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The FAAN-Air Peace drama explains why foreign investors are still on the run

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Late last week, an Air Peace flight scheduled to take off at from the Akanu Ibiam International Airport, Enugu to the Murtala Muhammed International Airport (MMIA), Lagos was blocked by the workers of the Federal Airports Authority of Nigeria (FAAN). According to FAAN workers, Air Peace owed it N7 million which the workers wanted paid immediately.

The baffling part of the drama, however, was that Air Peace had actually paid the said sum and was only owing N1.8 million, a paltry sum which according to regulations could be accrued for as long as the airlines were operating flights. The FAAN management apologized but that was after Air Peace had lost its flight and possibly many customers. This saga shows why despite the reforms targeted at wooing foreign investors, not much is being achieved.

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  • A biased, chaotic system: The total sum FAAN claimed was owed it was N8.8 million. In the aviation industry, this is such an insignificant sum. In fact, Chairman and CEO of the airline, Chief Allen Onyema, lamented that an airline that owed the government over N11billion was allowed to operate that morning but Air Peace was temporary shut down over N7million naira.
  • Lawlessness still reigns: The question of who authorized the action should be given special attention because if the workers acted of their volition, then they should be brought to book. Any problems FAAN may have with Air Peace should be discussed between their respective managements. Also, without an express order from the headquarters to stop an airline’s operation, what right do the workers have to do so?
  • Dialogue is the last option in Nigeria: Common sense would have dictated that the workers first get their facts right, confirming with both their management and the airline’s before jeopardizing the business of a client. However, as displayed in some other cases, in Nigeria, action before thinking is the vogue.
  • Customer service is still an abstract concept to FG workers: A critical component of Ease of doing business remains how people are treated. During the fracas, the Enugu Airport Manager, Mr. Mgbemena Orjiako allegedly called the CEO of Air Peace a riff-raff. Although the manager claimed to have mentioned the word in a different context, the very mention of the word in many other countries is enough to get the manager laid off. In Nigeria, it’s just reason to get into another argument with your client.
  • Apologies that are too late: After the airline had lost money and customers to the fracas, Acting General Manager, Public Affairs, FAAN, Henrietta Yakubu, apologized to the airline. How though, would this undo all the harm, directly and indirectly, done to Air Peace’s business?

Given all the above points, if you were a foreign investor with some millions of dollars to put into a business enterprise, would you consider putting them into a system with the above characteristics?

 

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Chacha Wabara-Ogbobine is a Legal practitioner with over 9years post call experience. A research Consultant, professional writer and a blogger at heart,owner of four thriving websites with well over 10years of experience. Totally in love with keeping fit and coaching weight loss enthusiasts. I love my quiet time, being with my kids, watching TV series for hours on end.

2 Comments

2 Comments

  1. Anodebenze

    June 12, 2017 at 12:33 pm

    they said Nigeria have 6 major international airport, with Enugu international airport as one.IF PEACE AIRLINE IS USING ENUGU AIRPORT AS THEIR BASES OF OPERATION,they have to changes their name,if they want to operate international other wises,they will only operate in igboland or south south.out of the heart your mind speak,if your ambition is small so is your ambition and out-put,once your heart is big and your ambitious is .it will bring other factors that will makes your dream and ambition big.you still needs humility to see the other factors,which is there,but you did not see.
    What you thinks is what your are,you runs a business to makes profit,you cannot put your 2 hand into your mouth,you cannot runs a business like an arline to be run a business,and you uses your slogan and mantra airline peace,an initial reaction by people will think those “people are crazy and not serious”.if your airline have just once plane crashes either with casualty or not,your business is dead on arrival,there is a lot of risks in running an airline.you runs it as honestly as you can.no cutting of corners in running an airline

    • Uche

      May 19, 2019 at 8:13 pm

      You read the entire story and this comment is the best you could come up with? God help this country.

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Business News

Lagos State Government orders building owners to conduct structural stability tests

There will also be stricter enforcement of regulations and safety precautions to ensure that building owners and developers across Lagos metropolis comply with it, she reiterated.

