Minister of Aviation Festus Keyamo has said that expanded federal allocation disbursements from ongoing macroeconomic reforms are directly funding major airport and highway developments across sub-national states. The claim is political and fiscal at once. It ties subsidy removal and exchange rate reform to visible infrastructure. That is a message the presidency wants to sell. It also raises a question. If allocations have risen, why do states still struggle to pay salaries and pensions?
The mechanics matter. Federal allocations to states rise when oil revenue and tax collections improve. The removal of petrol subsidies increased federal revenue. Exchange rate reform increased naira value of dollar-denominated oil receipts. But states receive a share under the FAAC formula. The federal government cannot direct states to spend their allocations on airports. Aviation projects at state level usually involve state governments, the Federal Airports Authority of Nigeria and private partners. Keyamo’s statement therefore blends federal, state and private spending.
The historical echo is the 2016 recession, when states received bailouts but many still struggled to pay salaries. Revenue increases do not automatically become service delivery. They become service delivery when governors prioritise capital spending over recurrent costs. Airport and highway projects can spur trade. They can also become white elephants if passenger traffic and cargo volumes do not justify them. The winners are contractors, aviation agencies and states with viable projects. The losers are taxpayers if the projects lack business cases.
Winners: Contractors, aviation agencies, states with viable airport projects.Losers: Taxpayers if projects lack business cases, states that divert allocations to recurrent spending.
Bottom Line: Keyamo is right that reforms have raised revenue. He has not proved that airports are the best use of that revenue.