Nigeria’s New Aircraft Leasing Initiative to Bolster Local Airlines
Festus Keyamo, Nigeria’s Minister of Aviation and Aerospace Development, announced plans for a proposed aircraft leasing company designed to enable local airlines to acquire aircraft through domestic arrangements and transact in naira instead of US dollars. This initiative was shared during the inaugural African Air Transport Conference held in Lomé, Togo.
Keyamo emphasized that the Nigerian Aircraft Leasing Company would operate with private funding, supported by government guarantees aimed at drawing in investors while mitigating risks for aircraft owners and financiers. He noted that this strategic effort is intended to assist local airlines in overcoming a primary obstacle: access to affordable aircraft.
In his remarks, Keyamo confirmed, “We have also launched an aircraft leasing company in Nigeria, Nigeria Aircraft Leasing Company, fully privately funded.” He further explained his intention to maintain a minor ownership stake in the enterprise, attributing this to the federal government’s forthcoming sovereign guarantees.
Government Support for the Initiative
The minister revealed that President Bola Tinubu has endorsed the initiative, and talks are in progress with potential investors. The proposed company is poised to attract investment through potential tax incentives and other benefits designed to bolster economic engagement in the sector.
Keyamo stated that the government guarantees would provide assurance to lenders and creditors, significantly lowering the risks associated with aircraft financing in Nigeria. This, he said, constitutes a vital factor in mitigating risks for financial institutions.
He also highlighted Nigeria’s adaptation of international frameworks, such as the Cape Town Convention and the Irrevocable Deregistration and Export Request Authorization (IDERA). These frameworks facilitate the deregistration and exportation of aircraft within a predetermined period should an operator default on financial obligations.
Local Currency Transactions for Airlines
Keyamo pointed out a significant advantage of the proposed leasing company: it will permit Nigerian airlines to operate in naira. Currently, many airlines must secure US dollars to satisfy lease agreements with foreign aircraft owners, exposing them to the volatility of exchange rates and potential currency shortages.
The new structure facilitates a relationship whereby airlines engage with a local leasing company, which in turn manages foreign currency debts. “Airlines can trade with local companies in naira at local rates,” he asserted, outlining the operational improvements this shift would bring.
Broader Regional Aspirations
Keyamo expressed confidence that the initiative would alleviate the financial pressures on airlines while enhancing the availability of aircraft. He emphasized that participation in the leasing program would be voluntary, enabling airlines to negotiate lease terms with international companies should they find more favorable conditions elsewhere.
The minister envisions a long-term expansion of this platform, stating, “This will spread across West Africa and Central Africa. It will one day become a pan-African leasing platform.” This forward-thinking approach aims to transform the aviation landscape across the continent, enhancing connectivity and economic opportunities.
