Hajj cancellation and matters of N150bn

 

The ban placed on pilgrims from hajj participating countries by Saudi Arabia due to Covid-19 pandemic has thrown public discourse on its economic impact and networking effects on hajj and Umrah industry.

Though the report is meant to draw the attention of relevant authority to the devastating economic impact on Hajj and Umrah industry we must put the fact on record to avoid erroneous impression created and the possibility of referring to inaccurate analysis in future.

According to reports, Nigerian operators and airlines will  lose N150bn and N50 billion, respectively, in revenue due to hajj cancellation. If Nigerian hajj operators lose 150bn due to the ban on hajj, then it means that they would have generated N150bn revenue if hajj took place. 

Let’s take the issue of “Nigerian operators lose N150bn to 2020 hajj cancellation” and do in-house interrogations on the report. 

Nigerian pilgrims that performed hajj 2019 fall within the range of 65,000. Let us concede that each pilgrim paid N1.5 million as hajj fare. The 65,000 pilgrims would have paid N97.5bn during one hajj season.

Now let’s do the interrogation using 2019 hajj fare as a template and N1.5 million hajj fares and see whether Nigerian hajj operators operate a ‘lifeless balance sheet” of N150bn due to hajj cancellations. 

The dollar component of 2019 hajj fare is about $4,834 (N1,479,442) amounting to 97.9% of the total hajj fare package. The entire dollar component is being spent on offshore hajj services. The component with the largest share is the flight ticket which is $1,500 (N459,000) and constitutes 30.4% of the total package. 

This money goes to both Nigeria and Saudi Arabia airline operators. Max, Medview and Flynas are the major airlines that participated in ferrying Nigerian pilgrims. This excludes 20, 000 pilgrims allocated to private tour operators. 

Pilgrims’ accommodation in Makkah and Madinah was within $1,260 (N385,695) about 25.5% of the fare. The money also goes to the Saudi economy. 

Other services rendered by Saudi agencies include: transportation within Saudi. Minna and Arafat Tent and other services amount to about $865 (N264,647) which takes 17.5% of the hajj fare. This also entered the Saudi economy. 

Basic Travel Allowance of $800 (N244,800) which constitutes 16.3 percent of the fare is spent on shopping in Saudi. Feeding in Makkah, Madina, Masha’er and the Jeddah airport, constitutes another 7.5% and also this entered the credit side of the Saudi economy.

So, what is in for Nigerian economy?

Now the big issue. The entire local charges comprising the pilgrim’s uniform, suitcase, various charges and levies are the smallest part amounting to $140 (N42,889) constituting 2.8%. This is the only money that stays back home out of the entire hajj components. The profit made by private hajj companies cannot exceed 150 – 200 per pilgrims for those tour operators that rendered commensurate services to their pilgrims.

Where is the N150bn loss?

Reporters do seek ‘‘voices of experts in the field” whenever they are assigned to write special report. Therefore, we should always be mindful of ‘expert opinion’ we give to journalists.

In a factual sense, Nigerian economy stands to benefit from the ban on hajj because there is no capital flight this year. There will be no capital flight that could have further crippled the economy in addition to the havoc from Covid-19. 

However, it is a fact that Nigerian Hajj and Umrah industry has been badly affected by Covid-19. Independent Hajj Reporters, a civil society organisation, which yours sincerely works for, has been soliciting assistance from relevant authorities for private hajj tour operators. But this should not give room to overblown figures that could be used against the industry in future.

The real loser is Saudi Arabia. The Hajj and Umrah industry contributed approximately $12 billion, or 7 per cent of the total GDP of Saudi Arabia and 20 percent of its non-oil GDP.

The suspension of international pilgrims will also impact negatively on the primary sources of income to many of 1.9 million inhabitants living in Mecca. At least 45 per cent of the people living in Makkah is made up of non-Saudis that rely on about 100,000 Hajj-related jobs for survival. 

More importantly, if it is true that Nigeria Hajj and Umrah industry generate N150bn per season, then the Orosanya report that calls for scrapping of NAHCON is right because, it means that Nigeria Hajj and Umrah industry are reaping so much gain from Hajj and Umrah and yet it allow government to pay salaries and allowance of its staff and even bear other responsibilities for hajj industry. We might have unconsciously shot ourselves in the foot. 

Muhammed is the National Coordinator, Independent Hajj Reporters

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