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Air Transport Grew by 50.7% in Q1 2022 – Coronation Merchant Bank

Air transport grew by 50.7% y/y in Q1 ’22 compared to the contraction of -11.8% recorded in Q1 ’21.




The latest national accounts released by the National Bureau of Statistics (NBS) show the continuous recovery of the air transport sector from the adverse effects of the COVID19 pandemic. Air transport grew by 50.7% y/y in Q1 ’22 compared to the contraction of -11.8% recorded in Q1 ’21.

This was the second fastest-growing segment in Q1 ’22, following rail transport (124.5% y/y). We note that this is from a low base.

Given that the sector was one of the most impacted sectors during the pandemic, the easing of COVID19-related restrictions globally has contributed to its recovery. The current geopolitical crisis is weighing heavily on domestic airline operators. The Russia-Ukraine crisis has led to a surge in oil prices globally (Russia controls c.10% of the global oil supply).

This has been transmitted through higher energy, oil and gas prices, worsening the already elevated inflation in advanced and emerging economies. Following the US ban on Russian oil imports, oil prices surged above USD100 per barrel to hit their highest level since 2008. As at end-May ’22, Brent crude stood at USD122.8/b.

In Nigeria, aviation fuel is a deregulated product and as such, its price is dependent on movements in global oil price and the foreign exchange rate among others. Aviation fuel has increased from N190/litre in 2021 to N700/litre in May ‘22. The surge is placing pressure on operational costs. Based on our channel checks, aviation fuel accounted for 40% of operating cost in 2021. However, this has now risen to 95% of total operational cost.

This increase in operating cost has resulted in upticks in ticket fares across airline operators within the country and has also led to a significant decline in the frequency of domestic flights.

Based on data from the NBS “Transport Fare Watch” series, the average airfare for select routes (one-way) increased by 52.4% y/y from N36,409 (USD87) recorded in April ’21 to N55,501 (USD132) in April ’22. On a m/m basis, it rose by 18.6% from N46,810 (USD112) recorded in March ’22 to N55,501 (USD132) in April ’22.

On a zonal basis, North-Central recorded the highest average airfare (N57,552) for select routes (one-way) in April ‘22, followed by North-East (N56,800), South-South (N55,586), North-West (N54,760), South-West (N54,338), and South-East (N53,402).

To put the current strain in perspective, in May ‘22, the Airline Operators of Nigeria (AON) announced a shutdown of operations within the industry due to the price surge in aviation fuel (Jet-A1) and uptick in other operating costs. However, following discussions with government officials, AON suspended its plan to shut down operations.

Coronation Merchant Bank understand that the NNPC agreed to supply Jet A1 to marketers nominated by airline operators for three months and at a fixed price of N480/litre. However, the airlines are to apply for aviation fuel import licenses so they can import directly to reduce reliance on NNPC.

The potential impact of a prolonged Russia-Ukraine crisis is likely to stretch the current challenges for domestic airlines. Furthermore, there are limits to the cost that can be passed on to the consumers, given that inflationary pressure continuously weighs heavy on consumer pockets.

The subsidy route seems unsustainable as the FGN is currently grappling with costs associated with the ongoing fuel subsidy (PMS). Forward thinking solutions would include innovative mechanisms that can optimise operations and accommodate rising operating costs within the aviation industry.

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

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2025: The End of Gas Flaring

The Federal Government through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has inaugurated a 12-member ‘Gas Flare Commercialization Program Team’ to manage the nation’s gas flaring.



gas flaring

The Federal Government through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has inaugurated a 12-member ‘Gas Flare Commercialization Program Team’ to manage the nation’s gas flaring.

According to Engineer Gbenga Komolafe, the Chief Executive of NUPRC, gas flaring in the oil gas industry has been a continuous menace that needs to be eradicated because of its adverse effect on the people’s health, the Environment and also a major resource waste and value erosion to the country.

Gbenga mentioned that to monetize gas resources is to take a positive step toward securing energy security, especially in this period of global energy transition. He said as a nation, Nigeria needs to ensure it harnesses every available gas resource in other to create value.

He declared that the NUPRC is resuming the procedure of issuing flare sites to competent technical companies, after a complete bidding process.

This process is crucial and important in respect of the direction of the federal government’s policy to ensure every gas resource is properly developed for national development.

He laid emphasis that the wasteful disposal of natural gas is not only hazardous with serious health and environmental consequences but also a waste of resource and value to Nigeria.

