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Why Foreign Investors Shun Nigeria

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nigeria economy

The frenzy about federal government’s plan to concession airport facilities was taking a high note until economics, entrepreneurs, aviators and politicians thawed at government’s intentions, the vacuity of its plan and how unprepared it is to really actualise the ideals of Public, Private Partnership (PPP) in the transportation industry and possibly other areas of the economy.

The government wants to concession first the four major airports in the country, and later the remaining 18 airports. It is also considering giving out the railways on concession. In fact, there is an indication that the government may give out the narrow gauge rails on concession to General Electric (GE).

Government is also looking at PPP on roads. Some of the roads may be given out to investors who would build them and recover their money through tolls. This plan is in addition to the deal already signed by government and Chinese government to construct the Calabar to Lagos rail line.

Obsolete Airport Facilities

Stakeholders, business moguls, top public servants, serving and retired and political office holders were among those who attended the conference on Privatisation and Concession of Nigerian Airports, organised by Checkin Nigeria, held at Sheraton Hotel, Lagos last weekend.

Speakers at the event justified the need for public, private partnership for the development of aviation infrastructure and noted that there is urgent need to rehabilitate the nation’s airports. While they supported concession, they noted that government has not put the right things in place, which would make the concession plan to work, looking at the fundamental issues that should be done before successful concession could be carried out.

It was the organiser of the conference; Michael Chikeka that first pointed out in his opening speech that there was no definition of the concession programme government wanted to carry out, what is to be given in concession and remarked that government does not honour its agreements. From hind site, Chikeka noted that it would be pertinent for government to have legal and administrative framework that would serve as guide and make agreement of such nature binding among players involved.

Through videoconference the political economist, Professor Pat Utomi lamented the decay of the nation’s airport infrastructure and noted that Nigeria is not maximising the opportunity offered to it by its sheer size, population, the hard work of her citizens and its location, which naturally should have made it a hub.

“As a country we continue to be challenged in our quest for progress because we missed the soft issues that are key to development. Unless our institutions are strong and our values are consistent, we cannot attract investors to invest in our country,” Utomi said.

He urged Nigeria to first grow a culture of institution building in order to attract investors.

“There is tendency not to realise that people calculate the risk involved in investing in Nigeria and other countries. The problem with Nigeria is that anybody that is in authority believes in arbitrariness and this creates uncertainty in investing in the country. There is regulatory risk in investing in Nigeria,” Utomi said.

He acknowledged that the airports are in deplorable states and therefore need urgent rehabilitation and now that government does not have the funds and is disposed to concession them, the investors ought to come and partner with government. But the impediment is that government did not create enabling environment for private sector investment in government owned facilities under the PPP arrangement.

Identification of Challenge

The Chairman of Airline Operators of Nigeria (AON), Captain Nogie Meggison observed in his presentation that government, despite its seeming preparedness to concession has not defined what should be given out in concession. Past experience showed that government concessioned airport terminals, but in the current case industry experts believe that to turn things around, government must have to define whether it would give out both the landside, which is the terminal and the airside of the airport, which harbours the runways, the landing aids, the airfield lighting, the ramp and taxiways.

Meggison noted that this is critical because if government gives only the terminal in concession, the industry may not move from where it was because one of the major challenges of airlines is not that there is no terminal through which the passengers would go through before boarding their flights, but that safety critical facilities are not at the airports for airlines to maximise daily operations.

For example, many airports in Nigeria do not have runway lights and this hinders airline operation.

“What are we concessioning? Nigeria at this stage needs airports that are of high standard so that the country can take its rightful place as a hub for West and Central Africa. We can take advantage of our population, location, oil and skilled manpower to become a hub. We need to privatise, concession or arrange a build, operate and transfer (BOT) or whatever forms because Nigeria does not have the funds.

“The International Air Transport Association (IATA) says in view of economic realities Nigeria needs to concession its airports. We need to get the airports and terminals going. The Nigerian economy has taken a plunge so we need to concession,” Meggison emphasised.

He expressed the regret that safety critical equipment, which could be found at various airports of the world, including that of the very poor nations are lacking at Nigeria’s airports. He remarked that in Nigeria poor visibility hamper air operation and recalled that at 2000 meters visibility that airplanes cannot land at some airports in the country, while in other countries, planes could land at extremely very low visibility of one-meter visibility.

“The benefits of concession include increase in efficiency, people will not lose their jobs and they will also earn bigger salaries. Once the facilities are running efficiently they will be paid commensurate salaries. Concession will help Nigeria to grow GDP in aviation sector, it will boost tourism and activities will be done more transparently.
“But what mode is the concession going to take? Will the concession include navigational aids, security, runways etc.? I hope government has taken into consideration the entire airport system and did a robust work on the concession programme,” Meggison said.

