• Saturday, December 09, 2023
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It’s too late to back out of Nigerian Air – Anosike, investor

It’s too late to back out of Nigerian Air – Anosike, investor

Fidelis Anosike, a shareholder in Nigeria Air and founder of Folio Media Group, publishers of Daily Times Nigeria in this exclusive interview with BusinessDay’s John Osadolor (Managing Editor), Onyinye Nwachukwu (Abuja Bureau Chief) and Gbemi Faminu (Abuja Aviation Correspondent) speaks about the controversial Nigeria Air, giving insights into the owners, plans and what to expect. Excerpts:

Can we get an insight into what Nigeria Air is all about?

People’s belief in government projects is very low which is why the country is the way it is, it is a catch-22 situation. If you don’t believe in a country, it cannot be built, people don’t believe in the country, hence there’s a divide, and that’s why some of us came in to bridge that public-private partnership gap. When people talk about government, they do that in abstract form even though without government or policies, you cannot operate nor can you bring any money into the country, and build a country like Nigeria that has vast natural resources, you need a lot of money and experience especially as we have wasted so many years dwelling on potential. We do not have the patience anymore.

For example, in 2003, I got involved in the sale of Daily Times, I am a graphic artist from the University of Benin, I understand banking as well and I know that without capital, we can’t really do anything. So for me, I wanted to go into the media properly when we bided for Daily Times, to be able to bring in capital, and then to unbundle media, just like banking when Nigeria had 80 banks and none of them could raise a letter of credit of $10 million or $20 million. At that point, there were various issues so I felt that if you don’t have the proper media company, you can’t develop a country. CNN and FOX are media companies that I’ve visited their newsrooms; and each time, I’m ashamed to call myself a publisher. I work with CNN as their only partner in Africa and for the past 25 years, we have been trying to get them to create CNN Africa but it is not possible because the capacity is not there and this is something that will take maybe $100million to $200 million to create. Again, we do not have the kind of journalists that we need to do the work, which is what we have seen in other sectors when value is unlocked, investments will flow. That’s a little background.

I got into Nigeria in 2016 and I attended a stakeholder conference in Yar’Adua Center and presentations were made by people including the one by the former aviation minister who I know is not frivolous, then a diagnostics of the whole sector was done to show what was required. After a dialogue with the minister of aviation, I got involved. Aviation is one of the ways that you build a country’s brand and because it is something I am very much interested in, I started following it, and the process is important to me.

One school of thought argued that Nigeria Air should be floated as a hundred percent indigenous company but Nigeria does not have that kind of money to invest and people already believe that the government cannot manage business, although in some places they do because they have built capacity over the years. We started following this project and then the next thing after the diagnostics they decided that it was going to be a Public Private Partnership (PPP) and the government will own only five percent. Automatically it means that people who will be shareholders must be comfortable because what it means is that you don’t have undue government advantage or interference in your business. So, if you create a business plan, it will be successful because the market is there. We have over 200 million people who want service and over 26 airports, while every state government wants to build an airport. In essence, the Nigeria Air project unlocks value because Nigerians are constantly on the move but we do not have this because we lack people that have sincerity of purpose, it is not just cash but also technical capacity.

I got involved and we started packaging it till they advertised the bid and then we started trying to form a consortium. It took us many talks to get Ethiopian Air which is a six billion dollar company of African origin. We have a lot of capital providers in that company who will not drop a dime, neither will they come if there is no due process to follow because of their stock market and associated companies in that firm. We started putting these things together and trying to convince them until they agreed to invest, and typically if you raise $1 billion to build an airline, you will get aircraft and it is the same Ethiopian Air or IAG or another third party that you will go to lease the aircraft.

So, if the owner of the aircraft says I will invest with you, and give you capacity and training among other things, there is no difference between leasing and buying an aircraft so far it is available for use and able to generate revenue, but because of the lack of trust in government-related activities, people get into hysteria. If something failed last year does it mean it will fail again? The capacity has improved, macro and fiscal policies are different, and the country has grown. It has to be a free market because the government was controlling the sector, investors cannot come in but if the sector is liberalized, investors can enter and exit at will and we already have a vibrant stock market, the governance of the Nigerian economy is becoming better. Whether people like it or not the country is improving, maybe not at the pace we want.

Can you explain what exactly happened on May 26th during the display of Nigeria Air aircraft at Abuja Airport?

