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Senate Wants Zero Customs Duty, VAT for Aviation Sector

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Aviation Sector

By Modupe Gbadeyanka

The federal government has been advised to consider exempting the aviation industry from the payment of customs duty and value added tax (VAT).

These exemptions would be for the importation of commercial aircraft and spare parts, according to the Senate, which debated the huge challenges facing the sector at the moment.

In March 2020, the federal government shut down the nation’s airspace as a result of the COVID-19 pandemic and operations were only allowed to resume six months after.

Even after the resumption, most airlines are struggling to operate at full capacity because of the various policies put in place to curb the spread of the virus. Some of them have asked for a bailout.

At the plenary on Tuesday, a member of the upper chamber of the parliament, Mr Adamu Aliero, moved a motion to look at the issues raised by operators in the industry.

He argued that the issues of multiple taxations, payment of import duty and commercial taxes raised by airline owners in Nigeria were genuine, calling on his colleagues to implore the federal government to take actions that would save the sector.

In his contribution, Mr Smart Adeyemi, threw his weight behind the motion, emphasising that “other countries gave bailout fund to their aviation sector” because the industry is key to the development of the economy.

“If airline operators say they can’t clear their goods because of VAT, then the government needs to look into that. The federal government should allow the aviation sector to be tax-free for at least three years,” the former president of the Nigeria Union of Journalists (NUJ), submitted.

At the end of deliberations, the federal government was asked to upgrade decaying infrastructures at the nation’s airports and fast-tracking the clearance of Aircraft-on-Ground (AOG), spare parts and facilitate the availability of jet air.

The government was also advised to fully implement the Executive Order on Zero Customs Duty and VAT on importation of commercial aircraft and aircraft spare parts and also implement the Executive Order of the removal of VAT and then eliminate multiple taxes, fees and charges on airlines.

The Senate also asked the Central Bank of Nigeria (CBN) to make foreign exchange readily and easily accessible for the sector and make interest rate a single digit for airlines which will reduce the cost of capital;

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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Travel/Tourism

Ebonyi Airport Will Attract Local, Foreign Investments—Sirika

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Ebonyi Airport Project

By Aduragbemi Omiyale

The Minister of Aviation, Mr Hadi Sirika, has said the proposed airport in Ebonyi State will attract local and foreign investments to the south-east state.

The Minister said this when he received Governor Dave Umahi in his office in Abuja on Thursday to discuss the airport project.

He commended his guest for the foresight, describing the Ebonyi airport project as worthwhile.

According to him, the decision to build the airport is courageous as it will expose the state’s agricultural potential to the international market.

He told Governor Umahi that the administration of President Muhammadu Buhari has, since its inception, embarked on creating an enabling environment for the expansion of the aviation industry in Nigeria which has been severally acknowledged by the global aviation community.

The Minister also gave the assurance that the Ministry of Aviation will do whatever is required to bring the project to fruition, considering the prospects for employment generation.

Earlier, Governor Umahi had briefed the Minister on the progress of the airport project and said he remained committed to its successful completion, considering the expected benefits to the people of the state.

He expressed the appreciation of the state to the federal government, especially the Aviation Minister, for the encouragement and support in seeing the project to its present stage, assuring him that the airport, when completed, will meet all industry requirements.

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Sustaining Nigeria’s Transport Sector Using Technology

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Interswitch

An efficient transportation sector facilitates exchanges that result in the improvements of lives and economies globally. Every day, transport stakeholders develop new ways that support the sustainability of this sector. This stems from the knowledge that the movement of humans, goods and services remains a fundamental part of a country’s economy, and extensively, global economic growth.

In the third-quarter economic performance report for 2021 released by the Nigeria Bureau of Statistics (NBS), the growth in the non-oil sector cannot be overlooked, with the transportation sector also making significant leaps in the quarter, making it one of the fastest-growing sectors in Nigeria in Q3 2021.

The modes of transportation that made these impressive contributions to the economy were rail transport and pipeline (59.93 per cent), air transport (33.31 per cent), road transport (21.11 per cent), and water transport (16.30 per cent). For a country with over 200 million people, the need for a robust means of transportation cannot be overemphasized.

And this guides the federal government’s decision to put initiatives in place to close the gap in the transportation sector through a multi-modal transport system. Although these initiatives are yet to be unveiled, the Lagos State Government has embarked on its own ambitious multi-modal transport system in a bid to upgrade the state to smart city status.

According to the state government, there is fund available to complete the various projects, including the creation of rail lines for intracity trips and other works that will put the proper infrastructure in place for an efficient transport system in the state. To further drive this conversation on the importance of building a sustainable transport system in the metropolis, the Lagos Transport Fest, held on December 13, 2021, drawing stakeholders from both the public and private sector to discuss the way forward in improving Nigeria’s transport system.

The event focused on every aspect of transportation including road, rail, logistics, and ports, noting the importance of a cross-sector partnership to develop the transport sector. In the outline of the event’s agenda, one element made a repeated appearance: technology.

