Nigerian President Muhammadu Buhari signed an 8.9 trillion naira (USD 29 billion) budget for 2019 into law on Monday, 27 May.
The National Assembly last month passed the appropriation bill at N8.9 trillion naira, increasing the budget by 80 billion naira, up from the N8.83 trillion submitted by Mr President in December last year.
With a deficit of 1.9 trillion naira, the budget relies on raising about 53.6% (3.7 trillion naira) revenue from crude oil sales. The government estimates to produce about 2.3 million barrels of oil a day at USD 60 per barrel, and exchange rate peaked at 305 naira to a dollar.
The budget made provision for Nigeria’s space programme and the establishment of a new national carrier to bolster the aviation sector.
The national carrier project named Nigeria Air was unveiled at the Farnborough Airshow in London in July 2018 amidst public outcry for fear of mismanagement by the government.
The government announced it plans to own not more than 10% shares of the airline while allowing private investors to manage and run the business. Some shares will also be floated on the stock market, giving Nigerians the opportunity to own a stake in the carrier.
According to the breakdown of the 2019 budget, Nigeria Air will receive 47 billion naira (USD 155 million) grant in Viability Gap Funding (VGF) to kick off operations. VGF is a grant in the form of capital subsidy provided by the government for economically viable projects.
Nigeria’s Minister of State for Aviation, Senator Hadi Sirika, told the press in Abuja in November 2018 that the estimated funding requirement for the establishment of the project is USD 300m. Sirika further explained that the estimated working capital for Nigeria Air in 2019 is USD 100 million and 145 million for 2020, which will be provided by strategic private equity partners who are expected to manage the business.
According to Sirika, leading international aerospace companies and investment banks have expressed interest to partner with the Nigerian government on the project, including African Development Bank, AFREXIM, Airbus, US-EXIM, Boeing, Standard Chartered Bank and China-Exim Bank.
How much in the budget is allocated to Nigeria’s space programme?
Similarly, the recently approved 2019 budget made provision for Nigeria’s space programme. The government earmarked 18.1 billion naira (about USD 50 million) for its space programme, shared between the National Space Research and Development Agency (NASRDA) and its centres; Defence Space Administration and the Nigerian Communication Satellite Limited.
NASRDA and its centre would receive the larger part of the fund: 11.7 billion naira ($32.3million); followed by NIGCOMSAT, N3.9 billion ($10.7million) and the Defence Space Administration, N2.5 billion ($7million).
Nigeria’s budget for space in 2019 decreased by USD 11.7 million less of the USD 61.7 million budgeted in 2018.
Nigeria’s budget for space does not usually capture capital expenditures such as the acquisition of satellites. For example, the government spent an additional USD 13 million to acquire NigeriaSat-1 from the UK, USD 300 million to acquire NIGCOMSAT-1 from China, USD 35 million to acquire NigeriaSat-2 from to the UK and to build NigeriaSat-X, and USD 150k to build NigeriaEduSAT-1, which were not captured in the annual operational allocations of the space agencies in those years.
The government is also currently negotiating with Beijing to acquire two communications satellites in exchange for equity in NIGCOMSAT Ltd, the state-owned communications satellite operator.
Joseph Ibeh is a Mandela Washington Fellow and Senior Analyst at Space in Africa. His experience spans industry research and market analysis with a focus on African-grown NewSpace companies, commercial space industry, national space programmes and real-life application of space science for sustainable development in Africa.