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FG Urged to Reduce Taxes, Cost of Aviation Fuel

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aviation
  • FG Urged to Reduce Taxes, Cost of Aviation Fuel

Nigerian airlines have called on the federal government to review its tax policy for the sector as well as the cost of aviation fuel, in order to reduce cost of flight operations and ensure they remain in business.

The operators said many airlines that went under in the last few years were due to high cost of operation, including high taxes and high cost of aviation fuel.

The airlines said cost of flight tickets would also reduce if they pay less taxes and spend less on aviation fuel, which is known as Jet A1, so that more Nigerians can travel by air, especially now road travel is fraught with insecurity. In addition, the operators said they spend huge resources on aviation fuel because of its arbitrary costs, which according to them does not reflect the cost of crude oil, but negatively affect long-term planning by the airlines.

Speaking on behalf of the airlines, the CEO of Aero Contractors, Captain Ado Sanusi, said there was need for government to review its policy on aviation fuel, noting that although supply was deregulated, the government could take actions to ensure that supply is regular and prices lower than what obtains currently.

“The first government intervention to reduce cost of operation should be in the supply of fuel, which over the years government has been striving to bring the prices down.

“This is critical because about 40 per cent of the cost of operation is almost on fuel, Jet A1. So we can look at it and ensure that the fluctuation in the prices is not much.

“Look at the situation now. The prices go from N198 to 220 per litre. So if we can have a constant supply of Jet A1 at constant price, airlines will know how to plan their budget and how they can bring down the cost of ticket based on the lower cost of aviation fuel,” Sanusi said.

He noted that in most countries the price of Jet A1 is, “very dependent on the price of crude oil but in Nigeria it is dependent on the landing cost of imported product.”

The Aero CEO said crude oil price could be steady for the next six months, but Jet A1 price would be fluctuating, stressing the need to streamline prices.

He said although Jet A1 had been deregulated, the government could persuade the importers to ensure constant supply of the product or government could be importing the product and selling to marketers.

Another factor that has influenced the high price of tickets, the airlines said, was the high taxes operators pay, so they urged government to tackle the problem of multiple taxation.

“Government has done very well in the area of taxes by reducing some and looking at removing VAT. I hope it has done that already. But the most important thing government should tackle is multiple taxation.
“The federal government should look at it. The last time they reviewed taxes in aviation was a very long time ago and I think they should look at it and reflect the reality on ground.

“This is because if they continue to heavily tax the airlines it will continue to impact on their finances and you see that some of them are dying. There is something definitely wrong somewhere.

“High taxation is one of the root causes of the reason our airlines are dying; so government can help to save the airlines by reviewing downwards the taxation levied on them.”

Another factor he said that has effect on the cost of flight operation was bird strike and non-clearing of runways, which gives rise to incidents that lead to high maintenance cost.

He pointed out that frequent bird strikes destroy aircraft engine and when the runway is not swept regularly objects destroy aircraft tyres.

According to him, replacing these engines and tyres cost a lot of money to the airlines, which means they have to increase price of tickets in order to generate money to pay for spares replacement and general maintenance.

“If, for example, the runway is not swept regularly and the birds are not controlled and the aircraft suffer from bird strike and objects on the runway destroy the aircraft wheels, these will increase maintenance cost and eventually affect the price of the tickets.

“This is because the moment I have increased my cost I have to increase my revenue. Otherwise, the airline’s finances will be affected. So the airport management company has to sweep the tarmac and the runway, chase the birds away so that the aircraft wheels do not suffer damage and the engine does not pick birds.

“These are the things that will lower the airline’s cost. When the cost of operation is lowered, the airline will definitely lower the cost of its tickets,” Sanusi added.

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.

Brands

Eat’N’Go Expands To East Africa, Projects 180 Stores By Year End

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In a bid to further extend its tentacles beyond the West African market, Eat’N’Go limited, one of the leading Quick Service Restaurant (QSR) operators in Nigeria and master franchisee for world-class food brands – Domino’s Pizza, Cold Stone Creamery, and Pinkberry Gourmet Frozen Yoghurt, announced its expansion into the East African market.

This development comes after the successful acquisition of the franchisee which operated Cold Stone Creamery and Domino’s Pizza in Kenya. This acquisition will see Eat’N’Go limited become the largest Domino’s pizza and Cold Stone Creamery Master Franchisee in Africa with operations in Nigeria and Kenya.

Since its entrance to Nigeria in 2012, the QSR company has grown exponentially and has continuously nurtured the drive to extend its footprint across the African market. This acquisition provides them their first foreign market expansion, making them a Pan African company with a total number of 147 outlets across Africa and a projection to reach 180 stores by end of 2021.

