Foreign airlines' funds trapped in Nigeria balloons to $783m as hard currency crisis lingers

FUNDS owned by international airlines which remain in Nigeria with operators unable to repatriate them rose to $783m as of August this year exacerbating what has now become a major embarrassment for the industry.

As a result of the scarcity of foreign exchange in Nigeria, huge sums belonging to over 20 foreign airlines have been held in the country since the beginning of last year. Because they are unable to convert their earnings from naira into dollars due to the dollar scarcity the Central Bank of Nigeria (CBN) is witnessing, these airlines are unable to repatriate their funds to their home countries.

Nigeria has been officially declared as the biggest debtor in the foreign airlines by the International Air Transport Association (IATA) as a result of the crisis. The IATA is the international body representing over 300 airlines globally, covering 83% of global traffic with a mandate to ensure international standards are met.

These foreign airlines' trapped funds have been rising significantly over the past year, thus forcing many of them to cut down their flights to Nigeria. This development has also forced the airlines to block Nigerian travellers from accessing lower inventories air tickets, making them pay triple the charges per route.

IATA’s regional vice president for Africa and Middle East, Kamil Al-Awadhi, recent held a meeting with Nigeria's aviation minister Festus Keyamo on the matter. After the meeting, he called on the new government for continued but closer consultation with the industry while developing short- and long-term solutions for foreign exchange access to both domestic and foreign carriers.

Mr Al-Awadhi  said: “As of August 2023, Nigeria accounts for $783m of airline blocked funds. Safety, security and efficient infrastructure are critical for a well-functioning air transport system, so is the ability of airlines to have access to the revenues they generate in Africa.

“These priorities are among the key elements addressed under IATA’s Focus Africa initiative to strengthen aviation’s contribution to Africa’s economic and social development. Nigeria’s focus on these issues reinforces their position among the leaders of African aviation. We welcome the Federal Aviation Authority of Nigeria's (FAAN) commitment to upgrade Lagos airport as it is the main domestic and international hub connecting Nigeria with the rest of Africa and beyond and needs to keep up with demand.

“This strategic focus not only enhances the aviation sector but also serves as a catalyst for Nigeria’s broader economic and social advancement. IATA stands ready to support the FAAN with expertise to ensure international standards are met through the corrective action plan.”