First of all, let me say that it is okay to doubt but this does not mean that the Nigeria Air project is not real. What happened on that day is not launching, it was an unveiling and simply a static display from a technical partner. It can be likened to ringing the bell at the stock exchange when you list something. So, if as a minister you work on a project for six years and you are handing over, don’t you have a right to talk about what you have achieved? Does it mean people cannot structure Nigeria Air as people have structured banks, telecommunications companies, etc? So, there is no big deal with Nigeria Air. Is it that Nigerians have been so beaten that we now diminish our thoughts in our heads and make ourselves so micro?

Read also: Nigeria’s first female-driven HR tech company, founded by Kelechi Abiri and Joha Ordu

If tomorrow the government says it is no longer interested, it is too late because we have won the bid and we are the private partners, shareholder agreements have been signed, we have the technical partner, and the government can step out. We will buy out their five percent and continue to deliver service to the public who will determine whether it is real or not and also determine who is creating value. The business is only sustainable if the public reward or buy your service.

No Nigerian can come out to say that they are happy with all the things the government has given to aviation. For example, when the airlines bring engines they do not pay tax, do you know how much a runway or airport equipment costs? Why should we have dead capital, this is something people should embrace. Why are you trying to drive protectionist ideas while saying Nigeria is open for business?

It is simply a private business that has followed the government process and has emerged as a partner to the government and is ready to do business. AOC is a technical thing you apply for and that is stage one, for stage two you are asked to bring your manuals, in stage three bring your aircraft for testing, till the fourth and fifth stages and this is why we hired Captain Olumide (Nigeria Air interim managing director) who is a Nigerian and is an expert and he has been there for two years doing these things. We do not need the minister to bend the rules, if that project was not unveiled then the shareholders will not take over.

We are Nigerians and Nigerians control 51 percent of it, we have the Ministry of Finance Incorporated (MOFI) and Nigerian Sovereign Wealth Investment Authority (NSIA) might come in, the chairman will be a Nigerian but we need the technical partners, this is the same reason why Nigerians say the first one failed. At least this one is African, the first was not. Is it not better to deal with an African conglomerate and make Africa stronger? Rather than talking about $800 million foreign airlines’ money trapped in Nigeria, the focus should be on strengthening the naira because the dollar is not our currency. We should not talk about exchange rates rather we should talk about purchasing power parity, for example, tickets will be sold in Naira. The reason why the dollar affects everything is that businessmen always look for loopholes in the business rules to their advantage.

There is this belief out there that the project is a fraud, what do you have to say regarding this?

Whoever is alleging it to be a fraud has to talk with proof, it is wrong to label something as a fraud if you do not have enough information about it. At every stage of this project, at least in all the meetings I attended, the National Assembly members were there, and it is on record, the minister has been to National Assembly five times on Nigeria Air and other issues because there’s a roadmap to transform the aviation sector. You have to strengthen the airports and build a training center, if you are going to use Boeing, you must have a simulator to train the pilot on that aircraft type and ensure that they are Nigerians. You have to build an aviation school so you can keep churning out the right kind of manpower to make it sustainable, we have to have an aviation leasing company because the cost of a plane is too much. We are not going to use only 35 planes in five years it might be 60 if the market determines but the investor will not give you 60 aircraft, they will give you the ones to take off.

So, as a business, you have to keep getting aircraft. You need to have an aircraft leasing company that can help you lease aircraft and you can find multilateral institutions that will invest in it so you can lease aircraft locally. You also need to have a free trade zone and this is what the minister called his roadmap. Aviation is a global business that requires reputation. When you try to get foreign direct investment into Nigeria and the hurdles you have to pass through, you begin to understand why you should give accolades to Nigerian investors in the aviation business. This business is real, don’t try to abort the system if you say it is not. What they think is that it is just to make a static display and it ends there. We are serious business-minded people with reputations who are involved in this project.

You mentioned that there are five stages, what stage is Nigeria Air in now? In addition, what is the difference between unveiling and launching?

We are in stage one which is preparing for AOC. Launching means that we have started operations, for example in September when we get an AOC and launch operations, you can buy tickets the next day. And once we get to a particular stage in the AOC process, we will advertise for jobs, and start hiring people, 400 direct jobs, and 70,000 indirect jobs because the plan is to start with 12 planes – Boeing 737-800 for local and regional operations, and Boeing 737-900 max for international operations. According to the business plan, we should have flights to London and New York by December but this is consequent upon the AOC process. What will delay these things is all the hysteria that gets the technocrats afraid. If you are a risk analyst, you will see that with all this hysteria there will be a one month to two months delay from the original timelines.

