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Nigeria – Aviation Woes

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Airports close and airlines suspend flights as the aviation sector struggles in a challenging environment.

On December 21st passengers across the country were left stranded after Arik Air, the largest airline in the country, suspended services due to action by unions, including the National Union of Air Transport Employees (NUATE), the Air Transport Senior Staff Services Association of Nigeria (ATSSSAN) and the National Association of Aircraft Pilots and Engineers (NAAPE).

The protests related to arrears in salaries amounting around seven months and the perceived anti-labour direction of policymaking. The Nigeria Civil Aviation Authority (NCAA) brokered a meeting with Arik Air meeting the following day in which strike action was shelved, reported This Day.

Additional capacity was allocated afterwards from both Lagos and Abuja to destinations such as Enugu, Asaba, Owerri, Port Harcourt, Benin, Warri, Uyo, Yola and others to enable many of the Arik customers to get to their destinations.

Some of the placards placed around Arik counters read: ‘ARIK owes staff seven months salaries, defaults in taxes and other statutory deductions, criminalises trade unionism and union membership.”

Other airlines such as Air Peace, First Nation, Med-View, Dana Air, Overland and Azman were unable to take the spillover from Arik due to low capacity; according to Lagos-based the Guardian there was a 100% hike in ticket fares followed the strike action as passengers scrambled for available seats.

In Lagos, outside the Arik Headquarters, company officials from the Nigerian Lagos Congress (NLC) and the National Union of Electricity Employees (NUEE) barricaded the main entrance, causing traffic problems on the airports access road.

There were reports later on January 6th that aggrieved passengers had attacked staff at the Murtala Muhammed International Airport in Lagos, as a number of flights were again rescheduled and some cancelled, reported Daily Trust.

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CC – 2014

It is reported that Arik Air owes in the region of Naira (N) 13bn to the Federal Airports Authority of Nigeria (FAAN) and N6bn to the Nigerian Airspace Management Agency (NAMA). The airline is also reportedly indebted to fuel supplies and ground handlers.

The Spokesman for Arik Air, Banji Ola, in his response to the allegations said the organisation was “disappointed” by the actions of the unions to “ambush and disrupt the operations.”

Meanwhile, the Nnamdi Azikiwe International Airport in Abuja is to close for six weeks from February to March 2017 for repairs, which will involve almost total reconstruction of the badly damaged runway. The full construction works are expected to take six months, but the middle section of runway will be unusable for 6 weeks, reported the Premium Times.

President Muhammadu Buhari reportedly commenced the work through an emergency procurement procedure, due to the centrality of Abuja to the country. Passengers have been directed to use Kaduna airport as an alternative during this period.

Passengers will travel in bus shuttles, guarded by security provided by the government; the stretch of road from Kaduna airport to Abuja has seen a number of kidnapping incidents over the last few years.

A number of foreign airlines, however, have considered suspending services after the decision to close the Abuja airport, as the alternative in Kaduna was deemed unsafe for foreigners. However, Minister for Aviation Hadi Sirika said that Kaduna was preferable to alternatives such as Ilorin or Minna as it was able to cater for larger aircraft. Sirikia assured that the safety of passengers would be the top priority.

Additionally the oldest domestic carrier in the country, Aero Contractors, has resumed operations after a suspension of four months, according to a report from the Daily Trust. Operations started again on December 23rd with flights to Lagos, Port Harcourt and Warri.

Find out more in the Africa Research Bulletin today:

NIGERIA: Darker Days
Economic, Financial & Technical Series
Vol. 53, Issue. 9, Pp. 21418B–21420A

AIRPORTS AND SERVICES: Nigeria
Economic, Financial & Technical Series
Vol. 53, Issue. 9, Pp. 21432A–21433C

NIGERIA: Recession and ‘Record’ Low Foreign Investment
Economic, Financial & Technical Series
Vol. 53, Issue. 8, Pp. 21384C–21386C

Subscribe to the Africa Research Bulletin today

Nigeria – Cocoa Crop in Decline

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Many claim that the once central industry is now the most neglected, while others eye the opportunities.

The decline in the cultivation of the crop is reportedly to due with long growing periods and impatience among the younger generation, according to President of the Federation of Agricultural Commodity Associations of Nigeria (FACAN), Victor Iyama, who was speaking at the 2nd Daily Trust Agricultural Conference in Abuja on December 15th.

“It’s not four to six months, it is up to five years minimum but the beauty is that it can last for 70 years,” he said, adding that chocolate production generated large sums of money; out of a $120bn cocoa economy only around $15bn goes to products other than chocolate.

Iyama noted that cocoa was the second largest foreign exchange earner, next only to oil, adding that 29 states in the country can produce the crop, reported the Daily Trust.

According to Lagos-based the Guardian, a number of stakeholders in the Nigerian industry have said that it has remained the most neglected sector of the economy despite at the same time being one of the most viable industries in the world. Setbacks include the high cost of borrowing, deregulation and inconsistent government policy.

CEO of FTN Cocoa Processors Plc, Akin Laoye, explained that the deregulated environment is impeding the growth of the processing sector, adding that the cocoa sector needs some degree of regulation.

“To deepen Nigeria’s industrial base, it is counter productive to allow agricultural raw materials to be exported without adding value. Value addition will grow the industrial sector, generate employment, and enhance value of the revenue from export.” Laoye also urged government to find a lasting solution to tackle the ongoing recession, reported the Guardian.

The Minister for Agriculture, Chief Audu Ogbeh, on December 15th said that Nigeria used to be a leading cocoa exported but has since fallen to seventh among exporting countries exporting 27.5m tonnes annually, in comparison to first place Cote D’Ivoire with an annual export volume of 1.75bn tonnes, reported This Day.

