We will adopt best financial model to turn aviation industry around, Olubunmi Kuku

FAAN Managing Director, Olubunmi Kuku reflects on her one year in office as she navigates around the sector challenges, airport rehabilitation, its economic activities, cargo focus, public-private partnership, runway reconstruction, airports certification, safety standards, airport infrastructure and viability, airport linkages, airport modernization and management among the lot.

Strategies adopted so far to tackle decay in the aviation sector and the progress

I think we’ve spent too much time talking about the decay, and it’s time to start fixing and that’s exactly what we’re doing. What is even more critical is the continuity that is required, meaning that wherever we stop doing the work or the good work, with the Honorable Minister, and of course, the agencies within the Ministry, somebody needs to pick that up, which is the biggest challenge that we see, because once we have new administration, sometimes we tend not to continue or complete existing projects.

Let me talk about the work that we’re doing, as opposed to what has happened. Because I’m sure you heard me talk about that endlessly. I think the first thing is to block some immediate gaps, and we did that with minor rehabilitation works at a lot of our airports. I’m sure that if you’ve been a traveling passenger over the last 90 days, you will see that the airports are cleaner. They’re friendlier. In terms of the atmosphere, we’ve lit up some of those airports a lot more and it’s more spacious in certain areas. That is just the minimal that we can do in terms of interventions, at least, to make sure that while we focus on the large infrastructure projects and, of course, rehabilitating some of the facilities, you’re able to do that if you fly through the domestic airport in Abuja, you would notice that there’s a lot that has been done. If you came into that airport about six months to a year ago, it was dark. It was almost like the Hall of doom. We’ve lit up that airport tremendously. We’ve opened up the space, the sitting arrangements, in terms of the facility, and of course, what we hear everyone complain about, which is the conveniences or access, or better access for people with disability, making sure that some of the elevators and the escalators are functional, making sure that things like the toilets are also functional, and really focusing on a lot of expansion Works across that airport. All right, same thing goes if you go into the north, if you go into the South or the southeast, you will see similar projects and similar progress that is being made.

Airports viability and best way to manage them

So let me start by saying that there’s something that we refer to in finance as some cost right? So you’ve already made the investment in infrastructure, so what you need to do is really to plug that investment so that you can improve your rate of returns. I do not recommend shutting down those airports at all. And if you’ve had conversations with me over the last few months, what I will say to you is that there are two things. One is the economics of the airports, which is viability, but secondly, is also the social impact that the airport brings into driving the economy, or at least helping us to turn around the economy, in terms of the interventions that we’re putting through, the four critical areas that we’re focusing on, in terms of how we flood those airports and improving the state of the airport so one is to increase economic activity around the airports. Our commercial and business development team, as well as myself, obviously, with the guidance of the Honorable Minister, have worked very closely with some of the state government in terms of what they can do.

One is largely around cargo. I think cargo is a sweet spot for us in market. States like Kano, Jos, Ogun state, even though Ogun is not our airport, they’re looking to drive cargo effectively as well. But it’s not just about building the infrastructure or investing more in the infrastructure on ground. It’s really making sure that there’s a feeder system that starts all the way from the bottom of the value chain to drive cargo, the various segments of cargo, I think agro and farmer are two critical areas that we have been looking at agro specifically around making sure that there’s food security, so distribution of food items in market, specifically within Nigeria, and of course, Certain items that can be exported. What that means is that in terms of the bottom of the chain, the value systems, making sure that the states are working very closely with DFIs, in terms of aggregating the products of the produce that need to go out, making sure that you’re sort of aggregating a database that also focuses on packaging, logistics, also testing labs around some of those airports.

So that we can at least start to drive a lot more cargo activity. As I mentioned, that is one area. So economic activity, tourism. I know there’s been a lot of noise about detty December in Lagos. So tourism is one of course, business activity, and largely around driving GDP. Look, I think if we want to drive economic activity at this airport, is really to make sure that we’re able to drive the GDP growth, which are the key inhabitants. So that’s one. The second is really around improving the infrastructure linkage to the airport facilities, so making sure that a collaboration between ourselves and the state government and, of course, at the federal level as well, making sure that the road network that leads into the airport, making sure that the transit facilities that are available. I’ll give some examples. FCT, for example, has a rail line that terminates at the airport. It makes it easier for people to come there, whether they’re traveling passengers or to conduct economic activity at the airport. We recently had a meeting with Lagos state government, they do have a road that is coming in from Alimosho to also open up the area. So the linkage is very important in terms of making sure that we can actually drive this activity. The third is really around transit hubs. So let me just wrap up very quickly. Is establishing certain locations and transit hubs, Lagos and Abuja, of course, are the main areas that we’re looking at, and I mentioned earlier, which is also to prioritize the cargo exports.