The highest that will happen is shareholders pulling out but I can tell you that it is a business that we are in, we have spent money, we have dug in and we will make sure that we manage all the stakeholders including the public who are the ones that we will take this service to, so this publicity is also good because it shows how passionate Nigerians are to the subject matter so we are not worried. When we start flying, those who have alleged this to be a fraud will have their reputations at stake but give us the opportunity to succeed or fail, people should conduct research and try to get more information. Also, if you check other airlines, almost all of their fleet is chartered and any aircraft that is not being used for operation is given out on charter, so it is procedural.

The unveiling is a big deal because what it means is that the shareholders have agreed to go ahead and partner with you. The federal government of Nigeria did not spend up to $5 million in this whole project. Their shares are just five percent of this airline which is now about some $17 million so the minister should be applauded because they did not spend more than five million dollars in total. You can check the appropriation and see how much money was drawn down from the N85 billion. I think people are being unfair to Hadi Sirika. He shut down Enugu Airport, and built and completed it on time, same with Abuja Airport despite opposition. He completed almost all the airports started by President Goodluck Jonathan. He approved all the AOCs the Nigerian Civil Aviation Authority (NCAA) issued to all the new Nigerian airlines. Government is a continuum. I don’t care which government is in power because they are still Nigerians, we are talking about what is good for the country. Check the Bilateral Air Services Agreement (BASA) which is negotiated by the foreign affairs minister which we use.

The minister shut down the relationship which Nigeria has with Dubai, because of Air Peace, and today he cannot get a Dubai visa. So, why do you think someone like him who has been in the aviation industry for 38 years, was a policeman, trained as a pilot, got an aviation business degree from London College, was a member of the House of Representatives for 20 years, was a senator and a minister for eight years does not have integrity? He is not just someone that was appointed and these are things that investors will take into consideration.

What is Nigeria Air’s shareholding like?

We are a consortium. Ethiopia Air is the technical partner and they have 49 percent. Nigerians as well as the Nigerian government has 51 percent and even if a shareholder pulls out today it does not invalidate the deal. In fact, there are Nigerians in the queue who want to get shares in Nigeria Air. Some will get in when the airline launches and at every stage of the milestone, you will see the value increasing. If we meet the milestone, the plan is to go public and list the company where shares will be sold.

Despite the hue and cry, is work proceeding on the AOC?

Yes, Captain Olumide had to deliver that, he has been working on it for the past two years, and all the processes are done, and offices are open such as the communication/stakeholder management, etc. So, we are setting up everything but we could not have done that before the unveiling. Also, Nigerians are in control of 51 percent while the government has just five percent and there is no preferential treatment here, any place you see the Federal Airports Authority of Nigeria (FAAN) giving us office or space, we are paying for it.

In your understanding of the issues raised by the Airline Operators of Nigeria (AON), what do you think is amiss?

The AON issue is a typical issue that entrepreneurs in the international business see every day, people get comfortable in their skin and do not think about competition. Competition is excellent for the industry and will always come, that is the life cycle of any business as the market expands. Looking at the media industry for example, we can see the evolution of digital media which is challenging the old order but it keeps operators on their toes as the market is expanding. The sector must be liberalized because the government has spent trillions of naira building infrastructure which is not being fully optimized. AON does not have the capacity to monetize the aviation industry, it is a global business, and you need deep pockets, capital, and adequate experience in managing these things otherwise the assets will wind up. So, the AON has a right to go to court but the court is neutral. There is nothing special in the aviation business and it must be open.

Nigeria is a signatory to the Africa Continental Free Trade Agreement (AfCFTA), there is no protectionism. If I have broken a law or violated an order, you are not to tell me, it is the court that will tell me. Where mischief comes to the fore is when a lawyer is writing the president to stop somebody when the court is not helpless and can enforce its own order. Nobody has violated any court order. Also, a minister of the federal republic of Nigeria is also the custodian of public policy which is why he swears an oath before assuming his office. Public policy and public interest override these things that we are talking about, Nigerians need service. Is AON saying Nigerians do not need to get tickets at cheaper rates, or that they do not deserve better services than even Ghana has? Looking at businesses like Air Tanzania, who are its operators and owners?

