Financial leakages, high operating costs and policy uncertainties are some of the reasons foreign investors are skeptical about investing in the Nigeria’s aviation industry, aviation expert, Samuel Caulcrick has said.
Caulcrick in an interview with The Guardian yesterrday, said that the aforementioned obstacles continue to cast doubt on Returns on Investment (RoI) for willing investors.

He explained that despite the ongoing reforms by the Federal government, concerns remained that structural inefficiencies, ranging from illicit financial flows to foreign exchange volatility, are discouraging long-term capital inflows into the sector.
He explained that available data indicate that Nigeria loses between $17.72 billion and $46 billion yearly to illicit financial flows, oil theft, illegal mining and related activities.
He expressed that these losses significantly weaken government revenue and limit its capacity to invest in critical infrastructure needed to support profitable private sector participation.

According to him, Nigeria accounted for about 79 per cent of illicit financial flows in West Africa, with total losses estimated at $77.7 billion between 2013 and 2022.
He attributed this to trade-related illicit activities.
In the oil sector alone, he pointed out that monthly losses linked to theft and unmetered production are said to exceed $700 million.

Caulcrick explained that these leakages contribute to macroeconomic instability, which in turn discourages Foreign Direct Investment (FDI) and encourages short-term portfolio inflows.
He added: “The challenge is not that investors are unaware of Nigeria’s potential. The real issue is confidence, particularly around the ability to generate and repatriate returns.
“The solid minerals sector reflects similar concerns. Illegal mining and gold smuggling are estimated to cost the country about $9 billion yearly, undermining formalisation efforts and raising questions about regulatory enforcement.

“These systemic challenges send negative signals to investors in critical sectors such as aviation, where long-term capital and stable policy environments are essential.”
Caulcrick regretted that the country’s aviation industry, had faced significant headwinds in recent years, mentioning the trapped foreign airline funds, which peaked at approximately $850 million in June 2023.
He, however, said that the Federal government of President Bola Tinubu later cleared about 98 per cent of the backlog by April 2024, but the crisis raised concerns about the ease of capital repatriation by investors and exposed deeper structural risks within Nigeria’s investment environment.

Besides, the former Rector of the Nigerian College of Aviation Technology (NCAT), Zaria said that operators are confronted with high operating costs driven by multiple taxes and charges, including the five per cent Ticket Sales Charge (TSC) and Cargo Sales Charge (CSC), as well as rising aviation fuel prices, currency depreciation and inflation.
He posited that these cost pressures leave very thin margins and make it difficult to guarantee returns to investors.
He, expressed that the government had however, introduced reforms aimed at improving the investment climate, including the unification of the exchange rate and efforts to boost capital importation, but warned that much of the inflows remained short-term.

He maintained that the sector in Nigeria was still dominated by “portfolio investors,” rather than long-term FDI, which is what an industry like aviation truly needed to remain competitive.
He said: “Beyond reforms, the government must take deliberate steps to reduce the cost of doing business, ensure policy consistency and provide guarantees around capital mobility.”

For the aviation sector, Caulcrick said this could include a review of existing taxes and charges, improved access to foreign exchange and targeted interventions to reduce operational costs.
He warned that without such measures, Nigeria risked losing out in the global competition for investment capital.