Sade Williams/Business a.m.
In an effort to tackle the issue of funding aviation development programmes and projects and to promote economic growth, Festus Keyamo, minister of aviation and aerospace development, is mulling the idea of setting up a bank for aviation.Â
He has, therefore, directed a review of the proposal for an aviation development bank to explore the possibility of establishing a structural financial system for the industry.
At a meeting held at the Federal Ministry of Aviation recently, the minister instructed a team of aviation experts and economists to explore funding options for the industry.
The team was also tasked with assessing the potential for an aviation and aerospace development bank – an institutional solution that would provide a well-structured aviation development investment and financing system to address the industry’s unique risks under a public private partnership (PPP) initiative.
The aim is to attract low-interest funds from the global fund market and accelerate all-inclusive development in the sector.
The meeting, which was chaired on behalf of the minister by M.R. Shehu, director, planning, research, and statistics, also had Samuel Obafemi Bajomo, special adviser on foreign direct investment, and capital improvement programme, representing the minister.
The meeting was occasioned by Fortune Idu’s call for a well-structured financial system for aviation.
The chief executive of F.C.I International, had suggested the creation of a sector-specific bank in the absence of a credible financial warehouse for the sector.
Idu had earlier emphasised that the aviation sector has been completely isolated from Nigeria’s infrastructure investment banking and support services, and something drastic has to be done to improve access to funding for aviation projects.
According to him, existing banks are not supporting aviation saying the industry will need to set up its own system.
He asserted that aviation development has to be consistent and sustainable and requires a stable financial outlook for more investment to come in globally.
In response to the explanation of the technical implementation of setting up a sectorial bank, the lead subject matter expert at the meeting, Keneth Ife, a professor and a renowned Central Bank of Nigeria (CBN) consultant, acknowledged the urgent need to address this issue based on the importance of aviation and another transport sector the economy.
Ife indicated that the industry itself is worth over N10 trillion in its ecosystem, and the funding to make it a more vibrant sector exists and can be accessed if the industry is properly positioned and well packaged with corporate governance entrenched.
The bank can be created under PPP with the federal government through the Ministry of Aviation leading in this drive and providing the initial support and standing as surety for the emergence of the bank.
He also suggested the possibility of integrating other transport sectors into the system to create a larger financial ambition for a multi-modal outlook, similar to what was done with NEXIM Bank, Bank of Industry and Infrastructure Bank.
At the end of the meeting, it was agreed that creating a structured financial system for the aviation industry would be a great idea, and the Aviation and Aerospace Development Bank would be a potential solution.
The meeting attendees expressed interest in exploring this option in collaboration with major financial stakeholders in the country, such as the Minister of Finance, the Central Bank of Nigeria, the Security and Exchange Commission, and the relevant MDAs. This initiative could potentially be a game-changer for the survival and growth of the aviation industry.
