Hajj cancellation and financial burden on Nigeria
The ban placed on pilgrims by Saudi Arabia due to the COVID-19 pandemic has thrown public discourse on its economic impact on Hajj and Umrah operations.
Although the report is meant to draw the attention of the relevant authorities to the devastating economic impact of the virus on Hajj and Umrah, we must put the fact straight to avoid the erroneous impression created and the possibility of referring to inaccurate analysis in future.
According to a report, Nigerian operators are losing an estimated N150billion to 2020 Hajj cancellation while airliners are losing N50billion. If this is anything to go by, it means that Nigerian operators can generate the quoted amount during Hajj and Umrah operations.
How is this possible? Let’s assume that 65,000 pilgrims from Nigeria performed the 2019 Hajj and each person paid N1.5million, they would have paid a total sum of N97.5b.
For more analysis using the above 2019 fare as a template, it would be discovered that going by dollar components, Hajj fare was $4,834 (N1, 479,442), amounting to 97.9 per cent of the package. And the entire dollar component is spent on offshore services. The largest component is the flight ticket, which is $1,500 (N459,000) and constitutes 30.4 per cent of the total package.
This money goes to both Nigerian and Saudi Arabian airline operators. Max, Flynas and Medview are the major airlines that convey Nigerian pilgrims to the Holy Land for Hajj. This excludes 20,000 pilgrims allocated to private tour operators.
Also, pilgrims’ accommodation in Makkah and Madinah was within $1,260 (385,695); and that is about 25.5 per cent of the fare. The money also goes to Saudi Arabia’s economy.
Other services rendered by Saudi agencies include transportation within the Kingdom; Minna and Arafat Tent and other services amount to $865 (N264,647), which takes 17.5 per cent of the Hajj fare. This also goes into the Kingdom of Saudi Arabia’s economy.
Basic travel allowance of $800 (N244,800), which constitutes 16.3 per cent of the fare, is spent on shopping in Saudi. Feeding in Makkah, Madina, Masha’er and Jeddah airports constitutes another 7.5 per cent. This is also to the advantage of Saudi’s economy.
Furthermore, local charges, comprising a pilgrim’s uniform, suitcase, various admin charges and levies, are the smallest, amounting to $140 (N42,889) constituting 2.8 per cent. This is the only money that stays back home out of the entire Hajj components. The profit made by private Hajj companies cannot exceed N200 per pilgrim for tour operators that rendered commensurate services.
In a factual sense, Nigeria’s economy stands to benefit from the ban on Hajj for foreigners. This is because there will be no capital flight that would have further wounded the economy, in addition to the adverse effect of COVID-19.
No doubt, Hajj and Umrah operation in Nigeria has been badly affected by COVID-19, and the Independent Hajj Reporters, a civil society organisation which yours sincerely works for, has been publicly and privately soliciting for assistance from relevant authorities, especially for private tour operators.
This should not give room for overblown figures that may be used against the industry in future.
The real loser is the Kingdom of Saudi Arabia, as Hajj and Umrah operations contribute approximately 7per cent of the total Gross Domestic Product of that country, as well as 20 per cent of its non-oil revenue.
The suspension of the exercise for foreign pilgrims will also impact negatively on the primary source of income to many inhabitants of Mecca. At least 45 per cent of the people living in Makkah are made up of non-Saudis who rely on Hajj-related jobs for survival.
More importantly, if it is true that Nigeria generates N150b per Hajj and Umrah season, then the Orosanya report which calls for the scrapping of the National Hajj Commission of Nigeria (NAHCON) is right. This is because it means that while the commission makes much gain from such operations, the Federal Government pays salaries and allowances of its staff and even shoulders other responsibilities therein. Probably, we have unconsciously shot ourselves in the foot.
Speaking on the effect of COVID-19 on Hajj and Umrah and its impact on the pilgrims and the country, Nura Hassan Yakasai, the NAHCON commissioner for policy, personnel management and finance said, “The second impact for us is loss of revenue. Whatever we are doing as a commission is from the revenue generated during Hajj, from where we finance our budget. But unfortunately, this year’s Hajj did not take place and that has put us in a tight corner to finance some of our activities. The government takes care of our salaries and allowances, but it is from the revenue we generate that we finance some of our capital projects and logistic needs.
Our budget is divided into two: offshore and onshore. The offshore is what we use when we go for Hajj in Saudi Arabia, and since Hajj won’t be possible this year, that is completely off. The onshore is the revenue we generate from pilgrimage, which helps us to finance our activities as a commission. So the cancellation is going to affect us financially.”
This has confirmed our fear for 2021 Hajj, which will be conducted under new rules. And this requires adequate and comprehensive education and enlightenment for intending pilgrims. The question is: Where will the NAHCON source fund for such activities?
Finally, to meet the challenges ahead of 2021, we need to think outside the box and reconfigure the channel where the commission’s revenue flows.
There is no time for laxity because preparations for Hajj 2021 commenced the day Saudi Arabia announced ban on foreign pilgrims. At the end of it all, it is better for Saudi Arabia to lose money, not Nigeria. There is the need to avoid foreseeable circumstances.
This has confirmed our fear for 2021 Hajj, which will be conducted under new rules. And this requires adequate and comprehensive education and enlightenment for intending pilgrims. The question is: Where will the NAHCON source fund for such activities?