- Exchange Rate: Foreign Airlines Raise Fares
The international airfares from Lagos to various destinations across the globe have recorded a further increase following the announcement of a new dollar exchange rate for the sale of air tickets.
The Switzerland-based IATA, the trade association representing over 290 global airlines, reviewed the dollar exchange rate for the sale of tickets for flights out of Nigeria from 305/dollar to 326/dollar about three weeks ago.
As a result of this development, international airfares out of Nigeria, which are already on the high side, have risen further by seven per cent.
Travel companies issuing international tickets in Nigeria confirmed to our correspondent on Sunday that airfares had recorded a further increase.
Although some travel agents expressed the hope that the development would not affect sales volume, other felt some cost-conscious passengers might choose to cancel proposed travels owing to the rise.
A survey by our correspondent on Sunday showed that non-stop return flights in the economy class from Lagos to some destinations in the United States aboard the Delta Airlines, which used to cost between N750,000 and N850,000 during the summer season, were being offered between N850,000 and N940,000.
Non-stop return flights from Lagos to London, the United Kingdom in the economy class on the British Airways and Virgin Atlantic, which used to be between N350,000 and N550,000, had also up to between N400,000 to N600,000 for the summer season.
Non-stop return flight in the economy class from Lagos to destinations in South Africa, aboard the South Africa Airways, which used to cost between N220,000 and N240,000, depending on the timing, had gone up to between N230,000 and N250,000 for the summer season.
Although airfares actually rose as a result of the increase in the exchange rate for the sale of tickets from 305/dollar to 326/dollar, some travel agents said the development had made foreign airlines to release some cheaper classes of airfares that hitherto were blocked.
Unconfirmed sources said foreign airlines flying into the country were not breaking even with the sale of tickets at 305/dollar.
The development, it was learnt, forced them to approach IATA to increase the exchange rate from 305/dollar to 326/dollar.
Foreign airlines had allegedly blocked travel agents from accessing some cheaper classes of seats for passengers.
However, the blocking of cheaper classes of seats was said to be partly connected with the old problem of not being able to access adequate amount of dollars from the Central Bank of Nigeria to repatriate their naira revenue.
Travel agents said IATA agreed to increase the exchange rate on the premise that airlines would unblock the cheaper classes of seats.
The President, National Association of Nigerian Travel Agents, Mr. Bernard Bankole, confirmed that foreign airlines had unblocked some cheaper classes of seats for travel agents, following the increase in the exchange rate from 305/dollar to 326/dollar by IATA.
Bankole said, “Airlines have unblocked some cheaper classes of seats that were not available for sale before now. For example, flights to London that used to be N450,000 or N550,000 have come down. We have flights of N350,000 on the British Airways, Virgin Atlantic now. We now have Oscar class and Sugar class of seats that can be bought for N270,000 and N280,000. IATA has increased the exchange rate for the sale of ticket, but foreign airlines have in turn opened the cheaper classes.”’
Airfares especially international travel tickets have witnessed significant rise in the last two years following the depreciation of the naira from 155/dollar to the current 326/dollar official.
Currently, travel agents said the IATA rate had been fluctuating between N325/dollar and N328/dollar.
The fluctuation in the exchange rate has in the last few years forced some foreign airlines to shut down their services in Nigeria. They included the United Airlines, which used to fly between Lagos and Houston, and the Spanish carrier, Iberia. They both left due to difficulties in converting proceeds from ticket sales into dollars for repatriation.
A travel agent, who spoke on condition of anonymity, said the problem had forced many travel agencies out of business.
“The fluctuation has been like this since the recession but we are yet to get used to it. When it just rose to N200, a lot of people were still travelling because you could still get tickets for N300,000 to New York but since it rose further, many licensed IATA agents have shut down. What keep many of us in the business are the push and the belief that it will get better,” she said
NCDMB and NEXIM Sign $30 Million Agreement to Support Oil and Gas Services Firms
The Nigerian Content Development Monitoring Board (NCDMB) and the Nigerian Export-Import Bank (NEXIM) yesterday signed a $30 million agreement on working capital and capacity building fund to support oil and gas services firms.
Simbi Wabote, Executive Secretary, NCDMB and Managing Director, NEXIM Bank, Abba Bello, signed the funding agreement at the Abuja office of the Nigerian content monitoring agency.
Wabote said the Oil Producers Trade Section, Independent Petroleum Producers Group and Petroleum Technology Association of Nigeria had raised concerns over funding challenges confronting oil services firms, as this had made most of the companies to consider downsizing their staff.
