If you are planning to take a bet on the Nigerian real estate market, look beyond the modern retail side of the market.
Nigeria’s aviation property are dilapidated and the government might be handing off from these assets. Apart from the fact that the government cannot properly run them according to global standards, Abuja is very broke and might not have survived another three months should President Buhari had not stopped its expensive subsidy on petrol.
If this sounds like an assumption, Minister of State for Aviation, Senator Hadi Sirika has given the market an hint as to how the government of Nigeria might deal with its decaying airport facilities. Hadi has just threatened to close down the Nnamdi Azikiwe International Airport, Abuja as a result of its porthole filled runways, an over-bloated workforce and inefficient management. To paint how serious things are, NAIA is Nigeria’s second busiest airport after Murtala Mohammed International Airport, Lagos, MMIA.
Should NAIA be shut, it will put undue pressure on MMIA, an airport that is not exactly in tune with latest requirement in airport standards. MMIA is Africa’s 5th busiest airport by its 2014 traffic estimate of 7.9 million total passengers who passed through the airport. The airport should have been a hub for most West African states such as Ghana, Liberia, Sierra Leone, Togo and Benin Republic.
The haphazard infrastructure, corrupt management and lack of serious aviation policy to address these malaise made the MMIA, a far cry from South Africa’s OR Tambo International Airport, the busiest in Africa did 19 million passengers in 2014 which is more than double of Nigeria’s MMIA.
Nigeria’s airports are one of the worst in the world. They are derelict, dilapidated and operated by mostly incompetent civil servants who over the years have connived with portfolio ministers of aviation to siphon funds appropriated for upgrade, maintenance and remodelling of these property.
To fully justify that Nigeria’s government at all levels are incapable of running airports, in 2011, Delta state an oil producing state in the Niger Delta region of the country spent over NGN 37 billion (NGN 185 million) to build a local airport in Asaba, its state capital. The airport was upgradable to an international status should the state manage and upgrade it over time. Shockingly the airport became decrepit in less than four years after its official opening. Its runway went so bad that the government had to shut it down after it became practically impossible to use the airport due to safety concerns.
The green light for local and international investors is that the Nigerian government is showing signs that it will get out of many businesses it cannot run properly. While the government might suffer from withdrawal syndrome and ego of being in charge of a ‘prestigious’ and critical infrastructure such as its international airports, its latest financial incapacitation would eventually make it to eat the humble pie.
As a pointer to any investor, the model used in Lagos has already shown the way that private investors and entrepreneurs are best to run serious infrastructure such as airports. In 2007, the Federal Airport Authority of Nigeria, FAAN entered into a build, operate and transfer, BOT arrangement with Bi-Courtney Aviation Services, BASL to officially open the Murtala Mohammed Airport 2, a local airport terminal in Lagos. The company invested NGN 39 billion in the property. Till today, the airport functions properly and better than any airport in Nigeria. The government seeing the success of MMA2, remodeled MMA1 which now competes with MMA2 terminal for airlines and passengers.
The coming weeks will unfold Nigeria’s policy on the aviation sector in general. The government will be making touch choices. What becomes of Nigeria’s vast aviation liabilities called international airports will be among such tough decisions. Investors have the ball in their court.