As airlines in Nigeria do their utmost to operate in the present harsh climes engendered principally by a scarcity of forex to be used for procurement of Jet A1; while also aiming to cover maintenance and overhaul costs, aircraft purchase and lease payments, there is a pressing need to side-line traditional methods of fundraising in the Nigerian aviation sector.
This was one of the themes at the recently concluded two-day 2nd Aviation & Cargo Conference, 2022 which was held at Marriott Hotel, Ikeja – Lagos, from Wednesday September 7 to Thursday September 8, 2022.
The event was graced by industry big wigs and other experts the likes of the Chief Executive Officer/Managing Director, Skyway Aviation Handling Company Plc. (SAHCO), Mr. Basil Agboarumi; President, Aircraft Owners and Pilots Association of Nigeria, Alex Nwuba; Chief Executive Officer (CEO), Hashgreed, Efosa Ighodaro; CEO, Chisco Express, Obinna Anyaegbu; Associate Member, Airstream Aviation Services Ltd., Anny Chigbo amongst others.
Speaking on aviation funding, the tech expert Efosa Ighodaro made a presentation on the application of blockchain as a means of raising funds within the sector through a process called “tokenization” of assets.
According to him, “Blockchain is a cryptocurrency project that works with Non-Fungible Tokens (NFTs), which are essentially smaller units of the total cost of an asset. By selling these tokens in an NFT marketplace, airlines and other businesses in the aviation sector can fund various projects faster, while at the same time pruning the investment culture among Nigerians and preserving national assets. The first danger to money is when it is not being utilized to make more money. Therefore, before an NFT is sold, there’s already a project waiting to be funded with the sold NFT”, he said.
The CEO added, “Blockchain is the new banking. It is the latest and safest way to store data and escape inflation. It is basically “crowd-owning”, which differs from crowd-funding in that here, investors are not merely funders of projects, but are equally owners of the assets they fund. Instead of waiting for a foreigner to cough up 1 hundred million USD for you to procure an aircraft for example, create 1 million NFTs and sell them to Nigerians at 100 USD each. The funders will then become owners of the said aircraft, while you remain the operator”, he suggested.
The Hashgreed boss cited information gap as the primary challenge in this domain – a hurdle which can easily be overcome with the right amount of advertising, as according to him, “The more people are aware of your need for funds and your kind of business, the faster you can raise the money you need, because with blockchain, even Nigerians in the diaspora can participate.”
Responding to a comment by Obinna Anyaegbu about Nigerian goods being rejected abroad despite the acceptance and high consumption of foreign goods in the country, Alex Nwuba said:
“Goods from Nigeria come with all sorts of certification recommendations. These create bottlenecks during the authentication process abroad, leading to a higher probability of them being rejected. Blockchain eases this process by eliminating bureaucracy.”
With reference to the aviation sector, he advised: “As an industry, we do not seem to be looking at the equity market and partnerships for funding. Tokenize the price of your project so that the general public can buy units, and raise the funds you need. Use tokenization as a mechanism for funding operations at various levels, rather than going with the traditional approach which involves going to the banks for funding.”
