Nigerian airlines and their suppliers are facing tough times because of extremely high interest rates, Aero Contractors (N2, Lagos) CEO Ado Sanusi has complained to local media.
Airlines will not be able to survive in a high-interest environment, he warned. “The cost of funding in this country is very high. This is stifling growth in the aviation industry, and all the gains of the Cape Town Convention will be lost. I can’t see an airline going to borrow money at 33 to 35 per cent interest rates and then make a profit,” he said.
Sanusi claimed that high rates are “killing businesses”, adding that 90% of Aero Contractors’ vendors have to borrow money at very high rates.
He also called on the government to address multiple charges and levies imposed on airlines by grouping them into a single charge and strongly condemned a planned increase of 600% in ground handling charges. According to current rules, different authorities collect ticket sales charges, en route and terminal charges, fuel surcharges, and more.
The chief executive’s comments come after the acting director-general of the Nigerian Civil Aviation Authority (NCAA), Chris Najomo, warned that there is a chance all airlines in Nigeria may go under as a result of multiple taxation, a challenging operating environment, and inadequate access to financing.
In August, multiple Nigerian businesses questioned the high lending rates in the country. At the time, the Manufacturers Association of Nigeria disclosed that the average maximum lending rate charged to its members by commercial banks was 35% in the second quarter of 2024.
According to the Central Bank of Nigeria data, the prime interest loan rate at most banks in the country for the transportation industry hovers between 25 and 30%. The country's benchmark lending rate is currently 27.5%.
