The Federal Airports Authority of Nigeria (FAAN) has emerged as a model of resilience by remitting ₦218.3 billion from its internally generated revenue (IGR) and an additional ₦352.3 million in stamp duty payments to the Consolidated Revenue Fund (CRF) between 2020 and 2024. This achievement stands out amid the Federal Government’s directive for a 50% IGR deduction from all revenue generation parastatals, raising critical questions about the efficacy of the policy.
Navigating Challenges: FAAN’s Commitment to Accountability*
During a presentation to the Senate Committee on Finance in Abuja, FAAN’s Managing Director, Olubunmi Kuku, outlined the authority’s achievements despite daunting challenges, including the COVID-19 pandemic. In 2020, when the aviation sector was hardest hit, FAAN remitted ₦3.5 billion from its IGR and fully cleared delayed stamp duty payments by 2021.
Kuku emphasized FAAN’s unwavering commitment to financial regulations, noting its role in managing Nigeria’s commercial airports effectively. However, she also called for increased funding to modernize the country’s airports, positioning Nigeria as a key aviation hub in West and Central Africa.
The 50% IGR Deduction Debate
President Bola Ahmed Tinubu’s 50% IGR deduction policy aims to centralize revenue generation and optimize national funds for critical sectors. While this policy has garnered support as a fiscal consolidation strategy, it has also sparked concerns about its impact on the operational efficiency of revenue-generating agencies.
Insights from FAAN’s Performance
FAAN’s ability to remit substantial funds highlights its operational resilience. Aviation consultant remarked, “FAAN has demonstrated that strategic resource management can yield impressive results, even under financial constraints.”
Yet, for other agencies like the Nigerian Ports Authority (NPA) and the National Emergency Management Agency (NEMA), the policy has reportedly hindered their ability to execute developmental programs.
Global Practices and Case Studies
– Rwanda: A tiered revenue-sharing model allows agencies to retain a portion of their IGR for development while remitting the rest to the central government, balancing operational efficiency and national fiscal goals.
– Ethiopia: Ethiopian Airlines reinvests a significant share of its earnings into infrastructure and fleet expansion, benefiting from operational autonomy despite government oversight.
Strategic Recommendations
1. Flexible Deduction Models:Adjusting the percentage of IGR deductions based on agency mandates could ensure sufficient funds for critical projects while meeting national revenue targets.
2. Public-Private Partnerships (PPPs): Encouraging PPPs could help agencies like FAAN attract investments for infrastructure upgrades, reducing reliance on federal allocations.
3. Enhanced Oversight:Periodic audits and strict compliance monitoring can ensure retained funds are allocated for developmental purposes.
Looking Ahead
FAAN’s performance amid fiscal constraints is a testament to its managerial efficiency and adherence to regulations. However, the broader success of President Tinubu’s 50% deduction policy hinges on its adaptability to agency-specific needs and the establishment of collaborative frameworks with key stakeholders.
With strategic adjustments and continued transparency, Nigeria can balance fiscal prudence with developmental goals, ensuring sustainable growth across all sectors
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