Nigeria’s Aviation Reforms Yet to Fully Restore Investor Confidence - Shiekuma Gemade

Aviation Financing in Nigeria Still Constrained Despite Regulatory Progress

Nigeria’s aviation sector has recorded notable regulatory improvements over the past three years, including its removal from the Aviation Working Group (AWG) watchlist and stronger compliance with the Cape Town Convention (CTC). However, investor confidence in the industry remains subdued, according to aviation finance executive Shiekuma Gemade.

Speaking in an interview with Nairametrics, Gemade said that while recent reforms have improved Nigeria’s credibility in the global aviation market, aircraft leasing activity and broader financing inflows have yet to recover meaningfully. He noted that global lessors and financiers still view the Nigerian aviation market as high-risk despite progress in regulatory alignment.

/ You Might Also Like /

Nigeria achieved a 75.5% compliance score on the Cape Town Convention Index after reforms to its Irrevocable Deregistration and Export Request Authorisation (IDERA) framework under the Nigerian Civil Aviation Authority (NCAA). The reforms were designed to improve creditor protections and align Nigeria more closely with global aircraft financing standards.

Regulatory progress improves credibility

Gemade described Nigeria’s exit from the AWG watchlist as a significant milestone for the aviation sector. According to him, the development signals to international lessors and financiers that Nigeria is making deliberate efforts to align with international best practices.

He credited the reforms implemented under the leadership of Aviation Minister Festus Keyamo for helping improve the country’s standing within the global aviation ecosystem. According to Gemade, stronger regulatory compliance has enhanced Nigeria’s reputation among aircraft lessors and financial institutions seeking stable and predictable markets.

However, he stressed that regulatory reforms alone are insufficient to immediately unlock large-scale investment or leasing activity.

Investor confidence still recovering

Despite the regulatory gains, Gemade noted that leasing companies remain cautious about committing capital to Nigeria’s aviation market. He explained that the sector is experiencing what he described as a “lagging effect,” where investor confidence takes time to recover even after reforms are introduced.

According to him, aircraft lessors evaluate more than legal protections before deploying capital into a market. Operational efficiency, airport infrastructure, maintenance capacity, fuel price stability, taxation, and broader economic conditions also influence financing decisions.

He stated that many financiers still want evidence of consistent policy implementation and operational reliability before increasing exposure to Nigerian airlines.

The cautious approach by global leasing firms partly explains why Air Peace’s dry lease transaction in late 2025 remains one of the few publicly visible aircraft financing deals involving a Nigerian airline since the reforms were introduced.

Aviation ecosystem challenges persist

Gemade argued that Nigeria’s aviation reforms must extend beyond regulatory compliance to include broader ecosystem development. He said sustainable investment inflows require coordinated support across infrastructure, airline operations, maintenance capabilities, and financial systems.

According to him, aviation markets that attract long-term capital typically operate under unified national strategies that treat aviation as a strategic economic sector rather than a collection of isolated airline businesses.

He cited Saudi Arabia as an example of a country pursuing an integrated aviation development strategy through coordinated investments in airlines, airport infrastructure, maintenance facilities, and aviation partnerships.

Gemade noted that Nigeria’s aviation industry remains fragmented, with many airlines operating independently while competing for limited aircraft supply and financing opportunities. He said this fragmentation weakens bargaining power with lessors and increases operating costs across the sector.

Global aircraft shortages create additional pressure

The aviation finance executive also pointed to ongoing global supply chain disruptions and aircraft shortages as a challenge for emerging aviation markets such as Nigeria.

According to the International Air Transport Association (IATA), global aircraft order backlogs reached approximately 17,000 aircraft in 2025, creating delivery delays and increasing leasing costs worldwide.

Gemade said the shortage has made access to new aircraft more difficult for smaller and emerging markets. However, he added that the backlog could eventually create opportunities for Nigerian airlines through the availability of mid-life aircraft entering the leasing market.

He emphasised the need for coordinated aircraft acquisition strategies that would allow Nigerian airlines to negotiate more favourable financing terms, maintenance support, training arrangements, and technical partnerships.

Fleet planning and profitability remain critical

Gemade also highlighted the importance of strategic fleet planning for Nigerian airlines seeking long-term profitability.

He explained that aircraft selection depends heavily on route structure, passenger demand, airport capacity, and overall business strategy. According to him, there is no universal aircraft model suitable for every airline, as fleet composition must align with operational realities and revenue objectives.

He noted that some domestic routes in Nigeria, particularly the Lagos-Abuja corridor, are heavily serviced, while other routes remain underserved. Better route coordination and data-driven capacity planning, he said, could help airlines improve profitability and operational efficiency.

MRO infrastructure seen as long-term necessity

The interview also addressed the commercial viability of maintenance, repair, and overhaul (MRO) facilities in Nigeria.

Gemade described MRO infrastructure as essential to the long-term sustainability of the aviation sector. He noted that many Nigerian airlines still rely on foreign maintenance facilities, increasing operational costs and reducing efficiency.

However, he cautioned that developing competitive MRO facilities requires substantial capital investment, technical expertise, tooling, and regulatory certification.

He added that successful aviation markets often negotiate maintenance infrastructure, technical partnerships, and training support directly within aircraft procurement agreements with manufacturers such as Boeing and Airbus.

Outlook for Nigeria’s aviation sector

Nigeria’s aviation sector has made measurable progress in strengthening its regulatory environment and improving compliance with international financing standards. However, industry stakeholders continue to face challenges tied to infrastructure gaps, operational efficiency, fragmented market structures, and weak investor confidence.

While the country’s removal from the AWG watchlist marked an important milestone, aviation experts believe sustained investment will depend on broader ecosystem reforms capable of improving airline profitability, operational reliability, and long-term financing stability.

As global aviation financing conditions remain tight, Nigeria’s ability to build an integrated and commercially sustainable aviation ecosystem could determine whether recent reforms eventually translate into stronger capital inflows and expanded aircraft leasing activity.

READ MORE