Nigeria’s Air Cargo industry holds immense potential, but unlocking that potential requires significant Investment and strategic policy shifts. According to Auwalu Badamosi Babura, Managing Director and CEO of Red Star Express Plc, the nation needs more than $5 billion in investments to upgrade air cargo Infrastructure across at least 24 airports. This investment is crucial to positioning Nigeria as a key player in the global air cargo, freight, courier, logistics, and Agro-allied sectors. In a recent interview in Lagos, Babura emphasised that without adequate investment and deliberate policy initiatives, Nigeria’s air cargo sector will struggle to realise its full potential.
He pointed out that a substantial investment, estimated at $30 trillion over the next three decades, is necessary to modernise the country’s economic infrastructure. This modernisation is key to utilising the numerous opportunities in the air cargo business. Beyond financial investment, Babura stressed the importance of advocacy among industry stakeholders to push the government towards creating a more enabling environment for the air cargo value chain to thrive. He highlighted several critical challenges that need immediate attention to spur growth in the sector.
Regulatory issues and bilateral air agreements should be addressed.
One of the most pressing issues is the fluctuation in Aviation fuel prices, which significantly impacts the cost and Sustainability of air cargo operations. Regulatory issues, particularly those related to bilateral air services agreements with the United Kingdom (UK) and the United Arab Emirates (UAE), also pose substantial barriers. These agreements often come with restrictive terms that disadvantage Nigerian airlines, making it difficult for them to compete on a global scale. Additionally, the high cost of ground handling equipment, poor airport infrastructure, and the lack of economies of scale are major constraints that must be addressed.
Babura also noted the burden of extremely high Insurance premiums, excessive taxes, and other operational costs that further hinder the growth of Nigeria’s air cargo industry. To overcome these challenges, Babura called for the re-negotiation of bilateral agreements with the UK and UAE. He argued that such re-negotiations are essential for creating a balanced environment for Nigerian airlines, which could lead to a more improved air cargo sector. Through the Central Bank of Nigeria (CBN), he also proposed that the government initiate policies that support freight forwarders involved in exports by ensuring they have access to foreign exchange for international transactions.
Duties on small items should be excluded while improving facilities.
Also, he advocated for Subsidies for airlines and cargo handlers lacking sufficient foreign exchange liquidity. Such subsidies could safeguard jobs, protect investments, and create opportunities for Tax reductions, which would alleviate some of the industry’s financial pressures. The Red Star Express boss emphasised the need for developing and enhancing specialised temperature-controlled facilities and processing warehouses, particularly for pharmaceuticals and Agro-perishables. These facilities are crucial for maintaining the quality of sensitive goods and for expanding Nigeria’s air freight capabilities.
The market has the potential to scale through e-commerce, direct currency settlement and cross-border shipping, particularly by eliminating duties on small items. He noted that Lagos International Airport, as of 2018, remains the largest in terms of freight kilometres, but there is a pressing need to increase cargo traffic at other airports across the country. Looking ahead, He projected that with the right interventions, Nigeria could achieve over 19 million freight ton kilometres by 2025, even accounting for the disruptions caused by the COVID-19 pandemic.
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Moreover, he cautioned that this growth is dependent on the government taking swift and decisive action to address the current challenges. He urged the government to work towards improving Nigeria’s standing in various global rankings related to air trade. Currently, Nigeria ranks 68th out of over 150 countries in the Air Trade Facilitation Index, 36th among 135 nations in the Electronic Freight Friendliness Index, and 127th among 136 nations in the Enabling Trade Index. He stressed that improving these rankings is crucial for attracting investment and ensuring the competitiveness of Nigeria’s air cargo sector.