In addition to this, he stated that the FG declared the period 2021 to 2030 as the DECADE OF GAS, a period which the country must change direction from oil centered exploitation to a gas-focused industrial development.

Although the World Bank has set 2030 as the target year to end gas flaring, Nigeria has set the country’s deadline tp 2025.

President Muhammadu Buhari made a commitment towards the Paris Agreement during the COP26 Leaders’ Summit to achieve Net Zero carbon emissions by 2060,” he said.

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China Reaffirms Commitment to Maintaining Cooperation With Africa

Wu- Peng, has reaffirmed China’s commitment to maintaining cooperation with Africa



China Nigeria

The director general of the ministry of foreign affairs of China, Wu- Peng, has reaffirmed China’s commitment to maintaining cooperation with Africa.

Wu-Peng disclosed this at a meeting held with African journalists under the auspices of the China Africa Press Centre (CAPC) in June 2022 in Beijing.

Quoting the president of China, Xi Jinping, Wu-Peng said China will work hand in hand with African countries to implement linked programs in the next three years”.

According to Wu-Peng, this includes programs related to the medical and health sector, poverty alleviation, agricultural growth and promoting investments.

We’re still fighting to contain Covid-19 since the outbreak of the pandemic, China has so far provided about 260 million doses of vaccines to 55 African countries and African Union,” the Director General said.

He also mentioned that China had also made provision for about 120 batches of emergency supplies to African countries and they all have diplomatic relations with China and also contributed to Africa’s early recovery from the Covid-19 pandemic.

China has already constructed the African CDC in Addis Ababa and it will be completed in 2023.

The other program I would like to make mention is the agricultural sector. When FOCAC was held in 2021, there was no Russia-Ukraine crisis, yet we focus and invested in Agriculture in Africa.

The reason been, we believe in the potential of Agriculture in Africa, the growth and development is huge, there are still lots of arid land in Africa, Wu-Peng stated.

Unfortunately, Africans still have to import grapes from the outside which costs a lot of currency and actually damages Africa’s international balance sheet.”

He said that the failure to prioritize agriculture could obstruct fast economic growth in Africa, suggesting that more should be done through Public Private Partnership (PPP) to ensure food security.

The director general laid emphasis on the need for proper implementation of the report from the FOCAC meetings to bring to life the realization of set goals and objectives.

“This does not make sense, you have lands, you have labor forces, I think we just need the right policy to promote price investments in industrial large scale farms to improve our food security.

Why this is has become very important is due to the Ukraine crisis, food prices globally surged and going forward, we must finish construction of the project in the nearest future.

African governments have already noticed developments of agriculture is a huge priority to deal with the crisis of hike in food prices, we want Africas countries to have up to date plans from FOCAC meetings and the findings of the results.

“Usually, when we have FOCAC meetings we just produce documents, we need more concrete actions, we must be focused,” the director general said.

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Inflation Rises to 17 Year High in Nigeria

Inflation rate, grew at a 19.64% rate in July, the highest since September 2005 when inflation peaked at 24.32%



consumer prices

Prices of goods and services rose to a 17-year-high in Africa’s largest economy Nigeria in the month of July, the National Bureau of Statistics (NBS) reported on Monday.

The Consumer Price Index (CPI), which measures the inflation rate, grew at a 19.64% rate in July, the highest since September 2005 when inflation peaked at 24.32%. This was 1.04% higher than the 18.60% recorded in June 2022.

On a monthly basis, inflation expanded by 1.817%, an increase of 0.001% from 1.816% filed in June 2022.

As expected, food inflation also grew by 0.99% from 21.03% year-on-year in July 2021 to 22.02% in July 2022. According to NBS, the increase in the food sub-index was caused by increases in prices of Bread and cereals, Food products n.e.c, Potatoes, yam and other tubers, meat, fish, oil, and fat.

On a month-on-month basis, the food inflation rate in July was 2.04%, this was a 0.01% insignificant decline compared to the rate recorded in June 2022 (2.05%). This decline is attributed to a reduction in the prices of some food items like Tubers, Maize, Garri, and Vegetables.

Rising economic uncertainties amid a series of policy changes like the increase in duty on imported raw materials, high electricity tariffs,  fuel, etc needed to manufacture the necessary food items are responsible for the persistent increase in inflation.

Also, the extended decline in the value of the Nigerian Naira against its global counterparts has made foreign goods or imported goods expensive for Nigerians. Therefore, manufacturing companies are now passing the increase to final consumers already struggling with low earnings and a high unemployment rate.

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