Principal Managing Partner, Av aero Capital, Sindy Foster has called on the Federal Government to consider the creation of a dedicated aviation development fund with concessional lending rates for airport operators, airlines, and aviation service providers.
The aviation expert said the fund can be managed in partnership with development finance institutions (DFIs), the Central Bank of Nigeria (CBN), and international financial organisations.
The proposed bank, she said, should engage institutions such as the African Development Bank (AfDB), World Bank, and Export-Import Banks to provide a window in unlocking low-interest, long-term financing for aviation projects. These institutions, Foster said, have experience in funding infrastructure projects in Africa and can offer structured financial instruments.
Speaking in an interview, she said the Central Bank of Nigeria (CBN), should consider the introduction of special intervention funds for the aviation sector, similar to the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL).
NIRSAL, Foster said is a programme designed by the African Development Bank Group (AGRA) on behalf of the CBN.
Such an arrangement, she said, can provide refinancing options for commercial banks offering loans to aviation operators at lower interest rates.
Foster said :” The government can provide and tax holidays, import duty waivers on aircraft and spare parts, and reduced VAT on aviation fuel. If implemented, adhered to, and enforced by all relevant government agencies, these incentives can lower the cost of operations and indirectly ease financial burdens.
“Capital intensive sectors such as aviation benefits from long-term financing which can often be offered at lower cost. Nigeria’s pension funds and Sovereign Wealth Fund (SWF) hold significant capital that can be channeled into aviation infrastructure through long-term bonds.
“The government can incentivise these institutions to invest in aviation infrastructure by offering risk guarantees.
“The government can introduce credit risk guarantees to encourage banks and financial institutions to lend to the aviation sector.
Boeing recently brokered a Stand-By Letter of Credit (SBLC) arrangement for aircraft leasing with Nigerian banks.
“Credit risk guarantees would help reduce the risk of default and make lending more attractive to financial institutions.”
She also proposed the structuring of airport concessions and aviation infrastructure projects as PPPs, which government can use to attract private investors and international airport operators who have access to cheaper financing.
Foster, sai :” A refined model along the lines used for Murtala Muhammed Airport Terminal 2 (MM2) can be expanded nationwide.
“The government has actively been working on taking steps to enable more favorable aircraft leasing terms for Nigerian airlines through partnerships and engagement with global leasing firms and other relevant organisations such as The Aviation Working Group (AWG).
“In addition export credit agencies like Boeing Capital Corporation, Airbus Finance, and UK Export Finance (UKEF) and other specialist institutions offer financing at competitive rates for aircraft acquisitions.”
Alternatively, she said, it will not be out of place to consider the setting up a government-backed aircraft leasing company, which can provide Nigerian airlines with access to cheaper aircraft leasing, reducing their dependence on high-interest foreign loans.
Foster affirmed:” This model has been used successfully in countries like India and China.
“But critical to all of the above the government should create a stable policy environment with clear investment guidelines, predictable regulations, and reduced bureaucratic bottlenecks to reduce country risk and attract more financial institutions to lend to aviation projects. In addition the Nigerian Civil Aviation Authority (NCAA) should continue to streamline processes to enhance ease of doing business in the sector, and provide greater transparency to bring confidence to investors already involved in, or potential investors who will be watching every action or announcement with interest.
“By implementing these measures, the Nigerian government can ease financing constraints in the aviation sector, attract investments, and enhance infrastructure development.
“A combination of direct funding support, policy incentives, and private sector engagement will be crucial in overcoming the financing hurdle.”
She further said :” Public-Private Partnerships (PPPs) can play a crucial role in addressing Nigeria’s airport infrastructure challenges by leveraging private sector investment, expertise, and efficiency while allowing the government to focus on regulation and oversight.
“Nigeria’s airports require significant capital for modernisation, expansion, and maintenance, but government budgets are often constrained. PPPs can help fix Nigeria’s airport infrastructure gap by attracting private investment to reduce the financial burden on the government.
“Private companies bring expertise in airport management, customer service, and operational efficiency, leading to better service quality. If empowered to make strategic decisions private management can help address issues such as poor maintenance, congestion, and security inefficiencies.
“Many Nigerian airports lack modern terminals, runways, and cargo-handling facilities, through Build-Operate-Transfer (BOT) or concession models, private firms can invest in expanding terminals, upgrading runways, and improving technology.
“Private operators can optimise non-aeronautical revenue sources (retail, real estate, advertising) to make airports more financially sustainable. This reduces reliance on government subsidies while improving passenger experience. If s cost recovery model is adopted this would help to offset-set high operator charges which result in higher costs than is conducive to passenger numbers growth.
Private sector involvement often brings transparency and accountability in airport operations. PPP contracts with clear performance benchmarks can mitigate inefficiencies but requires an avoidance of political interference.
“Private investment can lead to employment opportunities in airport construction, management, and related services. With skills transfer programs from global aviation experts to enhance local workforce capabilities.
Modernised airports with transit facilities, combined with appropriate visa policies and processes, will enhance Nigeria’s global connectivity, making the country more attractive for tourism, business, and foreign direct investment (FDI). Efficient airports also improve cargo handling, boosting trade and exports.
“By ensuring transparent policies, strong regulatory frameworks, and investor-friendly environments, Nigeria can leverage PPPs to build world-class airport infrastructure and improve its aviation sector’s competitiveness.
“Access to low-interest financing is a critical challenge for aviation operators in Nigeria due to high borrowing costs, currency risks, and limited access to long-term capital.”
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