Why investors shun Nigerian airports –ICAO
The International Civil Aviation Organization says efforts to attract Foreign Direct Investments (FDI) to boost the quality of airport infrastructure in Africa has been severely hampered by poor access to public financing options.
President of ICAO, Dr. Olumuyiwa Bernard Aliu who spoke on Monday at the 59th Airport Council International (ACI) and Exhibition holding in Lagos decried how “it has become increasingly difficult however, for many States and airport operators to mobilize the significant and dependable funding and investments required for high quality aviation infrastructure.”
In the last three years, efforts by Nigeria to get the requisite investors to develop most state-owned airports to international standards has been thwarted by funding constraints. Aliu while blaming paucity of funds for the rot in infrastructure at most of Africa’s airports, also lamented the low volume of flight traffic at airports across African, a trend he said makes them unattractive for investors who seek speedy returns on their investments.
“The very limited volume of official development assistance (ODA) and South-South cooperation funding currently available for our sector’s infrastructure projects is a big part of this challenge, as are the constraints being faced with respect to public financing more generally,” said Aliu.
“A limiting factor on the number of flights many African airports managed and this made the financial situation quite precarious for many airports here, due to low utilization lot and therefore, poor returns on investment,” he said.
He said African countries can deliver tremendous support to airports in need of investments by taking pragmatic measures to realize transparent, stable and predictable regulatory climates, whether for direct investment, business reform, private finance initiatives, or public-private partnerships (PPP).
“Another key concern is the risk associated with a lack of sufficient institutional, legal and regulatory enabling frameworks in many African States, something which makes it very difficult for financial institutions to invest in airport projects,” said Aliu.
“No investor wants to project out their proposed returns based on one eventuality, only to see those goal posts being moved by a government half way through a project after they have made their financial commitment
“For countries with limited access to investment finances, it is therefore critical to include major airport infrastructure needs in the priority list of international public finance and assistance for development projects,” Aliu said.