Could the best manager have saved Nigeria Airways?
There has been a lot said already about how bad management ruined Nigeria Airways and other Federal Government agencies in the 90s. President Muhammadu Buhari recently stated that “Nigerians need to know what happened to Nigeria Airways.” If I may contribute, and this is not commonplace, I would say it was a combination of system failure, greed, and wrong decision. It was not only Nigeria Airways, but all other Federal Government agencies with high components of foreign exchange that were affected.
The likes of the Nigerian National Shipping Line, the refineries, the power sector, the Nigeria Railways, etc. were also affected. Nigeria’s top-class human capital, developed by the taxpayers’ money from the 1960s, did not escape the onslaught. The assault on our national psyche triggered an exodus of the cream of our think tank into the Diaspora. In the end, through the Structural Adjustment Programme, Nigeria descended eventually into a state where only the flotsam and the jetsam of the Nigerian society took over the leadership space, both in the industry and politics.
Nigeria Airways and all the others mentioned above were first, the victims of the blowing wind of monetarism in the late-1980s to mid-1990s. The cyclical low in global business (global recession), particularly in the Third World, was attributed to inadequate management skills of any company, particularly government businesses. When a Third World country approached the World Bank or the IMF for a loan, they met a brick wall of monetarists at the two world financial institutions on the Nineteenth Street, in Washington D.C., USA unless they took the IMF prescriptions. The protracted, prolonged global recession from the mid-1980s to early-1990s presented the opportunities to those who had wanted to experiment the market economy.
The implementation of the tripartite conditions of deregulation, privatisation and fiscal austerity became the minimum to access the IMF assistance in that period. After Buhari’s military regime had balked at the idea of accepting those terms, the administration that replaced it on August 27, 1985, however, implemented them to take the IMF loans.
The economic theory of Friedrich von Hayek which became grounded at the University of Chicago, Faculty of Social Sciences, School of Economics, had been brewing from the mid-1950s, but no responsible government wanted to implement it. Even President Nixon of the USA balked at the notion when they offered it to him in the 60s, by the likes of Donald Rumsfeld, Milton Friedman – the chief arguer of neoliberal economics.
Milton Friedman and his disciples struck gold in 1973; with the help of the Chicago Boys that hatched a plot in nearby Bolivia, Pinochet violently overthrew the government of Salvador Allende in Chile.
Nigeria that had been the destination of foreign investments in the 70s also became a target of the disciples of monetarism who had populated the world’s financial institutions. They took advantage of Nigeria’s political vulnerability and, in retrospect, sent the Nigerian socio-economic structure into a tailspin.
Four months into the regime of Ibrahim Babangida, in December 1985 to be precise, the Supreme Military Council decided to commercialise most government agencies, the likes of the Nigerian National Shipping Line, Nigeria Airways, the refineries, the power sector and others. The country was trying to grapple with a massive public budget deficit at the time. Most of these government agencies had the infrastructure in place and swung into action with their new status since government subventions would no longer come from the national treasury.
Nigeria Airways, like the other Federal Government agencies, took steps to adjust to its new commercial status and submitted plans to the government for its future development devoid of government subventions. It was ambitious; after all, Nigeria Airways was the leading airline in the sub-Sahara at the time. With its infrastructure, Nigeria Airways, it was envisaged, would continue to lead Africa into the future and could have dominated the skies of Africa and the Middle East if fate and the enabling environment had not been hostile. For example, the regime brought in their protégé to derail the airline’s grandiose plans for developing.
All of these did not preclude the quality of management at these government agencies at the time. The government deliberately brought in these people to manage, more like damage, some of these organisations to prepare the ground for individual take over in future. It was, however, a period of “innocence” to the rest of us. Babangida’s regime, in response to the reality on the ground and the urging of the IMF, decided to throw open, to the public, a discussion of Nigeria’s socio-economic future. The ensuing conclusion was SAP in June 1986.
The agencies mentioned above could not adjust their tariffs or fares in line with the dwindling value of the local currency, (naira) to stave off the public outcry of the programme’s implementation when the devaluation of the naira began to erode the people’s wealth and dent their purchasing power.
Consequently, Nigeria Airways and others maintained the status quo in the pricing of their products. The fare between Lagos and Port Harcourt, for instance, remained at N45.00 or $66.00 equivalent up to a day before the introduction of the Second-tier Foreign Exchange Market on September 29, 1986. Technically, the airfare of Lagos to Port Harcourt depreciated to an equivalent of $15.00 as the first bidding was N3 to one American dollar (3:1) – a massive shortfall in operating cost; maintained for the next two years at the minimum.
With over 1000 available seats on that route daily, serviced by the newly acquired Airbus 310-200 aircraft, it meant the airline was losing an equivalent of $51,000.00 US dollars daily on that route alone.
In 1986, Nigeria Airways route structure covered the whole of West Africa and some key other destinations in Central and East Africa with regular services. On the international routes, New York was twice a week; daily flight to London (10 flights a week in summer); three-a-week flights to Rome, Zurich, and Jeddah; two a week to Paris and Amsterdam.
On the local scene, all airports were serviced by Nigeria Airways, with Kano, four flights daily; Kaduna, three; Port Harcourt had four; Enugu had eight daily flights, and Benin had six flights daily. Most, if not all these routes had a passenger-load of 80 per cent or more. Problems only started with the introduction of SAP, when demand outstripped the supply of seats.
Overbooking became the order of the day, and it was evident there was a need for expansion, but at what price? With all its shortcomings, Nigeria Airways was the choice airline on any of those air routes.
The structure the founders of our nation (successive governments) laid down still took a while to crumble. It could be the reason some of those agencies are still in existence today, but they somewhat amble along. This historical perspective is crucial for us to realise that we could have wrongly diagnosed the ailment and administered the wrong prescriptions. Our ailments are persisting, still.
Everything stated earlier about Nigeria Airways could also be extended to the other federal agencies; the likes of the refineries, the power sector, the National Shipping Line. The shipping line was the first to go down. On in-depth analysis, all of these agencies had high operational components expressed in foreign exchange; apart from salaries and some overheads expressed in naira, the rest were in foreign currencies.
As the naira continued to slide, and by the end of the two years, the naira was trading for more than N7 to the dollar (N7.39 to $1.00); the frozen tariffs remained domiciled, in the naira. This devaluation of the naira further degraded the operational health of these organisations; there was still no government plans to bail them out.
As the national flag that flew on the tails of Nigeria Airways airplanes became a source of national disgrace, denigrated across the globe by court injunction seizures of Nigeria Airways planes, the Babangida regime released a grant of $100 million. The Abacha regime set up a commission to investigate what happened to that government intervention, but the report has not seen the light of day.
We all woke up one morning, the shipping line was no more – it was the dose prescribed by the IMF and the World Bank. The likes of China had to reject IMF consultancy and see where China is today.
The principals involved in all these must have their regrets in their solo moment. But how will the future historians, sitting in their quiet moments, record this period in Nigeria Airways’ history, or indeed Nigeria’s history? At the Armistice in 1918, when the First World War ended, Emperor Whihem, the Kaiser, was accused of planning the First World War. One of those who had compassion for the king was Sir Winston Spencer Churchill of Great Britain. Churchill offered in defence of the German king for his acquittal, the same plea that someone had once raised for Marshal Bazaine, for the surrender of Metz: “This is no traitor. Look at him; he is only a blunderer.” Will the future historian, sitting in their quiet moment record that Babangida and his team of Chief Olu Falaye, Dr. Kalu Idika Kalu and more, be offered the same plea of being only blunderers?