Financial leakages, high operating costs and policy uncertainties are some of the reasons foreign investors are sceptical about investing in Nigeria’s aviation industry, an aviation expert, Samuel Caulcrick, has said.

Caulcrick, in an interview with The Guardian yesterday, said the obstacles had continued 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.

According to him, 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 noted that the losses had weakened government revenue and limited its capacity to invest in critical infrastructure needed to support profitable private sector participation.

He stated that 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 were said to exceed $700 million.

According to him, the leakages contribute to macroeconomic instability, which, in turn, discourages Foreign Direct Investment (FDI) and encourages short-term portfolio inflows.

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 the Federal Government under 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 bigger 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 the cost pressures leave very thin margins and make it difficult to guarantee returns to investors.

Henoted thatthe 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 was what an industry like aviation truly needed to remain competitive.