TRAPPED in outdated notions of state capitalism and entitlement, labour unions in the aviation sector have, like their oil sector counterparts, been voicing strident opposition to the government’s plans to privatise airport operations and make way for private entrepreneurship. The workers staged a public protest in Abuja where they vowed to shut down the industry through strikes unless the Federal Government dropped ongoing processes to concession four airports. While their concerns on transparency and stakeholder inclusion are manifestly valid, resistance to privatisation is not: reality dictates more than ever before the overriding urgency to rescue the economy by unleashing the immense power of private capital.
Privatisation allows airports to move from a dependence on taxpayers’ money, towards a greater reliance on the ‘user pays’ principle. Both the government and Nigeria’s labour unions need to update their knowledge and align with global trends. Airports are not just transit points, they are also major job providers. They serve as hubs for a country’s transport, tourism, hospitality, international trade and catering sectors. The respected trade journal, Airport Technology, says, “Airports are catalysts for tourism growth and key to a country’s national and international trade relations.” More and more, pressure is mounting on the aviation sector to help emerging economies end poverty and boost public revenues. Airports are businesses. The old template of seeing them as solely strategic national assets has since given way to the imperatives of economic assets while still being available for a country’s national security needs.
The government has dawdled for too long in privatising operations at the airports. It should proceed post-haste in finally seeing through the concession of the four international airports – in Lagos, Abuja, Kano and Port Harcourt – as enunciated by the Minster of Aviation, Hadi Sirika. Planned as part of reforms in the sector, the four, incidentally the most profitable of the 31 airports managed by the Federal Airports Authority of Nigeria, are expected to create hundreds of jobs, boost activities down the sector’s value chain and free up funds for government to provide critical social infrastructure. This is the viable option that governments have been taking, gathering momentum since the United Kingdom took the lead in the 1980s to denationalise railways, airports and utilities. While most of the world’s major airports remain national, regional or local government property, private managers are increasingly running operations through concessions and leases. Despite global turbulence, the International Civil Aviation Organisation insists that airport and ancillary business “lifts communities out of poverty, employing over 10 million people worldwide and supporting another 55 million jobs between supply chain and tourism.”
Since the UK privatised British Airports Authority, its major airports, including Heathrow and Gatwick, are run by foreign-dominated consortiums. Similar privatisations have swept the world. Experts and empirical evidence have proved the advantages of private investment and management, especially in improving competition, spurring advances in innovation and technology, reducing wasteful government spending and creating jobs. Five rounds of privatisation through concessions, grants, leases and Public Private Partnership in Brazil 2001-2019, have created jobs, revenue and the expansion of small, regional private operators, while reducing INFRAERO, the equivalent of FAAN, from an operator to a leaner, profitable landlord firm. Canada has unloaded all but a few remote state-owned airports to private investors. India opts for joint ventures, PPP and outsourcing.
State capitalism and democracy do not go together. While one-party dictatorships and autocracies like China and the Gulf monarchies continue with SOEs, unleashed, private capital has transformed economic sectors both in advanced and emerging economies. A study by the UK’s Westminster University found that the first wave of airport privatisations in developing countries 1990-2005 attracted $18 billion investment, transformed the global airport industry and facilitated the emergence of multi-airport transnational companies and investors. One such firm, Global Infrastructure Partners, headed by Nigerian-born Adebayo Ogunlesi, holds a majority stake in Gatwick, London City Airport, Edinburgh Airport and Italian high-speed train service, NTV.
Nigeria’s aviation and oil sectors workers must therefore drop the retrogressive opposition to private sector-led control of businesses to enable the country to maximise its full potential. There is no viable alternative and the Nigerian government’s involvement in businesses has been disastrous. With liberalisation, the telecommunications sector magnetised investment inflow up to $70 billion by 2019 and contributed 9.85 per cent to GDP in 2018; the GSM sub-sector alone created 500,000 jobs in 2017 and added $21 billion to GDP, the Nigerian Communications Commission revealed. With a population over 200 million, Africa’s largest economy and untapped resources, efficient, corruption-free privatisation holds immense benefits. The aviation sector’s contribution of under $1 billion or 0.12 per cent to GDP in 2019 is miserable. Philips Consulting projects that the 254,500 jobs it supported could more than double. South Africa’s aviation sector added $7.4 billion or 3.5 per cent to GDP, supporting 472,000 jobs.
Privatisation will free the government from perpetual borrowing: there is nothing to show for the $500 million it borrowed for airports “remodelling” in 2013. Shortly after, one of the supposed beneficiary airports, Port Harcourt, was ranked the world’s worst international airport. PPP, concessions and leases should facilitate the much-needed FDI. Post-COVID-19-induced meltdown, IATA expects up to $1.8 trillion in new airport infrastructure by 2030.
Forging ahead, the government must address the concerns of all stakeholders: the major one being the lack of transparency, corruption and cronyism that marred some previous privatisations and delivered disappointing outcomes. Airport business is strategic and specialised; it should never be allowed to fall into the hands of incompetent, briefcase “investors,” the type that fouled up the electricity asset sales. The government should target only globally renowned operators who have the expertise and resources to run such assets. The interests of 200 million Nigerians supersede those of a few thousand workers. Nevertheless, they are critical stakeholders and should be carried along through transparent processes. Besides, it is imperative that their severance and welfare issues be fairly and thoroughly addressed, including government-supported training and entrepreneurship programmes for staff.
To avoid another disastrous transfer of assets, civil society and labour should monitor the processes, while the National Assembly should insist on full disclosure within the limits of its oversight function. The government should ink only agreements mutually beneficial to all parties to avoid the lingering rancour over the Lagos Airport concession, the power sector sales and other controversial deals.
Labour’s pushback is unjustifiable. Cash-strapped Nigerian federal and state governments should therefore privatise airports to increase investment without impacting their coffers. The President, Major General Muhammadu Buhari (retd.), and Sirika should demonstrate strong political will to see this through very quickly and most crucially, free of corruption and cronyism.
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