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Lagos state govt orders building owners to conduct a structural stability test

In response to the partial collapse of a 3-storey building at Alagomegi-Yaba on Monday, the Lagos State Government has ordered owners of buildings in the state to immediately carry out structural stability tests on their properties. This is expedient, given the onset of the rainy seasons, and the presence of statistics to show that many buildings collapse during the season.

In a series of tweets that were posted last night on the Lagos State Government’s official Twitter handle, the state’s Building Control Agency (LASBCA), disclosed that the affected building at 6, Olonode Street, Alagomeji-Yaba, Lagos, collapsed in the early hours of Monday due to the heavy rainfall in the area over the night.

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The General Manager of the agency, Engr. Biola Kosegbe, noted that the collapsed building had earlier been marked for demolition. In other words, all occupants of the building were evacuated by the Agency before the incident, thereby averting a disaster.

(READ MORE:Lagos increases health workers’ allowances, commissions local production of face masks)

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Kosegbe went on to explain that statistics from previous years show that there is a higher incidence of building collapse during the rainy season, hence the need for building owners to ascertain the level of structural stability of their properties to avert collapse. She added that the Lagos State Government would not hesitate to remove illegal or distressed buildings, or any other structure that is not in conformity with the State’s building laws and standards.

There will also be stricter enforcement of regulations and safety precautions to ensure that building owners and developers across Lagos metropolis comply with it, she reiterated.

Why it matters

This type of pro-active government regulation will help prevent future catastrophes that could occur in the events of building collapse. Incidents of building collapses are not alien to Lagos, a city-state with more than 20 million estimated population, a significant number of whom live in squalid conditions due to extreme poverty and housing deficits.

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Just In: Nigeria received $5.85 billion capital inflows in Q1 2020 –NBS

Nigeria received $5.85 billion capital importation (inflows) in the first quarter (Q1) of 2020, compared to $8.51 billion in Q1 2019.

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Foreign Reserves Rise by $295m in One month

Nigeria received $5.85 billion capital importation (inflows) in the first quarter (Q1) of 2020, as against $8.51 billion in Q1 2019. This is according to the latest capital importation report released by the National Bureau of Statistics (NBS).

According to the NBS, the $5.85 billion worth of capital importation in Q1 2020 represents an increase of 53.97% when compared to how much was received in Q4 2019.

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However, when compared to the corresponding first quarter period of 2019, the figure indicates a 31.19% decline.

Capital Inflow by type

Portfolio investment ($4.31 billion) accounted for 73.61% of the total capital importation, followed by other investments ($1.33 billion), which accounted for 22.73%, and Foreign Direct Investment ($214.3 million), which accounted for 3.66% of total capital importation.

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Naira set for recovery as ABCON issues guideline to members on forex sales resumption

It is obvious that the CBN has come to realize that BDC operators can be the difference between naira recovery and depreciation during volatile times.

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COVID-19 could save naira from depreciating further, Many odds against the naira, Naira forwards and parallel market crash puts pressure on official exchange rate, Naira appreciates to N386.94 to $1 at investor and exporters window. , Naira set for recovery as ABCON issues guideline to members for forex sales resumption

The Central Bank of Nigeria (CBN) and the Association of Bureau De Change Operators of Nigeria (ABCON) have finalized arrangements for the resumption of forex sales to Bureau De Change operators (BDCs).

Following this finalisation, the more than 5,000 BDCs spread across the country are now expected to help curb the downward spiral of the naira, thereby checking the activities of foreign currency speculators.

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Recall that the naira has recently been facing major challenges, no thanks to the COVID-19 pandemic. Unfortunately, currency speculators took advantage of the situation by making spurious demand for dollars with the hopes of making good returns from the rising gaps between official and parallel market rates.

