…FG to Provide Sovereign Guarantee for Aviation Leasing Initiative

Minister of Aviation and Aerospace Development, Festus Keyamo, has disclosed that private investors and development finance institutions will provide about 95 per cent of the funding for the newly established Nigerian aircraft leasing company.

Speaking during a meeting with representatives of the Airline Operators of Nigeria (AON) in Abuja, Keyamo said several development finance institutions and private investors across Africa and beyond had already expressed interest in financing the aviation leasing initiative.

According to the minister, the Special Purpose Vehicle (SPV), recently approved by President Bola Ahmed Tinubu and the Federal Executive Council (FEC), will operate largely as a private sector-driven company.

He explained that President Tinubu had directed four ministers — Finance, Aviation, Industry, Trade and Investment, as well as the Attorney-General of the Federation — to ensure the smooth take-off of the initiative.

Keyamo stated that the Federal Government’s role would mainly involve strategic support and sovereign guarantees relating to aircraft safety and repossession, while the bulk of financing would come from investors and financial institutions.

“The company will be substantially private. We are bringing in investments of nearly 95 to 99 per cent from outside government through development banks and private investors from within and outside the country,” he said.

The minister explained that the initiative was created to address the longstanding difficulties Nigerian airlines face in accessing aircraft and affordable financing.

According to him, the SPV will acquire aircraft through dry lease arrangements and lease them to local operators in naira, thereby reducing pressure on foreign exchange demand and protecting airlines from exchange rate volatility.

Keyamo added that the structure would simplify transactions for international financiers, who would now interface with a single Nigerian entity rather than multiple local airlines.

He further noted that government backing would guarantee smooth repossession processes for lessors and financiers in the event of default, a development expected to boost investor confidence in Nigeria’s aviation sector.

The minister also revealed that the African Development Bank (AfDB) had aligned with the initiative under its continental aviation financing programme.

According to him, Nigeria has been selected as one of the pilot countries for the programme, which carries an estimated $7 billion funding package dedicated to aviation development across Africa.

Keyamo disclosed that he had also been appointed ambassador for the programme across the continent by the AfDB.
He said discussions with investors and financial institutions were already ongoing, while the incorporation process for the SPV is expected to be completed within weeks.

Managing Director of Ibom Air, George Uriesi, commended the Federal Government for the initiative, describing it as a major intervention capable of lowering financing costs, improving airline operations, and reducing flight delays and cancellations in the country.

According to him, the minister has addressed three major challenges that had plagued the aviation industry for years, including issues surrounding the Cape Town Convention, aircraft insurance, and access to aircraft financing in naira at lower interest rates.

“We are not forced to use the leasing company, but when it offers lower interest rates and naira repayments, it makes sense. We have orders for new aircraft and we are ready to take advantage of this. On behalf of the airlines, thank you, Honourable Minister,” Uriesi said.