This highlights the fact that technology can bring about changes in the operations of businesses within the rail, maritime, aviation, and road modes of transportation. Technology has continued to prove itself a force to reckon with, evident in the unprecedented changes it has produced across sectors, and the transport sector in Nigeria is not any different.

These perceived and observed changes have led to a steady rise in its utilization, as digitization of processes in various economic quarters has become not just widely accepted but even encouraged. Speaking along these lines was one of the event’s sponsors, Interswitch, Africa’s leading digital payment company, who noted the effect of innovation on the country’s transport sector would increase accessibility to safe payment methods and the attendant ease for commuters.

The need for digitization in the transportation business became notable during the heat of the pandemic, as innovators devised new ways to conduct their businesses without the need for physical contact between individuals. This was especially observed in the logistics sector which saw more companies adopting technological solutions while minimizing physical contact.

In developed countries, other solutions such as robotics, drones, the Internet of Things (IoT) and Artificial Intelligence (AI) swiftly became a replacement for humans to reduce human contact and by extension, the spread of the virus.

Transportation and the AfCFTA

It would almost be remiss if there was no mention of Intra-African trade through the Africa Continental Free Trade Agreement (AfCFTA), which is expected to facilitate stronger trading relations between countries on the African continent. With this in view, experts have highlighted the deficits in the transportation sector that could hinder Nigeria – Africa’s current leading economy – from accessing its full potential, relegating it behind other smaller African nations with better systems in place.

However, giving reassurances of the country’s readiness to participate in this monumental intra-continental trade, the Minister of Transportation, Rotimi Amaechi, said, at a 2-day conference, that the federal government had taken seriously the business of transportation.

He noted that “The transportation sector is the most critical in implementing trade facilitation, enhancing regional integration is key to every other AfCFTA protocol. Hence, the Nigerian government has embarked on huge transport infrastructure investment across the country to ensure efficiency in the transportation sector.”

He also highlighted the importance of digitization in the sector as one of the major elements that require a sturdy infrastructure for successful intra-continental trading. The minister noted that his ministry was dedicated to improving digital services in the transport system through the automation of services.

In the same vein, analysts are projecting a boost in free trade in Africa through digitization. With about 36 countries ratified onto the AfCFTA, it is estimated that over 1 billion consumers on the African continent, with a growing Gross Domestic Product (GDP) of $3.4 trillion will be integrated.

However, the ever-fluctuating, dollar-reliant exchange rate system on the continent remains a challenge to trade within the continent. To address this, the African Export-Import Bank (Afreximbank), in collaboration with the West African Monetary Institute (WAMI), developed the Pan-African Payment and Settlement System (PAPSS) to facilitate cross-border payment between traders in Africa, which would involve participating central banks.

Interswitch, through some of its brands, has continued to enhance cross border payments – Quickteller, a borderless digital payment solution service and Verve card, a payment card issued in 8 African countries with acceptance in over 22 countries on the continent. These services and products are aiding payment between African traders, removing transaction barriers.

To take full advantage of this untapped market, countries would need to develop better transport infrastructure and systems and fortify payment systems to lessen the stress that comes with it, which will help to properly connect markets across the continent and achieve the overarching goal of a prosperous continent.

Enormous opportunities abound in the transport sector, but to tap into these there is the need for a concerted effort from stakeholders in both the public and private sectors to ensure that consumers have seamless experiences while moving goods, services, people and payments across borders.

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New High-Speed Trains to Boost Lagos Urban Transportation

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Lagos High-Speed Trains

By Adedapo Adesanya

The Lagos State government has said the two newly acquired high-speed trains for its Red Line rail project will improve the state’s goal of achieving urban transportation as it will improve traffic management and transportation.

This was as Governor Babajide Sanwo-Olu completed the acquisition deal of the two sets of 10 cars Talgo 330 kilometre per hour trains on Tuesday at an event held inside the Milwaukee facilities of Spanish train manufacturer, Talgo Incorporated, in the United States.

Mr Gboyega Akosile, who is the Chief Press Secretary to Governor Babajide Sanwo-Olu, in a disclosure revealed that the trains will be heading to Lagos for the Red Line – a 37km track rail project which will have 11 stations and will be the first operational metro system in West Africa when completed.

“A train is not something you can just go on the shelf and pick up,” the Governor was quoted as saying at the event.

“We are very lucky to get brand new trains. We have seen our beautiful white and red trains. Coincidentally, the rail line is called Red Line and you can see they have given us the colour. We are just going to brand it and put up our seal there.

“We hope that this (purchase of the trains) will be the beginning of a mutually beneficial business relationship. Providing a source of livelihood for our citizens is all about providing jobs for our people and that is what we are doing. It is about ensuring that we can build our economy; people can move from one location to another, and businesses can grow.

“Part of what we have done in the last two and half years is to have what we call Integrated Urban Mass transportation system, where we will be using road infrastructure, waterway infrastructure, and rail infrastructure so that we can move over 20 million Lagosians within and around the city,” he added.

Governor Sanwo-Olu gave an assurance that the first phase of the Red Line would begin by the last quarter of 2022 or the first quarter of 2023, with a capacity of 500,000 passengers daily.

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