Business
Worry over 50% TSA deductions from aviation agencies
Despite agitation and clamour for the removal of aviation agencies from Treasury Single Accounts (TSA), there is uneasy calm in the industry over the recent circular raising the TSA contribution from 40 per cent to 50 per cent, Daily Trust can report.
Aviation analysts and stakeholders have raised an alarm over the development which they said threatens safety of the industry as agencies are expected to reinvest their surplus in safety critical projects as recommended by the International Civil Aviation Organisation (ICAO).
Daily Trust reports that the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, had directed parastatals classified as “super agencies” which are self-funded to remit 50 per cent of their Internally Generated Revenues (IGR) to the government coffers.
Edun in a circular directed all partially-funded Federal Government Owned Enterprises (FGOEs) to remit 50 per cent of their IGRs while the fully-funded Ministries, Departments, and Agencies (MDAs) are to remit all their revenues.
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In a circular dated December 28, 2023, the minister said, “This is to improve revenue generation, fiscal discipline, accountability, and transparency in the management of government financial resources and the prevention of waste and inefficiencies.”
This directive is expected to be implemented by the Accountant General of the Federation (AGF) in compliance with a presidential directive aimed at plugging leakages and shoring up revenue.
Daily Trust reports that the affected agencies were 65 parastatals listed under the schedule to the Fiscal Responsibility Act, 2007.
They included two major service providers – the Federal Airports Authority of Nigeria (FAAN) and the Nigerian Airspace Management Agency (NAMA) as well as the regulatory authority, the Nigeria Civil Aviation Authority (NCAA).
The federal government had in October 2012 increased the compulsory contribution to the federation account by its revenue-generating agencies to 40 per cent from 25 per cent.
The immediate past Managing Director of NAMA, Mohammed Odunnowo, in October 2023 said the agency was facing extreme financial difficulty over the 40 % deduction.
“Eliminating this deduction is crucial for our thriving,” he said.
Experts however say safety is under threat with the increase of the contribution.
Aviation analyst and Managing Partner of Avaero Capital, Sindy Foster, said, “Increasing the TSA to 50% without taking into account costs is a huge mistake. In a sector like aviation which is about safety and security, it can lead to catastrophic lapses.
“Whilst capital expenditure may continue to be funded by federal government allocations, will the 50% retained be enough to pay all the recurrent expenditure for all the people and essential services? That question should have been asked first; not after the fact. What was required is a comprehensive audit and forward looking into future funding requirements. This is yet another situation where the cart has been placed before the horse. Let’s hope it doesn’t lead to dire consequences.”
Managing Director of Westlink Airlines, Capt. Ibrahim Mshelia, expressed concerns that the agencies are already over-bloated, saying Nigerian travellers will suffer for it.
He said aviation is a specialised industry that can’t be starved of funds.
“The truth is there. The agencies are over-bloated; how do you expect them to function? There are so many people doing one small thing. Don’t you travel out of this country? How many people meet you as you arrive? We have chosen to destroy our country. If they like they should increase it to 400 %, it is Nigerians that would suffer,” he said.
Engr Sheri Kyari, a former President of the National Association of Aircraft Pilots and Engineers (NAAPE), said the move would “degrade a lot of services in the industry.”
Engr Kyari said: “At the end of the day, I feel for the industry. Take for instance, you are taking so much from FAAN and there is a runway surfacing to be done. How will they do it?
In NAMA, there are navigational aids (NAVAIDS) that require constant power. If you don’t have back-up, solar and so on, how will they function?”
