Unlocking Growth: Rebuilding Investor Confidence Through Aviation Financing in Nigeria

Conversations around aviation financing in Nigeria – its risks, opportunities, and prospects—reignited fresh debate on Thursday, 7th August 2025, as policymakers, operators, government officials, regulators, and other stakeholders in the air transport and allied ecosystem gathered in Lagos at the Providence Hotel for the 29th edition of the League of Airport and Aviation Correspondents (LAAC) Annual Conference.

The conference provided a platform for industry players, through presentations and panel sessions, to express their perspectives on the critical issue of aviation financing and the pivotal role it plays in transforming the fortunes of Nigeria’s strategically important air transport sector.

Experts, in wide-ranging discussions centred on the theme, observed that until the challenges surrounding access to finance and the onerous conditions often attached to it are resolved, the much-anticipated growth of the aviation and allied industries will remain elusive.

While advocating for industry support and targeted interventions, participants emphasized the need for deliberate measures to unlock growth in the sector. They highlighted multiple hurdles and urged the creation of conditions that would boost investor confidence, enabling aviation to fulfil its role as both a catalyst and enabler of economic development.

After extensive analysis, participants concluded that a raft of measures must be adopted to overcome existing constraints. They noted that benchmarking financing models from other climes could hold the key to a turnaround.

In order to optimise expected outcomes, the Conference recommended the establishment of an Aviation Development Bank.

Recognising that global economies are increasingly strained by uncertainty – with infrastructure and operating costs rising sharply – participants stressed that adopting the right financing models to drive aviation sustainability is more urgent than ever.

Options discussed included enabling government policies, effective regulation, and public-private partnerships (PPP), given the capital-intensive nature of the sector. Substantial investments are needed in airport infrastructure, aircraft acquisition, maintenance, safety systems, and personnel development.

Experts further proposed innovative financing mechanisms such as leasing arrangements, sovereign-backed financing, and targeted foreign direct investments (FDIs). However, they stressed that these tools can only succeed in an enabling environment marked by policy consistency, regulatory transparency, and ease of doing business.

The Conference underscored aviation’s role as the lifeblood of global trade, requiring robust financing – both traditional and non-traditional. Notably, export credit financing structures were cited as viable options that reduce pressure on airlines, offering lower interest rates and favourable credit terms.

For Nigeria to strengthen its position within the travel ecosystem, participants called for consolidation of the industry, the creation of competitive hubs in Lagos and Abuja, and the adoption of concession models and PPP arrangements, backed by effective regulation.

The Conference also stressed the importance of investing in aircraft maintenance, repair and overhaul (MRO) facilities, while urging the government to focus on policy formulation and regulation rather than directly operating airlines. Policy consistency, they argued, is essential to rebuild investor confidence and attract global aviation capital.

Collaboration was identified as a critical driver for growth, as was addressing the challenge of collateral requirements, which often hinder access to low-interest financing.

Participants also noted with concern the prevailing lack of cooperation among indigenous carriers, which continues to frustrate efforts to build strong alliances or mergers that would provide economies of scale. The absence of such collaboration has contributed to the collapse of 14 Nigerian airlines in the past.

To bridge financing and infrastructure gaps, the conference recommended:

Exploring windows such as the Central Bank of Nigeria (CBN) and the Bank of Industry (BOI) to provide indigenous airlines access to foreign exchange at lower rates.

Expanding equity financing through PPP models for airport upgrades and development.

Enforcing financial discipline and compliance with regulation among operators to boost confidence from lenders and investors.

Participants stressed that to reverse Nigeria’s ailing air transport sector, a hub driven by at least three strong indigenous carriers is imperative. Reliance on foreign airlines alone is unsustainable.

They also highlighted the urgent need for Nigeria to develop a transit hub facility at Lagos’ Murtala Muhammed International Airport (MMIA), with panelists agreeing that such infrastructure would significantly improve airline profitability and national revenue.

The issue of high insurance premiums faced by Nigerian airlines was raised, with participants lamenting that insuring a single aircraft in Nigeria can cost the equivalent of insuring seven aircraft in other countries—largely due to the global high-risk perception of Nigeria. They commended the current administration’s efforts to rebuild trust with lessors and called for further action to eliminate factors that unnecessarily stigmatise Nigerian operators.

Other resolutions from the Conference included:

The establishment of an aviation finance bank from which operators can source funding.

Government intervention to reduce airlines’ cost of operations, with a call to review the impact of the 5% ticket sales charge on local carriers.

The adoption of green financing to empower airlines financially.

Embracing non-traditional financing models, including dry lease, wet lease, and hybrid structures.

Encouraging upcoming airlines to prepare adequate collateral while being mindful of prevailing market conditions.

Promoting mergers, alliances, and global partnerships to spread risks and boost revenue.

Establishing an aviation data bank and harmonising existing data across the sector for effective planning and investment attraction.

Prioritising airport concession through PPP models to ensure fiscal sustainability and efficiency.

Pursuing financing for MRO development.

Maintaining policy consistency to encourage long-term investment in airlines, airports, and other aviation-related ventures.

The conference reaffirmed that unlocking the vast potential of Nigeria’s aviation sector depends on sustainable financing models, robust regulatory frameworks, infrastructural development, and above all, collaboration among stakeholders.