He said, “The OPTS and IPPG had at some point raised before the NCDMB the inability of most indigenous contractors to provide services to them due to challenges of funding.
“This was especially when we got struck by the COVID-19 pandemic. I recall receiving several letters particularly from IPPG trying to see how we can support this.”
He added, “I also recall receiving similar letters from PETAN when the COVID-19 struck and most of their members had nothing to do anymore.
“This is because companies were shut down and their members were threatening on how to downsize and take Nigerians off their payrolls.
“Based on this, we then set up a committee to say how do we support these firms with the provision of working capital.”
Wabote noted the roll-out date for the fund would be July 1, 2021 and that the fund size of $30m would be boosted by matching funds of the same amount to be provided by NEXIM in naira (to be converted at prevailing official exchange rate).
“The scheme shall cover loans for working capital support and capacity building, oil service contracts, invoice discounting including acquisition of low-end equipment to service short-term contracts/service obligations,” he stated.
He said the target market comprised Nigerian oil service providers which belonged to a professional association in the Nigerian oil and gas industry and commercially viable with a business relationship with either an international oil company or a major Nigerian oil firm.
“Maximum amount that can be borrowed by a single obligor is $1m or its naira equivalent at the official exchange rate prevailing at the time of borrowing,” Wabote said.
He added, “Tenor shall be up to 12 months for working capital loans and up to three years for capacity building loans with moratorium of up to 12 months.
“The applicable interest rate shall be five per cent per annum all-in for dollar-denominated loans and eight per cent all-in per annum for naira-denominated loans and the rate shall be fixed throughout the tenor of the loan.”
LivingTrust Mortgage Bank Appoints Mr. Timothy Olorunsogo Gbadeyan as Company’s Secretary
LivingTrust Mortgage bank has appointed Mr. Timothy Olorunsogo Gbadeyan as company secretary/head of legal services.
The bank disclosed in a statement signed by Ikechukwu Omuku, the Finance Officer/Head, Investor Relations, LivingTrust Mortgage Bank Plc.
The statement reads “We wish to notify The Nigerian Stock Exchange and the investing public of the appointment Mr. Timothy Olorunsogo Gbadeyan as Company Secretary/Head, Legal Services of LivingTrust Mortgage Bank Plc.
“Mr. Gbadeyan is a consummate corporate attorney with experiential background in deals advisory, real estate finance, facioring, general commercial transactions, corporate governance, company secretarial services and regulatory compliance. Until his appointment, he was the Head of Legal Services of Infinity Trust Mortgage Bank Plc.”
Farmforte, Others Signs MoU To Strengthen and Sustain Growth in Agricultural Sector
Farmforte Limited has signed a strategic Memorandum of Understanding with the Agricultural Fresh Produce Growers and Exporters Association of Nigeria; HYBR, a pan-African innovation firm; and ALTS, a consulting and strategy development firm.
The firm said in a statement on Sunday that the partnership would strengthen common interest cooperation and stimulate inclusive and sustainable growth within the agricultural sector, by capitalising on the synergy and comparative advantage offered by each organisation.
Speaking during the signing ceremony, Farmforte Co-Chief Executive Officer, Osazuwa Osayi, said, “Our mid to long-term strategic goals are further reaffirmed, as this partnership will facilitate the sharing of knowledge, ideas, and expertise across the agricultural sector.
“We will collectively address initiatives and approaches concerning agricultural investments, food security, and the overall robustness of the value chain.”
He said the collaboration would also unlock the full potential of the sector and place it on a renewed path for success, especially within a post-pandemic economy.
The President of AFGEAN, Tajuddeen Dantata, said, “By creating dialogue and fostering investment in the horticulture sector, this partnership will endeavor to support Farmforte in its exporting efforts by improving operational efficacy and cost-savings, while ultimately driving socio-economic growth in the country.”
The Chief Executive Officer, HYBR, Charles Ojei, said to drive inclusion, sustainability, job creation, and Nigeria’s overall economic growth, the optimisation of the agriculture value chain was critical.
“This collaboration is a fusion of the complementary capabilities of all partners to move a bigger agenda forward.”
The Managing Partner, ALTS, Akintunde Sawyerr, said, “The goal of this partnership is to support Farmforte’s vision of becoming the largest agribusiness by 2035 via scalable and world-class innovation across its enterprise.”
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