Lack of Government Support

Business mogul and the Chairman, Senate Committee on Privatisation, Senator Ben Bruce, in his presentation at the conference urged government “to take more than a cursory look at the aviation sector”, noting that the current recession Nigeria has been plunged into would be worse if people cannot travel fast from one destination to another and called on government officials to patronise domestic airlines when travelling outside the country.

He stressed that one of the setbacks that discourage private sector investment in Nigeria is government’s inability to honour its agreements and promised that the Senate will carry out a legislation that would make it obligatory for government to honour its agreements.

“Recession will be worse if people don’t move fast from place to place. In Nigeria 180 million people are services by 56 planes, but few people in government are serviced by 10 aircraft in the Presidential fleet. Government should lease aircraft to the airlines from the Presidential fleet, even if on temporary basis. To save these airlines government should reduce their taxes, work on their insurance. Ghana’s aviation sector is expanding at the mercy of Nigeria. Ghana is the new aviation hub in West Africa. This is because Ghana separated the critical sector of its economy from politics.

“Government does not have the managerial ability to run airports. Nigeria recruits people that run critical institutions on primordial sentiments. Government should fast track the process of the privatisation of airports,” the Chairman, Senate Committee on Privatisation said.

Confusion over Agreements

A former Director General, the Nigeria Civil Aviation Authority (NCAA) and presently with Flight Safety Foundation, Dr. Harold Demuren said in his presentation that government should keep to agreements adding, “when you don’t keep to agreements you destroy the industry.”

Demuren wanted to know which part of the facilities government wanted to concession, noting that there is the landside and the airside of an airport and government has not made it clear what it wants to concession.

“We don’t honour agreements. There is high risk in investing in aviation, which means the value of the assets will be low. To attract investors, the government must have to resolve all litigations on agreements before you go into another one. The airside of the airport needs huge capital investment,” Demuren said.

He noted that there are a lot of things to concession at the airports so government must have to define what it wants to concession and wanted to know what will happen to the rest of the airports after the four major ones were given out in concession.

He suggested that government should partner the state governments that have airports in their states to see how the other airports could be maintained.

Demuren also spoke on debts owed by the Federal Airports Authority of Nigeria (FAAN) to contractors, noting that some organisations also owe FAAN. He suggested that the government must dialogue to resolve most of these problems.

Concerning how to deal with FAAN workers when the airports are given out in concession, the former Director-General of NCAA said government should not be afraid to negotiate with labour unions but it has to be honest and urged government not to default on agreements, adding, “you have to be honest.”

“There are other questions that have to be asked. What will be the relationship between the concessionaires and other aviation agencies? How do you handle the nation’s security? In all these there should be good corporate governance. Presently there is undue political interference and this must stop. There is no good corporate governance in FAAN. I usually say that FAAN tries to use basket to fetch water. Government must also ensure that airlines are given the support they deserve because all these revolve around the airlines. You can’t be wrong supporting your own,” Demuren said.

In x-raying these issues, it is expected that government should review the observations of these experts in the industry and then review its concession programme with a mind to institute corporate governance, which would be the bedrock for the success of the programme.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Government

COVID-19 Vaccine: African Export-Import Bank (Afrexim) to Purchase 270 Million Doses for Nigeria, Other African Nations

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African Export-Import Bank (Afrexim) Approves $2 Billion for the Purchase of 270 million Doses for African Nations

African Export-Import Bank (Afrexim) said it has approved $2 billion for the purchase of 270 million doses of COVID-19 vaccines for African nations, including Nigeria.

Prof. Benedict Oramah, the President of the Bank, disclosed this at a virtual Africa Soft Power Series held on Tuesday.

He, however, stated that the lender is looking to raise more funds for the COVID-19 vaccines’ acquisition.

He said: “The African Union knows that unless you put the virus away, your economy can’t come back. If Africa didn’t do anything, it would become a COVID-19 continent when other parts of the world have already moved on.
“Recall that it took seven years during the heat of HIV for them to come to Africa after 12 million people had died.

“With the assistance of the AU, we were able to get 270 million vaccines and financing need of about $2 billion. Afreximbank then went ahead to secure the $2 billion. But that money for the 270 million doses could only add 15 per cent to the 20 per cent that Covax was bringing.

He added that this is not the time to wait for handouts or free vaccines as other countries will naturally sort themselves out before African nations.

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China Calls for Better China-U.S. Relations

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China Calls for China-U.S. Relations

Senior Chinese diplomat Wang Yi said on Monday the United States and China could work together on issues like climate change and the coronavirus pandemic if they repaired their damaged bilateral relationship.

