NAHCO: Unified exchange rate should apply in aviation sector
Chairman of Nigerian Aviation Handling Company , NAHCO Plc, Dr Seinde Fadeni has urged President Bola Tinubu to extend the proposed unified exchange rate to the aviation sector so that players in the ground handling and cargo sector could latch on to it to grow their business.
He said players in the sector are upbeat in their expectations of the economic policies the Tinubu administration will bring for the sector as many companies look forward to retooling efforts that will facilitate economic development.
Speaking in an interview in Lagos, after the cargo company’s recent Annual General Meeting, Seinde said: “I believe that with the new administration, they want to retool the economy and I believe that that will also aid air cargo because once there are activities and the economy is running well, everything will run smoothly. President Tinubu has also said that there is going to be a unified exchange rate.
“So, this will have a lot of impact on cargo business whether it is sea freight or air freight. With these new economic policies, which we all know that by the grace of God, he will live up to, there is going to be an increase in cargo movement.”
He called on the Tinubu administration to focus on some of the challenges companies in the ground handling / cargo value chain are grappling with, which he said include, but not limited to, multiple taxation.
Seinde said: “One of the major issues is that 95 per cent of our equipment, if not 100 per cent, is bought through foreign currency.
“So, we have not had good access to foreign currency. We can’t even try to take a loan because you won’t survive it. The interest rate is not good for any business in Nigeria. We are almost at 26 per cent per annum. What do you want to do to make that kind of money to pay back?
“Basically, those are the challenges. For example, what the Federal Airports Authority of Nigeria (FAAN) charges us is five per cent on our revenue. It shouldn’t be five per cent on our revenue, it should be five per cent on our profit. Because if you are charging me five per cent on revenue that means you are also charging the money I paid to my staff. You are taking five per cent on my staff and yet I am paying you.
“If I want to take land from FAAN, my landlord, I will have to pay for it and yet you are taking five per cent of my total revenue, not profit.”
The NAHCO boss also called on the Federal Government to facilitate the takeoff of equipment leasing companies, which will take the burden of looking for huge capital to acquire operational equipment from indigenous companies.
He said: “This is a fantastic idea, and just like you rightly said, in abroad it is easy to do leasing and it is just like what happens in the housing sector.
“I know some of the oil companies, Shell does not buy outrightly, they lease. In abroad you don’t need to buy a house, you mortgage because the interest on some of these things are very low. But, even if you want to do leasing in Nigeria on equipment, the guy goes to the bank, he takes money at 25 per cent and then he leases it. How much does he want to lease it to you? So, these are some of the challenges.
“But I also appreciate the fact that you said we should come together and form a leasing company, which can lease to both of us. We have also been speaking to ourselves about this kind of an arrangement. But the major challenge is what I have told you. If you want to lease and you take money from the bank at 25 per cent, you buy the equipment and you give it to us, how much do you want to lease it to us? These are some of the challenges. It will kill us. To declare profit is a problem, but the thing is that you still have to declare profit for the stakeholders. By the time you turn the whole profit to dollar, how much does it become? All these shouts about good profit, just divide it by dollar. Today, it was N770 to a dollar. So, it is basically about demand and supply, it is what is available that is what is driving it. So, these are some of the things we also want to talk to the new government about