Group Chief Executive Officer and Managing Director Eat’N’Go Limited, Patrick McMichael said that expanding into East Africa represents a very exciting time in the growth of the organization and also a strategic investment for the firm and its stakeholders. “Over the years, we have fostered the mission to not just bring the best QSR brands to Africa, but to directly impact on Africa’s economy and we are glad we are finally on the way to making this happen. Studying the growth of the Kenyan market in the last couple of years, we are convinced that now is the time to extend our footprint into the country.”

“We are very thrilled about this expansion as this move avails us more opportunity to provide Jobs to more Africans, especially in times like this. We remain thankful to all our customers, partners, and stakeholders who have supported us this far and we are more than ready to strengthen our dedication in satisfying the needs of our customers” Patrick added.

Eat’N’Go has over the years maintained its position as the leading food franchisee in Nigeria. As it expands its presence to other parts of Africa, the organization also places a strong focus on the quality of its products and services of all its three brands. The expansion to this new region is in line with the company’s plan to reach 180 stores across Africa by the end of 2021.

The milestone achievement and development will better position the company in its contribution to Nigeria and Africa’s economy. Currently home to over 3000 staff members across Africa, the company is committed to continuously provide job and business opportunities across the continent.

Eat’N’Go launched in 2012 in Nigeria with the vision to become the premier food operator in Africa. Today, the company has over 147 stores in Nigeria and Kenya and it continues to deliver on this promise by successfully rolling out the globally recognised brands Cold Stone Creamery and Domino’s Pizza across Africa. The company continues to expand its presence in key markets by fusing company goals with new strategic development goals and is projected to reach 180 stores across Africa by end of 2021.

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Brands

Shoprite Exit: LCCI Explains Challenges Hurting Business Operations in Nigeria

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Following the recent announcement of Shoprite, a leading South Africa retail giant, that it is leaving the Nigerian market due to harsh business environment and tough business policies, Dr Muda Yusuf, the Director-General, Lagos Chamber of Commerce and Industry (LCCI) has explained some of the challenges responsible for such decision despite Nigeria’s huge population size.

Yusuf said while such decision is negative for the Nigerian economy, several factors like harsh business environment could have forced the company to make such decision. He said it also could be due to intense competitive pressure.

He said, “Shoprite is an international brand with presence in 14 African countries and about 3,000 stores. The comparative analysis of returns on investment in these countries may have informed the decision to exit the Nigeria market.

“The opportunities for retail business in Nigeria is immense. But the competition in the sector is also very intense.

“There are departmental stores in practically every neighbourhood in our urban centres around the country. There is also a strong informal sector presence in the retail sector. It is a very competitive space.”

According to the Director-General, there are also important investment climate issues that constitute downside risks to big stores like Shoprite.

He said, “These include the trade policy environment, which imposes strict restrictions on imports; the regulatory environment, which is characterised by a multitude of regulators making endless demands.

“There is also the foreign exchange policy, which has made imports and remittances difficult for foreign investors. There are challenges of infrastructure which put pressures on costs and erodes profit margins.”

The LCCI boss added, “But we need to stress that Shoprite is only divesting and selling its shares; Shoprite as a brand will remain. I am sure there are many investors who will be quite delighted to take over the shares.

“It should be noted that there are other South African firms in Nigeria doing good business. We have MTN, Multichoice, Stanbic IBTC, and Standard Chartered Bank, among others. Some of them are making more money in Nigeria than in South Africa.”

He added that some sectors are more vulnerable to the challenges of the business environment than others.

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Appointments

Afrinvest Appoints Mrs. Onaghinon As COO

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Afrinvest West Africa Limited, has appointed the former head of public private partnership agency of the Edo State, Mrs Onoise Onaghinon as its chief operating officer.

Onaghinon joined Afrinvest in 2003 as an analyst in the firm’s investment banking division, rising through the ranks to become an associate, then vice president and eventually executive director & head of investment banking.

She is a seasoned veteran in the Nigerian capital markets and investment landscape with over 18 years of experience in capital raising, mergers and acquisitions, and restructurings across many industries.

In 2017, Onaghinon took a sabbatical from the Firm to head the Public Private Partnership Agency of the Edo State Government. Having acquitted herself creditably in the public sector, she has rejoined the Firm to resume as the new COO.

Speaking on the appointment, group managing director of Afrinvest, Ike Chioke, said: “over the years, Onaghinon has demonstrated great leadership, professional excellence and outstanding client commitment in driving the firm’s business units, particularly our investment banking division. We are delighted to have her back and we look forward to leveraging her cross-disciplinary experience across the Afrinvest group”.

In her new role, Onaghinon will oversee human resources, legal & compliance, internal control and general services while leading the firm’s initiatives to improve efficiency across its subsidiaries.

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