Public private partnership and concession of airports

I’m glad we’re all on the same page that private sector participation is required. A hybrid model is what we’ve clearly preached for, and that’s making sure that for the commercial activities, we’re able to commercialize those you just spoke about the concessions. The Honorable Minister has been working very closely with us at FAAN to make sure that the concession process is thorough. There has been a review. So of course, there has been a review of the last concession process as well. There were some areas that we put in the paper, which were more of notices a couple of weeks ago, a couple of months ago, largely around interest or intent in in those airports that we’re looking to concession, there’s some advisory work that is also ongoing in terms of project development and the economics. Now, when it comes to concessions, it’s one thing to potentially find a private sector partner to work with you on those concessions, but what is more important is to make sure that you sort of have the same goals, you’re able to potentially trash out some of the issues that have potentially arose and will continue to arise around look, what do you do with the people? The Honorable Minister has clearly said there will be no jobs lost. Of course, that also requires conversation in terms of the economics and the financials of what happened. So currently, we’re in project development stage.

 

Best measures to finance infrastructural development

I’m actually not of the opinion that we set up another institution for financing. I think that we have a lot of institutions that exist today who are finance houses. So for example, you have some of the commercial banks, even though we know that financing from commercial banks tend to be at double digit rates. We also have some FDIs. They’re private equity institutions that we can look at. What I do think we need is really more specialized banking, or specialized financing that we can leverage. We also need to consider things that would help us improve the financing environment, so some sort of financial instruments, credit guarantees, for example, or backstops for the industry. So my focus would rather be on specialized financing and potential credit guarantees to support that.

Runways reconstruction

We have a number of runways in Nigeria today. We have 22 airports that are owned by the federal government. We also support some airports that are owned by the state. I did make specific reference to airports who had runways that had exceeded their lifespan. The average lifespan of a runway is about 20 to 25 years. A lot of our runways in Nigeria have actually exceeded that time, meaning that we’ve had them for 30 plus 35 years. And what it means is that we need to actually reconstruct those runways.

The reconstruction of those runways, the 580 billion that I initially mentioned is actually for over 17 runways. And it’s not just the runways. It includes the runways. It includes some perimeter roads. It includes fencing. So I’ve seen some commentary where people are saying, what do they need all of this money for? I encourage you, please just look at Google if you’re in the construction business or in the aviation business to try and understand what it means to build runways, taxiway, links, apron expansion work that we need to do, and of course, to make sure that we put a safe environment together for everything that happens on the air side.

Recertification of Lagos and Abuja airport

The Lagos and Abuja airports are two of our critical gateways. As you know, we have five international airports in Nigeria who all provide access to our international community. Before December, when those airports were certified, we were literally running airports that are not being certified, which is largely against the global standards that airport run by. There were a number of gaps that were identified. Some were safety and security related. Some had to do with the state of the infrastructure. Some had to do with policy and documentation. We were able to close a significant amount of gaps, but it doesn’t mean that the work stops. There’s still some work that needs to be done around those runways to make sure that we’re operating at optimal standards. And we’re working very closely with the Civil Aviation Authority on that, and that’s just two runways.

The priority for the Nigerian Civil Aviation Authority and ourselves at FAAN is to make sure that we can certify the other international airports. The team has been working jointly and very closely over the last couple of weeks to make sure that we can achieve the same success that we did for Lagos and Abuja.

Dealing with touting, bribery at airports

I’m sure you know that in Nigeria, in this economy, there’s no hard decision or policy that is put out that does not face any resistance. We have faced some resistance with the implementation of that policy, but I assure you that the Honorable Minister and I are extremely relentless. We have come out. We have engaged with our communities, and of course, with the Security Council that we meet with. The Nigerian Civil Aviation Authority has also had multiple sessions, and we have made sure that all of the agencies that are working very closely with us understand the implications of our actions. We did find one or two people who were culpable. We have a magistrate court that has been set up in some of our locations. We do make sure that they’re prosecuted, they’re set as good examples. And I also want to use this medium to let every Nigerian know that if you are stopped at the airport and someone is asking you to support them in any illicit activities, you will find yourself culpable, along with those officials.

So I’m saying very boldly again, and I’m supporting my Honorable Minister to say that our airports are tout free zones, and we ask that you stop. We are putting in all necessary measures from our end to make sure that that stops as well, of course, with the continued support of the National Security Advisor and the Security Council which we meet. So it’s also our responsibility as Nigerians. You’ve heard me say it. You’ve heard the minister said, If any agency, including mine, comes to you within the airport premises and wants to engage in such activities, it is your responsibility to tell them no. If they ask you for funding, tell them no.

Stepping on toes

I have stepped on toes. I’m still tapping on stepping on toes. I do know that I need to do that with caution, but definitely not at the jeopardy of the Nigerian airport system. If I have to, I will step down and I will resign if I realize that it’s not working. But what is important for me is to make sure that I do what is right. I do the needful, largely in terms of making sure that they’re critical infrastructure projects in front of me, making sure that Nigerians are safe. I continue to say that safety is my priority in the industry, making sure that our runways, our pavements, our airfield lighting, are up to par, to make sure that we can do that so the thoughts around you know, stepping on toes or being overwhelmed, if I’m tired, I will get out of the job.