The Acting Managing Director of the Nigerian Aviation Handling Company (NAHCoAviance) Plc, Norbert Bielderman, on Monday in Lagos, said Nigeria lost over $2 billion worth of Foreign Direct Investment (FDI) to other countries, following postponement of the general elections.
The Presidential, National Assembly, governorship and state assembly elections were shifted by six weeks from February 14 and 28 to March 28 and April 11, 2015 respectively by the Independent National Electoral Commission (INEC), citing security concerns.
Speaking at a one-day Nigeria Air Cargo Summit organised by NAHCo in Lagos, he said the postponement has occasioned loss of confidence in existing and new investments that have found their way to other countries.
Business environment in Nigeria, he said, has become more challenging in the face of the high costs of doing business as well the impact of the Naira devaluation.
“Election postponement impact on the economy is analysed to be worth over $2 billion as cost and investor loss of confidence for existing and new Foreign Direct Investment (FDI) that may have found its destination to other countries,” Bielderman said.
Continuing, he said “2015 is a crucial year because of elections and its associate intrigues. It is therefore no surprise that our economy has been badly hit and worsened by the election postponement.
“There have been travel bans from many European countries and this has negatively impacted the aviation sector. Nigeria’s foreign reserves are significantly depleted and our national account is in deficit,” he lamented.
He listed the negative factors affecting the aviation sector currently as Naira depreciation, high exchange rate, high interest rates, unreasonable domestic air tickets, elections and associate violence, political economy, static aviation fuel price, high airport taxes, charges, ground rents and concession fees.
He lamented that the crash in oil price and consequent impact on the nation’s revenue earnings and the drop in exchange rate from N155/$ to N210/$ within a six months period at the interbank.
This, he added, is compounded by decision of the Central Bank of Nigeria (CBN) to finally close the Retail Dutch Auction System (rDAS), which is a sign that all is not well with the economy.
The NAHCo MD stressed that the devaluation of Naira is capable of spiraling inflation, unless the Federal Government puts measures in place to reduce the high cost of prices of goods in the country.
“Implicitly, Naira has been devalued to between 30 to 40 per cent and this will necessarily cause inflation if government does not put in place deliberate measures to mitigate an upsurge in price across industry.
“We expect inflation to rise up to 10 per cent or more soon. Furthermore, the cost of fund have also significantly risen with bank interest rates now up to about 26 per cent,” Bielderman added.
This, he said, will lead to massive job losses in the private sector and that in the aviation sector, the domestic airlines would be worst hit because of current ticket prices are not responsive to current realities.
“This is due to unhealthy price wars and pursuit of market dominance at the domestic side of airline business. Domestic air tickets are still significantly low despite increase in airport charges and taxes.
“These domestic carriers still maintain their aircraft in dollars and aviation fuel has not significantly been reduced, if at all,” he stressed.
Meanwhile, Nigeria’s foreign reserves continued its steady decline, shedding $2.8 billion or 8 per cent in February, closing at $31.461 billion, according to data available on the CBN website on Monday.
At the end of January, the nation’s foreign reserves level stood at $34.28 billion, representing average daily fall of $140 during the period.
On February 19, 2015, the reserves had whittled down by $1.6 billion during the first two weeks of the month, falling to $33.181 billion on February 12.
The unrestrained downward movement of the country’s reserves has remained a major cause for concern in recent times.
The CBN Governor, Godwin Emefiele, said the bank had spent a huge chunk of the external reserves in defending the Naira from falling, adding that the best thing to do was to devalue it.
According to him, “the CBN took the decision that it would be sub-optimal to continue to heavily deplete the country’s reserves in defending the naira. This decision was appropriate because neither the Central Bank nor the Federal Government is in control of the major factors causing the depreciation of the nation’s currency.”
Daily Independent news – culled from: http://dailyindependentnig.com/2015/03/nigeria-lost-2b-fdi-elections-shift-nahco-boss/