Wang, a Chinese state councillor and foreign minister, said Beijing stood ready to reopen constructive dialogue with Washington after relations between the two countries sank to their lowest in decades under former president Donald Trump.

Wang called on Washington to remove tariffs on Chinese goods and abandon what he said was an irrational suppression of the Chinese tech sector, steps he said would create the “necessary conditions” for cooperation.

Before Wang spoke at a forum sponsored by the foreign ministry, officials played footage of the “ping-pong diplomacy” of 1972 when an exchange of table tennis players cleared the way for then U.S. President Richard Nixon to visit China.

Wang, a Chinese state councillor and foreign minister, said Beijing stood ready to reopen constructive dialogue with Washington after relations between the two countries sank to their lowest in decades under former president Donald Trump.

Wang called on Washington to remove tariffs on Chinese goods and abandon what he said was an irrational suppression of the Chinese tech sector, steps he said would create the “necessary conditions” for cooperation.

Before Wang spoke at a forum sponsored by the foreign ministry, officials played footage of the “ping-pong diplomacy” of 1972 when an exchange of table tennis players cleared the way for then U.S. President Richard Nixon to visit China.

Wang urged Washington to respect China’s core interests, stop “smearing” the ruling Communist Party, stop interfering in Beijing’s internal affairs and stop “conniving” with separatist forces for Taiwan’s independence.

“Over the past few years, the United States basically cut off bilateral dialogue at all levels,” Wang said in prepared remarks translated into English.

“We stand ready to have candid communication with the U.S. side, and engage in dialogues aimed at solving problems.”

Wang pointed to a recent call between Chinese President Xi Jinping and U.S. President Joe Biden as a positive step.

Washington and Beijing have clashed on multiple fronts including trade, accusations of human rights crimes against the Uighur Muslim minorities in the Xinjiang region and Beijing’s territorial claims in the resources-rich South China Sea.

The Biden administration has, however, signalled it will maintain pressure on Beijing. Biden has voiced concern about Beijing’s “coercive and unfair” trade practices and endorsed of a Trump administration determination that China has committed genocide in Xinjiang.

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U.S. Supreme Court Allows Release of Trump Tax Returns

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President Trump Signs Executive Order In Oval Office Of The White House

U.S. Supreme Court Allows Release of Trump Tax Returns

The U.S. Supreme Court on Monday paved the way for a New York City prosecutor to obtain former President Donald Trump’s tax returns and other financial records as part of a criminal investigation, a blow to his quest to conceal details of his finances.

The justices without comment rebuffed Trump’s request to put on hold an Oct. 7 lower court ruling directing the former Republican president’s longtime accounting firm, Mazars USA, to comply with a subpoena to turn over the materials to a grand jury convened by Manhattan District Attorney Cyrus Vance, a Democrat.

“The work continues,” Vance said in a statement issued after the court’s action.

Vance had previously said in a letter to Trump’s lawyers that his office would be free to immediately enforce the subpoena if the justices rejected Trump’s request.

A lawyer for Trump did not immediately respond to a request for comment.

The Supreme Court, which has a 6-3 conservative majority included three Trump appointees, had already ruled once in the dispute, last July rejecting Trump’s broad argument that he was immune from criminal probes as a sitting president.

Unlike all other recent U.S. presidents, Trump refused during his four years in office to make his tax returns public. The data could provide details on his wealth and the activities of his family real-estate company, the Trump Organization.

Trump, who left office on Jan. 20 after being defeated in his Nov. 3 re-election bid by Democrat Joe Biden, continues to face an array of legal issues concerning his personal and business conduct.

Vance issued a subpoena to Mazars in August 2019 seeking Trump’s corporate and personal tax returns from 2011 to 2018. Trump’s lawyers sued to block the subpoena, arguing that as a sitting president, Trump had absolute immunity from state criminal investigations.

The Supreme Court in its July ruling rejected those arguments but said Trump could raise other objections to the subpoena. Trump’s lawyers then argued before lower courts that the subpoena was overly broad and amounted to political harassment, but U.S. District Judge Victor Marrero in August and the New York-based 2nd U.S. Circuit Court of Appeals in October rejected those claims.

Vance’s investigation, which began more than two years ago, had focused on hush money payments that the president’s former lawyer and fixer Michael Cohen made before the 2016 election to two women – adult-film actress Stormy Daniels and former Playboy model Karen McDougal – who said they had sexual encounters with Trump.

In recent court filings, Vance has suggested that the probe is now broader and could focus on potential bank, tax and insurance fraud, as well as falsification of business records.

In separate litigation, the Democratic-led U.S. House of Representatives was seeking to subpoena similar records. The Supreme Court in July sent that matter back to lower courts for further review.

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