Aviation: AfDB, Afreximbank Earmark $20bn for Establishment of Leasing Company, MRO in Nigeria
African Development Bank (AfDB) and African Export, Import Bank (Afreximbank) have agreed to raise capital base of about $20 billion for the actualisation of federal government’s plan to establish aircraft leasing company and Maintenance, Repair and Overhaul (MRO) facility.
This is in line with the two financial institutions’ objective to support aviation development in Africa in order to expand and improve inter-city connectivity in the region and give teeth to Single African Air Transport Market (SAATM), a treaty signed by the African Union to promote air connectivity in the continent.
Informed source from the Ministry of Transportation told THISDAY on Tuesday that the two banks have keyed into the plan by the government of Nigeria to establish the leasing company, which it planned the national carrier, which would be birthed before the end of 2018 would source its aircraft from.
The source said that it is projected that part of the fund would be used to acquire about 50 medium range aircraft for short-haul flights to various destinations in West and Central Africa in addition to domestic operation.
“With about $4 billion the leasing company will acquire about 50 medium size aircraft for both domestic and regional flights. The banks want to support airlines in West and Central Africa with the leasing company which is being facilitated by the federal government and the major aircraft that will be acquired will be mainly Boeing, Airbus and possibly Bombardier, depending on the request of each airline that partners with the leasing company,” the source said.
The Minister of State, Aviation, Senator Hadi Sirika had said that the Buhari administration programme in the aviation industry was to establish a national carrier, a leasing company, a MRO facility and to concession major airports in the country.
THISDAY gathered that government’s plan was to ensure that the national carrier when established, would not go the way of the defunct Nigeria Airways Limited (NAL) by making sure the new airline is private sector driven; it will also provide the airline and other airlines in Nigeria, West and Central Africa maintenance facility and a leasing company.
According to the source, the new national carrier when established will not order aircraft directly from the manufacturers but through the leasing company which would provide the airline robust and flexible payment options, while at the same time providing it aircraft on demand.
In a recent road show to sensitise airlines in West and Central Africa on the plan of Afreximbank to support the development of air transport in Africa, the client relations manager of the bank, Mr. Rene Awabeng said that the bank would assist airlines in the region to acquire aircraft with terms that would enable airlines spread the payment of the aircraft, hence the banks’ financial support to the planned leasing company.
President of AfDB, Dr. Akinwunmi Adesina late last year signed agreement with the International Air Transport Association (IATA) and said the bank would support aviation development in Africa.
“The aviation sector is especially important as it opens up doors to investors. There will be very few investors in areas where it is difficult to travel to. That’s why ease of access via air travel is strongly correlated to economic growth. We must make regional aviation markets competitive and drive down costs, raise efficiencies and improve connectivity and convenience,” Adesina said.
The source who spoke to THISDAY also explained that the planned MRO would have the West and Central Africa as its targeted market, adding it would be expected that the facility would conduct checks for all the airlines in the region because currently there is no existing maintenance in either West of Central Africa.
With funding from Afreximbank and AfDB, the plan by the federal government to establish aircraft leasing company and MRO that would fully be funded by the private sector looks feasible.
By Chinedu Eze