CHALLENGES OF NIGERIA GOVERNMENT IN ADDRESSING THE POLITICS OF FOREIGN EXCHANGE AND THE DEVELOPMENT OF NIGERIA AVIATION INDUSTRY

Abstract

As a result of rising incidents of hoarding of US Dollars by politicians in private vaults/commercial banks as well as the practice by Bureau de change, the nation’s aviation industry has continued to be under intense threats. Despite the fact that the demand for air transport services has been on the increase over the years, the full potential of the aviation sector in Nigeria has yet to be realized. Therefore, the objective of this study is to examine the challenges of Nigeria government in addressing the politics of foreign exchange and the development of Nigeria aviation industry. The institutional theory was adopted as a framework for the study. Primary and secondary data were employed to achieve the set objectives. The primary data were elicited through a well-structured and concise questionnaire, as well as interview. The study revealed that floating exchange rate policy, liberalization of the air transport sector, closure of forex windows and currency substitution circular are the mechanisms put in place to address the politics of foreign exchange and the development of Nigeria aviation industry. Findings also show that major challenges in the aviation industry in Nigeria hangs on the excessive political interference, fluctuating and high exchange rates, high and volatile fuel price, recessed economy, inconsistent aviation policy, lack of political will to policy implementation and policy somersault. Based on these findings, the study suggested that the federal government should declare a serious-minded state of emergency in the implementation of Nigeria Civil Aviation Policy (NCAP), 2013 without summersault and suspension. In line with above description, then, there is the need for government to strengthen the exchange rate against the dollar to help the domestic industrial sector, especially the aviation industry. The federal government must make effort to protect domestic airlines from all forms of unfavourable Bilateral Air Services Agreement (BASA).