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CC 2015.

On December 7th AgWeb reported that the Nigerian government was preparing to capitalise the state owned Bank of Agriculture with Naira (N) 1trn (US$3.2bn) to boost the agricultural sector. “We are looking at 25 million farmers” as stakeholders or depositors, Minister Ogbeh said.

From November 8-10th a regional symposium focusing on the next generation of cocoa research for West and Central Africa was held at the International Institute of Tropical Agriculture (IITA) in Ibadan, Oyo State.

The symposium drew leaders from across the southwestern part of the country, the predominant area for the cultivation of cocoa, such as Ife, Oyo, Osum, Ogun, Cross River and Ondo states. The symposium drew leaders alongside academics and industry representatives to discuss research priorities and alliances to take advantage of the potential of cocoa.

According to Executive Director of the Cocoa Research Institute of Nigeria (CRIN), O. Olubamiwa, the Regional Cocoa Symposium is the first of its kind in Africa. “It is happening in West Africa—the hub of global cocoa production. It will highlight the diverse roles of cocoa in improving farmers’ livelihood. It is also a forum for stakeholders to synthesise ideas on sustainable cocoa production,” reported the Guardian.

However, other reports have suggested that cocoa cultivation in Ondo state appears to be waning, despite having what could mildly be described as comparative advantage. Farmers in the state accused the state government of failing to implement practical policies and programmes.

One of the cocoa farmers in Akure, the state capital, Olorunfemi Ashagi asserted that one major problem facing the growth of cocoa is finance. Another farmer expressed fear that cocoa farming in the state may soon go into extinction, as many of the young men engaged in it are increasingly to alternative livelihood opportunities, reported Leadership.

Find out more in the Africa Research Bulletin:

COCOA: Côte d’Ivoire
Economic, Financial & Technical Series
Vol. 53, Issue. 7, Pp. 21366A–21366C

NIGERIA: Recession and ‘Record’ Low Foreign Investment
Economic, Financial & Technical Series
Vol. 53, Issue. 8, Pp.21384C–21386C

COCOA: Ghana
Economic, Financial & Technical Series
Vol. 53, Issue. 2, Pp. 21184A–21184B

Subscribe to the Africa Research Bulletin today.

Egypt – Economic Situation Deteriorates

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The government devalues the currency in attempts to avoid an economic crisis, creating further worries for citizens.

As part of efforts to boost its ailing economy, Egypt has taken steps to devalue its currency, raised fuel prices and plans to cut customer subsidies, as part of conditions to receive an International Monetary Fund (IMF) loan of US$12bn.

While the IMF insists that floating the currency is a sensible long-term economic move and will attract foreign investment, many are concerned as inflation and unemployment are already high, and the price of food and services are also likely to rise, reported Al-Jazeera.

According to economists, any long term gains are going to be coupled with short-term hardships – the government hopes that attracting investment will end a hard-currency shortage. According to Reuters, wide-ranging economic problems will mean the huge volumes of hard currency required to stabilise the dollar will take a long time to arrive.

However, calls by some for protests were not supported by most opposition groups and activists; “At this point we find calls to protest scary. There is no political organisation, which means things can get out of hand. The country could burn,” said Malek Adly, a human rights lawyer with the Egyptian Centre for Economic and Social Rights, reported Reuters.

The IMF has delayed the approval of the loan until Egypt can meet the desired conditions – around $1bn had already be disbursed at the end of 15 but since then the flow of money has been halted. There have been shortages of goods such as wheat, baby milk, sugar, rice and cooking oil, reported Africa Confidential.

The decline in tourism revenues is also particularly damaging, now at around $3.8bn a year, which is less than one third of the levels before the 2011 uprising. The fears surrounding terrorism have furthered affected tourist numbers.

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Revenues from the Suez Canal have also fallen – CC

Another condition of the loan is that Egypt can secure co-financing of $5-6bn; in September the Egyptian Central Bank’s reserves went up by $3bn largely due to deposits from Saudi Arabia. However the support of Saudi Arabia has been in doubt after the Saudi Arabian Oil Company (Saudi Aramco) suspended deliveries of 700,000 tonnes per month of petroleum products – these supplies covered almost a third of Egypt’s import requirements of petroleum and natural gas. One suggestion is due to tensions of the Egyptian courts ruling against an agreement to give Saudi Arabia control over two Red Sea islands, reported Africa Confidential.

The consequences of these economic decisions are likely to be felt mainly by the poor and struggling middle class. Already at least 27% of the population live below the ‘poverty line’, and the political economic effects of structural adjustment are likely to exacerbate this further, reported Al Jazeera.

Already, Egyptians face capital controls, including limits on transferring currency abroad and the amount they can withdraw to travel overseas – this has particularly hit students studying abroad.

The focus of economic policy has largely been on grandiose projects that will take a long time for benefits to materialise. Little attention has been given to problems including massive levels of youth unemployment. Similarly Al Jazeera commented that the economic policy is entering the realm of the absurd, after President Abdel Fattah al-Sisi suggested funding for development projects could be garnered by collecting spare change.

Find out more in the Africa Research Bulletin:

EGYPT: Job Creation Boost
Economic, Financial & Technical Series
Vol. 53, Issue. 9, Pp. 21417A–21417C

Egypt – Development Policy Finance
Economic, Financial & Technical Series
Vol.53, Issue. 9, Pp. 21430A

EGYPT: Baby Formula Shortage Row
Economic, Financial & Technical Series
Vol. 53, Issue. 8, Pp. 21381C–21383C

Subscribe to the Africa Research Bulletin today.