatriate quota and residence permit are required for the expatriate staff working and domiciled within the area delineated as the Free Zone territory.

Concluding Remarks
Airport Free Zones have proven to be success stories in some countries of the world. The Suvarnabhumi Airport, Bangkok, the Dubai Airport Free Zone, Abu Dhabi Free Zone and Sharjah International Airport Free Zone – all within the United Arab Emirates – are good examples. They have continued to support the economic development of their host nations. All considered, the socio-economic potentials derivable from this development will be felt in a long time to come, especially in Nigeria’s Aviation industry and within the precincts of the neighbouring countries.
More importantly for me, aside the cargo volumes increase is an MRO being championed within a Free Zone to turn Nigeria into the Hub for maintenance, repairs and overhaul of Aircraft in West and Central Africa, while also attracting business from the rest of the aviation and aerospace world will be a catalyst for the new phase of aviation in the region

The MROs in FTZ will result in cost savings to Airlines based in Nigeria and reduce the demand for foreign currency required for Aircraft maintenance.
Labour, which is a major cost item is available locally and at cheaper rates…. More jobs opportunities.
MROs in FTZ would also serve as a platform for capacity building and ensure the development of local labour into highly skilled, certified world-class experts in various aviation related fields.
The aviation logistics value chain will be enhanced in Nigeria and the West and Central Africa Region.

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Aviation Minister Commends Umahi on Ebonyi Airport Project

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Minister of Aviation Senator Hadi Sirika has described the Ebonyi State airport project as a worthwhile one that will definitely open up the state to both domestic and international investments.

Senator Sirika who made the assertion while receiving the governor in his office Thursday,  described Governor Umahi’s decision to build the airport as one of courage and foresight, believing that the airport is guaranteed to expose the state’s agricultural potentials to the international market.

A statement by the Director, Public Affairs of the Ministry of Aviation,  James Odaudu, quotes the Minister as telling Governor Umahi that the administration of President Muhammadu Buhari has, since inception, embarked on creating an enabling environment for the expansion of the aviation industry in Nigeria which has been severally acknowledged by the global aviation community.

The Minister also gave the assurance that the Ministry of Aviation will do whatever is required to bring the project to fruition, considering the prospects for business growth and employment generation.

Governor Umahi and Aviation Minister, Senator Hadi Sirika

Earlier, Governor Umahi had briefed the Minister on the progress of the airport project and said he remained committed to its successful completion, considering the expected benefits to the people of the state.

He expressed the appreciation of the state to the Federal Government, especially the Aviation Minister, for the encouragement and support in seeing the project to its present stage, assuring the Senator Sirika that the airport,  when completed, will meet all industry requirements.

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AIB-N, NAF Collaborate for Improved Air Safety

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 Group Capt. B. A . Usman and COMM/CEO, Engr. Akin Olateru, at AIB Head office, Abuja.

Accident Investigation Bureau Nigeria (AIB-N), has reiterated its commitment to maintaining partnership and institutional collaboration with the Nigerian Airforce (NAF).

This is part of its drive to ensure sustainable cooperation with relevant authorities for safer airspace in Nigeria.

The Commissioner AIB, Mr Akin Olateru, who stated this while receiving the newly appointed Abuja Military Airport Commandant, Group Capt. B. A. Usman says the NAF had the Bureau’s full support and cooperation in ensuring air safety in the country.

He disclosed that AIB-N, as a government agency, has a strong relationship with the NAF, which was sealed with a pact between the two government establishments.

“AIB-N cannot do it alone. A strong collaboration must exist among relevant agencies in order to ensure the continuous safety of the Nigerian air space,” the Commissioner said.

While soliciting the Bureau’s support, Group Capt. Usman said, his team were seeking ways to consolidate the existing synergy between the agencies to ensure maximum safety and security within and outside the airport’s environment.

The Commandant further urged the Bureau not to hesitate to call NAF in times of distress, assuring the Bureau of readiness of a rapid response at all times

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DEFINING A NATIONAL SELF INTEREST-LESSONS FROM A BASA AGREEMENT GONE SOUR

By Tunde Adeniji

The DG NCAA Captain Musa Nuhu recently issued a Press release, conveying the decision of the Honourable Minister of Aviation Sen. Sirika Hadi to replace the operating schedule approval for 21 frequencies/week given to Emirates airlines with 1 weekly Frequency. He had relied on the spirit and letter of the Bilateral Services Agreement (BASA) between the two countries in responding to the single slots weekly offered to Air Peace at Sharjah Airport. The DG’s letter ended with his assurance to members of the public that national interests in all Aviation matters will be jealously protected.

