According to the International Air Transport Association (IATA), 98% of the funds that airlines were unable to access in Nigeria have now been released. In a recent announcement on their website, IATA recognized the substantial headway made in resolving the issue of trapped funds in Nigeria, as well as in other countries around the world. Willie Walsh, the Director General of IATA, stated that in June 2023, there was $850 million in blocked funds in Nigeria, which had a significant impact on the country’s Airline industry operations and finances.
He described the challenges carriers encountered in bringing back US Dollar revenues, resulting in blocked funds that caused airlines to scale back or even halt operations in Nigeria, dealing a challenge to the country’s Aviation sector. It was noted that by April 2024, almost all of these funds had been successfully released. The official explained that the Central Bank still needs to verify the outstanding forward claims submitted by commercial banks before releasing the remaining $19 million.
Various African nations restrict airlines from repatriating their profits.
The Nigerian government and the Central Bank of Nigeria were commended for addressing this matter. Enhanced air connectivity is crucial for the citizens and the Economy to prosper, and access to funds is key. They should keep moving forward and encourage the government to settle the remaining funds while maintaining a focus on aviation development. In November of last year, IATA expressed disapproval towards Nigeria and various other African nations for their restrictions on international airlines repatriating their profits.
Similarly from a recent findings, an estimated $1.68 billion of funds is currently locked in various African countries, hindering the progress of Air Travel development across the continent. Specifically, reports from August 2022 revealed that foreign airline companies have $793 million trapped in Nigeria due to ongoing foreign exchange shortages. The total amount includes $300 million in legacy debt that the CBN has acknowledged but has not yet paid to IATA for the airlines.
CBN assist Nigeria with valid foreign exchange backlogs.
Due to the suspension of flight operations by several major airlines, including Emirates Airline, in Nigeria, the government announced in March that all ‘valid’ foreign exchange backlogs had been cleared by the Central Bank of Nigeria (CBN). As a result, Emirates Airlines recently declared its decision to resume flight services to Nigeria on October 1. IATA stated that there has been a significant 28% reduction in the funds airlines are unable to repatriate due to government restrictions worldwide.
Also, $1.8 billion in blocked funds at the end of April marks a 28% ($708 million) decrease from the amount in December 2023, according to the statement. The group emphasized the need for governments to allow airlines to repatriate their earnings from ticket sales and other operations in line with global agreements and treaties. This decrease in blocked funds is seen as a step in the right direction. Mr. Walsh emphasized the urgency of addressing the fund. He assured that bilateral agreements ensure the prompt repatriation of airline revenues.
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On the other hand, he emphasized the essential nature of airlines being able to offer economically vital connections due to their slim profit margins. Mr. Walsh highlighted the necessity of having access to earned revenues for sustained business operations. Egypt has also authorized the release of its substantial amount of frozen funds. According to the statement, the airlines were impacted negatively by the Devaluation of the Egyptian Pound and the Nigerian Naira in both instances.