Meanwhile, Governor Godwin Emefiele of the CBN and ABCON President, Aminu Gwadabe, have repeatedly spoken against the illicit business of currency speculators and the dangers they pose to the economy and naira’s stability. They have also warned the speculators about the looming danger for their trade if they refuse to retrace their steps; they Could incur losses estimated at over N10 billion in the next few months, especially now that the CBN is enabling BDCs’ full return to the forex market after nearly six weeks of inactivity.

(READ MORE: Devaluation’s drum beats louder)

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Governor Emefiele had also appealed to industrialists who patronize the parallel market to stop such practices in the interest of the economy and for the sustainability of their businesses. Failure to do this might result in them incurring the same huge losses as currency speculators.

Naira hits N570 to $1 at forwards market, pressure on the naira climbs up, Naira set for recovery as ABCON issues guideline to members for forex sales resumption   

Both Emefiele and Gwadabe have extensive experience in the market, enough to predict what follows after every major crisis. During the 2016 currency crisis, the market got a major relief after the BDCs began getting dollar allocations from the CBN. That same scenario will soon play out as the BDCs countdown to resumption.

In the meantime, it is obvious that the CBN has come to realize that BDC operators can be the difference between naira recovery and depreciation during volatile times. This is especially true now that the local currency has come under intense pressure, driven mainly by speculative demand for the dollar.

Note that the BDCs are essentially operators who help to get dollars across to the end-users, no matter where they are. The BDC operators have, for decades, proven their relevance in stabilizing the naira. While commenting on the recent moves by the apex bank to resume dollar sales to the BDCs, Gwadabe said:

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The CBN’s planned lifting of moratorium on dollar sales to BDCs, reopening of the airports for air travels as well as global ease on restriction of movement are positive indications that dollar flows to the economy will soon improve.

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The naira has been exchanging at N461 to a dollar at the parallel market but will be upbeat once dollar sales to BDCs commence. The return of over 5,000 BDCs to the forex market will add great strength to the Naira and lead to major capital losses for forex speculators. It happened in 2016 and it will happen again in 2020. The return of the BDCs will immediately boost naira’s recovery and put the enemies of the economy to shame. We are committed to the CBN’s exchange rate stability and will take all necessary steps within set rules and regulations to keep the naira stable.”

(READ MORE: Naira depreciates at I&E window, forex turnover up by over 117%)

Naira crashes further at the parallel market due to dollar scarcity, lowest since 2017, Naira drops to N454, foreign investors and importers struggle for dollars, Naira set for recovery as ABCON issues guideline to members for forex sales resumption

Moving on, the CBN said it has taken steps to address the risks facing the naira. Asides other positive developments in the global economy (including oil price recovery thanks to OPEC+ output cuts and IMF’s $3.4 billion emergency funding to Nigeria), the CBN believes its measures will enable a rapid recovery for the local currency. Emefiele explained:

CBN has also officially reviewed the naira exchange rate to N380 to a dollar. Aside devaluing the naira, the apex bank also adopted a unified exchange rate, and pushed the official rate of the naira to N376 to dollar for International Money Transfer Operators rate to banks; N377 to dollar for banks’ dollar sale to CBN and pegged CBN’s dollar sales to banks at N378, all aimed at attracting Foreign Portfolio Investment and strengthening the local currency. The BDC operators are expected to buy dollar from the CBN at N378 per dollar.”

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For Gwadabe, the naira rate review and the CBN’s assurance to foreign investors on the easy repatriation of their funds from Nigeria, are positive indicators for naira’s continued recovery.

(READ MORE: Why the naira is falling)

He also noted that ABCON is reopening guidelines to all its members nationwide included on-boarding of the queuing crowd ticketing management application, known as ABCON 360°QSM portal, by all members. So far, over 80 percent of members registered nationwide.

He also disclosed that they updated all regulatory obligations during the lockdown, such as fumigation of members’ offices/markets, and distribution of second phase of face mask nationwide to our members. They also made provision for wash hand basins and sanitizers at distributions centres, even as members will explore school fees, mortgage, and subscription payments as part of their allowable scope post-COVID-19.

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