The Aviation Policy and Strategic group discussed the fallout from this decision exhaustively, deconstructing the issues involved, even as its erudite members put forward many good suggestions about how to proceed. The engagements have been rich and enlightening and our intention in contributing to this discourse is to focus on the need to define a National Self Interest in a robust policy framework to guide future BASA/external Aviation relations engagements.

This need is justified based on our experience as a Nation which seems to suggest that we may be haunted yet again by the many decision makers who fell into the trap described below by Jon Moen:

“People who are managing a (financial or economic) crisis are not immune from personal motivations…Sometimes the people in charge don’t know at first that their personal motivations and past experiences might not be compatible with what is best for the greater good.”

We view National Self Interest ‘’As the overriding purpose governing the state’s relationship with the outside world, it serves two purposes. It gives policy a general orientation towards the external environment. More importantly, it serves as the controlling criterion of choice in immediate situations. The dominant view of national interest, in other words, dictates the nature of a state’s long-term effort in foreign policy and governs what it does in a short-term context’’.

The concept of Bilateral Air Services Agreement (BASA) is the outcome of the compromise between the Open Skies advocacy of the US and the strong opposition by the UK and European countries, as a protection from their inability to compete with the formidable dominance of the US in post WW2 world. The delegates at the Chicago convention therefore agreed to a regime that allowed every country complete and exclusive sovereignty over its airspace with the provision that permissions were to be negotiated between contracting states on a bilateral basis. There are at least three different models of BASA, with varying levels of liberality, as may be agreed by the parties to it. We may therefore consider is a contract that should be mutually negotiated like any other

Slots on the other hand ‘’is the most emotive subject in civil aviation. It is the approval from an appropriate authority to take off at a particular time at one airport and land at its destination at another time. The difficulty arises in so called coordinated airports i.e., congested airports where there are severe capacity limits at certain times of the day. It subsequently dictates the difference between operating a route or not’’-D.H. Bunker

The Adam Smith model of Self-interest as the motivator of economic activity with competition as regulator to ensure the market runs efficiently without intervention, is situated below:

“It is not from the benevolence (kindness) of the government (of UAE), Its flag carrier (Emirates), or Airport (Sharjah) that we expect access to Air Peace, but from their regard to their own interest.”

It is important to state at the outset that the self-interest we advocate is (in the words of Lauren Hall) consistent with the demands of justice and becomes the germ from which virtuous, fair behaviour grows, to drive the larger economic engine of society.

In clear economic terms slots represents a barrier to entry and airlines awarded slots benefit from an economic rent. A system established to ensure stability has slowly become the property of the airlines. Slots are sold at a remarkable premium or used as a tool to exert unfair competitive pressures. It has been reported that many European countries who oppose the sale of slots, do so on the principle that, a private firm cannot benefit from a public good (Mackay 2008)

The decision to operate slot system or not remain those of the relevant airport and can be considered “its own internal cuisine‘’ just as ‘’A country’s motivation is its own concern, but the righteousness of its actions is the concern of all’’.

Nigeria like other states deliberately follow certain policies in pursuit of their national interest. The current face off with UAE, shows clearly that we have been a bit too eager to give than to receive or at least gave out before we received.

Our BASA is seemingly driven by the needs and ease of other countries. We have offered multiple entry points to countries, even where our own carriers have faced issues with slots for decades. These incongruities have never been convincingly explained to operators and other stakeholders

We have a unique opportunity to review our thinking and position in this area, especially as our slow adoption of Single African Air Transport Market (SSATM) and African Continental Free Trade Areas (AfCFTA) is totally in sharp contrast to our rush to embrace these dominant international brands

Our policies can start by ensuring that the investment by Nigerian carriers is complimented by access to the best of our facilities as no other country will ever offer them same.

A crisis, they say, is a terrible thing to waste, and so we suggest  that the minimum positive outcome from this saga should be a comprehensive policy paper that will spell out in clear terms, how Nigeria will take actions that will reduce to the barest costs and increase to maximum  benefits its engagements to further our National Aviation Interests.

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