THE International Air Transport Association (IATA) said Nigeria has cleared 98 percent of foreign airlines’ trapped funds, urging the country to clear the remaining two per cent of the residual $19 million funds.
The IATA, a trade association of the world’s airlines, disclosed this on Sunday, June 2.
It recalled that at its peak in June 2023, the Nigerian government blocked funds that amounted to $850 million, significantly affecting airline operations and finances in the country, as airlines faced difficulties in repatriating revenues.
Nigeria floated its foreign exchange market in June 2023 and since then devalued its currency twice, The ICIR can report.
On March 21, The ICIR reported that the Central Bank of Nigeria (CBN) confirmed clearance of all valid foreign exchange backlogs for the aviation sector following international airlines’ threats to halt operations in the country.
“However, as of April 2024, 98per cent of these funds have been cleared. The remaining $19 million is due to the Central Bank’s ongoing verification of outstanding forward claims filed by the commercial banks,” IATA stated.
IATA said that at the time, the high volume of blocked funds led some airlines to reduce their operations, causing one airline to temporarily cease operations in Nigeria, which severely impacted the country’s aviation industry.
“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,” IATA’s Director General, Willie Walsh, stated.
IATA also revealed a 28 per cent decrease in the amount of airline funds blocked from repatriation by governments as total blocked funds at the end of April stood at approximately $1.8 billion, a reduction of $708 million since December 2023.
The world aviation body said the main driver of the reduction was a significant clearance of funds blocked in Nigeria, and noted that airlines were adversely affected by the devaluation of the naira.
It also revealed that eight countries including Pakistan, Bangladesh, Algeria, XAF Zone, Ethiopia, Lebanon, Eritrea, and Zimbabwe, were responsible for 87 per cent of blocked funds with Pakistan and Bangladesh leading.
It said the situation 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.
It urged 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,” IATA’s director general, added.