November 9,2022

Nigerian aviation agencies are struggling to raise enough money to meet up with a new 40% revenue target set by the Federal Government, Nairametrics has learned.

A source at the Ministry of Aviation told Nairametrics that the compulsory contributions of revenue-generating agencies to the Federation Account were increased from 25% to 40%.

The Federal Government began implementing the new regime in mid-October. With this, 40% of internally generated revenues (IGRs) by all government agencies are now meant for the Federal Government to execute projects.

Affected aviation agencies: There are six agencies in the Ministry of Aviation, out of which four are affected by the new policy of the federal government. The affected agencies are the Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA), Nigerian Civil Aviation Authority (NCAA), and the Nigerian College of Aviation Technology (NCAT), Zaria.

The new target is seriously affecting aviation agencies. Another source close to FAAN, who didn’t want to be named, confirmed the development to our correspondent. According to the source, the management of FAAN received a circular from the Federal Government about three weeks ago, notifying them of the increase

Aviation struggling: He explained that since the new policy came on board, FAAN is finding it difficult to meet some of its obligations to staff, warning that this may also affect its projects in the sector. He said:

• “I can confirm to you that our contribution to the federation account has increased to 40% following the directive we received from the federal government. What this means is that as a revenue-generating agency, whatever amount of money we earn and send to the Treasury Single Account (TSA), we cannot take back more than 60% for staff welfare, salaries, and procurement of facilities.
• “This will affect our performance. How can you earn money and 40% of it is for the federation account? We pay our salaries without any subvention from the federal government. This is also in flagrant disobedience to the recommendation of the International Civil Aviation Organisation (ICAO), which stipulates that whatever revenue is earned in aviation should be returned to it for the upgrade of facilities.”

FAAN asks for exemption: Just recently, the Managing Director of FAAN, Capt. Rabiu Yadudu had appealed to the Federal Government to suspend the 25% revenue contribution to the Federation Account to enable it to address infrastructure gaps

Yadudu had said the only way to ensure development in the aviation industry was to reduce the revenue contribution by agencies in the sector. According to him such reductions were in line with international standards and recommended practices. 

• “The industry is still having an infrastructure gap to stabilize. Therefore, the government’s support in stabilizing the industry is needed. This can be achieved by suspending the contributions to the federation account in compliance with ICAO standards and recommended practices (SARPs) doc 9562.
• “This document on airport generation provides that revenue generated by the airport should be transparently re-invested wholly in operating and developing airport facilities,” the FAAN MD had stated.

He further explained that revenue generation was low because two airports — Murtala Muhammed International Airport (MMIA), Lagos and Nnamdi Azikiwe International Airport (NAIA), Abuja are responsible for a major part of the expenditure incurred by other airports.

He also decried the rising operating and maintenance cost of the new terminals and existing ones due to inflation and the devaluation of the naira to support his argument.

Yadudu, however, added that the airport management had embarked on aggressive debt recovery while it had introduced a pay-as-you-go system, as well as a cashless policy