‘Forex Volatility Kills Businesses in Nigeria’

President and Chief Executive Officer of Sabre Network NMC West Africa, Gabriel Olowo has said that the instability of the naira over other international currencies has adversely affected many businesses in Nigeria, leading to collapse of indigenous companies and the withdrawal of some multinational organisations from the country.

Olowo who made the remark in an interview with THISDAY in Lagos on Wednesday recalled that Nigeria has had problems with forex, which sometimes affect the country’s international trade. Olowo said in the 1970s and 1980s, the air link between Nigeria and Brazil gave rise to many businesses in Nigeria and there was business partnership between the two countries like the exchange programme between Volkswagen of Nigeria and Volkwagen of Brazil. He noted that when the air link was broken due to the volatility of forex, some of these companies had to leave Nigeria because they could not repatriate their revenues.

“During the first coming of President Buhari as Military Head of State, we faced the foreign exchange problem and the airlines were running with what was called blended rate. Various banks offered different exchange rates. Foreign airlines were faced with that. About five airlines left Nigeria. I was working for a Brazilian airline, Varig. I was deputy General Manager.“The airline left this country because of foreign exchange. They had naira in Nigeria, but they could not repatriate their revenue due to scarcity of foreign exchange. Iberia left, Varig, Scandinavian Airline amongst others left. Since then a big vacuum was created. There was trade with Brazil; we had counter trade with Brazil. Volkswagen Nigeria was relating with Volkswagen Brazil. We had Sakamori, we had telecom from that country, pharmaceutical businesses from Brazil,” he said.

Olowo who is also the President of Aviation Round Table (ART) said forex challenges seem to affect airlines more because over 75 percent of the activities to manage an aircraft and to sustain an airline need forex.

“As far back as 1994, exchange rate was around N22 to a dollar from N4. Nigerian airlines were selling a one hour of jet flight like Lagos-Kano, Lagos-Abuja for N2, 200 and exchange rate was N22; that is $100. Lagos-Abuja was a $100 value in 1994; that was 23 years ago. Now exchange rate has moved from N22 to about N450 today and somebody is selling ticket at N16, 000, which is $30. Somebody in government should intervene. How will the airline generate money to maintain its aircraft?” Olowo asked.

Olowo also said government policies do not favour the growth of the private sector.