International Air Transport Association says Nigeria has cleared 98% of the blocked funds belonging to foreign airlines operating in the country.
In June 2023, Nigeria’s blocked funds peaked at $850 million, which negatively affected airline operations and finances in the country.
But as of April 2024, according to IATA, 98% of these funds had been cleared, saying the remaining $19 million is due to the Central Bank’s ongoing verification of outstanding forward claims filed by the commercial banks.
Recall that foreign airlines carrying passengers to Nigeria had faced difficulties in repatriating revenues in US dollars, forcing them to adjust their operations by stopping the sale of lower tickets.
UAE carrier, Emirates, completely stopped its flights to Nigeria and is now only planning to return by October.
“We commend the new Nigerian government and the Central Bank of Nigeria for their efforts to resolve this issue. Individual Nigerians and the economy will all benefit from reliable air connectivity for which access to revenues is critical. We are on the right path and urge the government to clear the residual $19 million and continue prioritizing aviation,” said IATA Director-General Willie Walsh.
Walsh spoke just as IATA, which represents 330 airlines reported a 28% decrease in the amount of airline funds blocked from repatriation by governments.
The total blocked funds at the end of April globally stood at approximately $1.8 billion, a reduction of $708 million (28%) since December 2023.
But IATA reiterated the call for governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities in accordance with international agreements and treaty obligations.
“The reduction in blocked funds is a positive development. The remaining $1.8 billion, however, is significant and must be urgently addressed. The efficient repatriation of airline revenues is guaranteed in bilateral agreements. Even more importantly, it is a pre-requisite for airlines—who operate on thin margins—to be able to provide economically critical connectivity. No business can operate long-term without access to rightfully earned revenues,” the DG further said.
Walsh confirmed that the main driver of the reduction “was a significant clearance of funds blocked in Nigeria,” adding that Egypt also approved the clearance of its significant accumulation of blocked funds.
But in both cases, airlines were adversely affected by the devaluation of the Egyptian Pound and the Nigerian Naira.
IATA further disclosed that eight countries including Pakistan, Bangladesh, Algeria, XAF Zone, Ethiopia, Lebanon, Eritrea, Zimbabwe, are responsible for 87% of blocked funds with Pakistan and Bangladesh leading.
The situation, it stated, has become severe in Pakistan and Bangladesh with airlines unable to repatriate $731 million ($411 million in Pakistan and $320 million in Bangladesh) of revenues earned in these markets.
“Pakistan and Bangladesh must release the $731 million in blocked funds immediately to ensure airlines can continue providing essential air connectivity. In Bangladesh, the solution is in the hands of the Central Bank, which must prioritize aviation’s access to foreign exchange in line with international treaty obligations. The solution in Pakistan is finding efficient alternatives to the system of audit and tax exemption certificates, which cause long processing delays,” the IATA boss said.
