Nigeria is positioning itself as a more competitive destination for aircraft financing and leasing, following a series of regulatory reforms linked to the implementation of the Cape Town Convention.
The reforms were presented at the Aviation Working Group General Meeting in London, where international financiers, aircraft lessors, legal experts and aviation stakeholders were briefed on Nigeria’s progress in strengthening aviation financing, regulatory compliance and investor confidence.
A central focus was Nigeria’s implementation of the Cape Town Convention, which is designed to reduce legal uncertainty, strengthen creditor confidence and lower financing costs for aircraft operators. This is particularly relevant for emerging aviation markets, where growth is often constrained less by passenger demand than by access to affordable capital.
Nigeria was among the original signatories to the Cape Town Convention during the Diplomatic Conference held in Cape Town in 2001, and later domesticated the Convention through national legislation under the Civil Aviation Act.
More than 80% of aircraft operating on the Nigerian registry are acquired through lease arrangements. According to the information presented, most leased aircraft whose lease terms expired were successfully deregistered and exported without hindrance, supporting Nigeria’s efforts to improve its reputation as a Cape Town Convention-compliant jurisdiction.
Nigeria’s Cape Town Convention compliance score improved from 49% to 70.5% in September 2024, following the signing of a new Practice Direction by the Chief Judge of the Federal High Court. The Practice Direction strengthened legal enforcement mechanisms in aviation-related matters.
The operationalisation of the Irrevocable Deregistration and Export Request Authorisation, commonly known as IDERA, later raised Nigeria’s compliance score to 75.5%. This contributed to Nigeria’s removal from the Aviation Working Group blacklist.
The reforms are already being reflected in the aviation financing market, with recent successful dry lease transactions involving Nigerian carriers and financing institutions cited as examples of renewed confidence in the Nigerian aviation sector.
However, several operational challenges remain. These include customs-related issues, temporary importation procedures, foreign exchange volatility and inter-agency coordination concerns, which can affect financing predictability and lease structures.
Further reforms are being pursued through regulatory agencies, judicial capacity development and digitalisation initiatives within the Nigeria Civil Aviation Authority.
The Federal Executive Council has also approved the establishment of a Nigerian Aircraft Leasing Company. The initiative is expected to unlock more than US$1 billion in future fleet financing capacity and reduce Nigeria’s dependence on foreign lessors.
The proposed leasing company is intended to give Nigerian airlines access to aircraft on more competitive terms, support fleet modernisation and strengthen operational resilience within the sector.
Nigeria’s aviation market, with a population exceeding 200 million people and growing passenger traffic, requires a modern, efficient and financially sustainable aviation system capable of attracting long-term and competitively priced investment.
For airlines, lessors and financiers, the effectiveness of these reforms will depend on continued legal certainty, institutional confidence and consistent enforcement of international obligations.