Half of the planes they are using there are from Ethiopian Air and they just paint it. AON actions are just distractions. Ours is just to manage our stakeholders so that they stay on course and we deliver service, which when we do, Nigerians will applaud us. We understand the public hysteria because we understand that Nigerians have lost trust in government but we are not worried. However, we will go through the process because we are committed to unlocking the value in the aviation industry. What it means is that if Nigeria Air is doing well, those BASAs that are lying fallow will be optimized and with this, Nigerians can fly to London for competitive fares and they won’t be struggling, the economy will improve.

Since you started, have you tried to dialogue or engage with AON?

I don’t need to do that, they did not invite me to their business, the government can be doing that, moreover, Infrastructure Concession Regulatory Commission (ICRC) is the custodian of the documentation. The business is open to everyone, for example, Ethiopian Air can come to Nigeria and set up their business if the Corporate Affairs Commission (CAC) grants them the certificate of registration.

There is no protectionism in Nigeria, every business remains a business regardless of the industry. If the government finds my business viable and wants to invest in it, so be it. This is a government that is promoting business. Government should be courting us to invest in businesses. I believe AON’s decision was their choice because stakes were advertised and they could have come as a unit to purchase stakes and win the bid because the government actually has criteria for these things; there is an outlined business case, a full request for proposal which was published. Meanwhile, they bring in parts and engines tax-free into the country and they do not pay VAT, they have also been getting dollars at Central Bank of Nigeria rates. The truth is, we are businessmen with legitimate rights just like them and we are ready to do our business with or without government but Nigeria Air belongs to Nigerians and so far we want to serve the interest of the people, I assure you that this business will succeed.

The interest of Nigerians in this business is good service, value for money, purchasing tickets at accessible rates. If the business is making a turnover of $1 billion, it pays more taxes, employs more labor, uses more airports, and pays agencies like FAAN, NCAA, Nigerian Airspace Management Agency (NAMA), etc. The ultimate beneficiary of competition is the consumers because they are the ones that make the business sustainable, the government already has assets available for use which they need industry players to leverage. AON that are talking about their business are not more Nigerian than myself; they are doing the same thing even worse than anybody will do, they cannot afford to buy new aircraft without taking loans from foreign companies so it is the same thing.

The ultimate thing is what service is given especially as the demand is there, you cannot keep customers waiting for eight hours at airports and you are complaining of someone who wants to offer better services. We have seen the Akwa Ibom State government leverage their assets and what Nigerian government is doing is replicating Ibom Air which will drive the use of dormant airports. If the routes are viable, Nigeria Air will go there. In this business, you have to develop capacity not by pinching penny but by spending money so getting quality investors is key. The Nigeria Air consortium is 100 percent. We have a technical partner which is Ethiopian Air, myself, and a group of other Nigerians. When we launch we are going to have a Nigerian chairman.

How are you relating with the government and what are they saying?

We have a government relationship manager that interfaces with them and anybody that wants to challenge what the government has done should go to the government. We are investors and we have taken over, we have built our process to go to the market which is a lot of work so we cannot be distracted, I believe the reaction is simply giving an insight into how passionate Nigerians are, so it is a good thing and even makes the technical partners understand that they have to handle the project well.

In terms of timelines, what should we expect from Nigeria Air?

We expect that Nigeria Air will commence operations by the last quarter of the year with 12 aircraft and the routes will be very viable starting with the low hanging fruits, we also want to keep operating cost low to enable us to retain capital. We have the equipment, knowledge, processes and systems taken care of, but the defining thing for me is staffing, the kind of culture we build and how Nigerians embrace it. We have to create Nigeria Air as a love mark to Nigerians and we will create that emotional connection and to do that, we are not going to circumvent any process. Governance is everything and if you get it right, capital will flow and if it flows then you have the resources to create that love mark brand.

When you provide a service well, people will reward it and Nigerians are travelers. We have an African technical partner with adequate resources and we are here to work with the best in class including members of the AON but they have to understand what we are doing to key into it. And in this instance, there is nothing like preferential treatment because it is not sustainable. For example, if the president or minister gave us preferential treatment, now that they are gone and another person takes over what do we do? So you must build it on a solid foundation which is what we have done recognizing the customer as king.

Also, this our coming into the industry increases everybody’s valuation, what you have to do is run your own business well, for the amount of investment Nigeria has made in aviation, it is for AON’s own good that more big and international players come in so they can leverage it. The whole Nigerian aviation industry does not have more than 60 aircraft, it is a business and we are coming in as investors to expand it and give value to the customers. For those saying Hadi did not do well, let new people come in and do better than him. The permanent secretary is there, who is the person that we signed the Nigeria Air agreement with. So, if they have personal issues with the minister, we are not concerned as investors.