Until recently, not much is known and or heard about Mr. Zemedeneh Negatu and the truth about the controversial Nigeria Air project that followed due process and was subsequently approved by the Federal Executive Council, FEC under former President Muhammadu Buhari.
Nigeria Air project stepped up by former President Buhari, would have been one of the largest foreign direct investments in Nigeria in recent years outside of the oil and gas sector, but for the unpatriotic war against it by local airliners and their collaborators.
The tender submission for the airline went through numerous tender processes and evaluations through due diligence that lasted several months.
Aviation industry players have described the process by the PMB administration from the bid submission to evaluation and finally to award as the most transparent.
A Federal High Court in Lagos halted the sale of Nigeria Air to Ethiopian Airlines, ET, on August 6, 2024.
Narrating his side of the story to The Vanguard newspaper recently, the Global Chairman of Fairfax Africa Fund, a United States-based company, Zemedeneh Negatu, who was an active player in the botched project, discussed what led to the failure of what many described as an ill-fated scheme to come on stream.
Negatu as a distinguished Ethiopian-American business leader, global strategist, and investor, has been instrumental in facilitating large-scale investments and transformative projects on the African continent over the years.Â
Begatu had disclosed that his firm, Fairfax Africa Fund, put together the investors group after developing an investment plan justifying why investors should invest in the airline business in Nigeria.
It is on record that Fairfax assembled investors from across the globe with a view to assessing who fitted best for the project and who had a proven track record in the African market.
At the end of a meticulous effort, Fairfax Africa Fund did an assessment and concluded that Ethiopian Airlines, ET, as one of the world’s largest, most profitable and largest African carriers, as the partner to the project.
After assembling an investors group, a tender was issued in international publications and many other Nigerian publications for an offer of $250 million, all cash and no debt with a plan to start with 12 Boeing 737 MAX, Boeing 737 new generation and wide bodies Boeing 787 Dreamliner.
The $250 million was the cash portion only and then ET was to put up another $400 million dollars in guarantees because the aircraft manufacturers said a big airline like ET had to guarantee the equipment and lease payments. So, ET put up another $400 million. In total, it was actually a $650 million deal.
Nigerian government had hired a transaction advisor on its side. It was made very clear that whatever costs government and the other investors had incurred to get the project that far was not going to be transferred to the new Nigeria Air entity.
In spite of the stuff in social media about billions spent by government in the years before the shareholders agreement was signed, every step of the tender evaluation and decision was documented and, as appropriate, presented to the Federal Executive Council, FEC, which approved the winner of the tender and a business plan.
Regrettably, the project failed because of a lawsuit filed by certain local airlines, through the Airline Operators of Nigeria, AON who opposed the deal alleging that the project was ‘designed to damage the local airlines.’ But, the fact of the matter is, anyone who looked at agreement with government could have shown you that none of what was alleged was true. Initially, the lawsuit was supposed to be adjudicated within two weeks but it got dragged for months.
Had the Nigeria Air project succeeded, Ethiopian Airlines would have owned 49% which will translate to $98 million, Nigerian government 5% and the remaining 46% will be for Nigerian shareholders.
Undoubtedly, Nigeria, as the most populous country, is coincidently the largest economy in Africa. Nigeria should have probably a minimum of 5 very large multi-billion dollar more airlines today with each having at least 50 aircraft to adequately serve Nigerians.
The domestic airlines in Nigeria today are very small. And, with very few exceptions, they are owned by single individuals, which is extremely unusual in the airline industry worldwide.
From the above, it is now crystal clear that the former PMB administration had patriotically and transparently strategised for the take-off of Nigeria Air project with a view to make Air travel by Nigerians easier and more accessible.
Musa Ilallah
