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Nigeria Loses $2b to Aviation Sector

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aviation
  • Nigeria Loses $2b to Aviation Sector

Over $2 billion generated by foreign airlines, as well as funds expended by domestic airlines for aircraft maintenance, spares and emoluments for expatriate workforce, are repatriated annually.

The Chairman/CEO of Air Peace, Allen Onyema, who stated this, said that is part of the reaon responible for the continous weak naira/ dollar exchange rate, adding that a weakened naira adversely affects the economy as it distorts the prices of goods and services..

Onyema said the difficulty in repatriating airlines’ funds in the past should serve as a reminder that the country should evolve ways to reduce the amount of money repatriated, by empowering local airlines to operate international routes, and as well facilitate the establishment of maintenance, overhaul and repair (MRO) facility in Nigeria.

He lamented that while Nigeria has a huge population of travellers, the country imports every aircraft spare, imports aviation fuel and technical personnel, saying all these mount pressures on the naira.

Onyema said airlines serve as diplomatic tools which countries use to, not only project their image in the international community, but also leverage on to develop and grow their economy. He said for this reason, every country protects its airline industry from being ravaged by foreign competitors.

He said the US, which is the home of aviation globally, has introduced policies that today have curtailed the in-road of such airlines like Emirates, Qatar Airways, Etihadinto the US market.

Onyema said the Nigerian government should take cognisance of this and offer similar protection to the local aviation industry.

Local officials to bear it in mind that every decision they take impacts on the nation’s economy, adding that they should take it as a point of duty to eliminate the exploitation of Nigerian passengers by foreign airlines through exorbitant fares by supporting domestic airlines to join the international and regional market.

He also condemned the too many opportunities given to foreign airlines by the Nigerian government to operate multidesignation in the country, citing example with Ethiopian Airlines, which operates five destinations in Nigeria, noting that in addition to that there is rumour that the Nigerian government wanted to give the East African carrier management contract to take over Arik Air.

According to Onyema, Arik Air’s goodwill and opportunities are worth more than $12 billion, besides its assets, so if Ethiopia wants to manage the airline, it should put such amount of money down before it should be given the opportunity to manage the nation’s major airline.

”Ethiopia Airlines should not be allowed to come through the back door to ravage our country. We have capable Nigerians that can run Arik Air, so Ethiopian Airlines expressing interest to take over Arik Air’s management is not to the best interest of the country. This is similar opportunities that are given to other international airlines like Air France and Lufthansa, which operate from Abuja to Port Harcourt and back to Abuja before they take off to their country everyday; meanwhile, they still operate their Lagos destinations,” he said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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