Nigeria pays up 98% of foreign airlines’ grabbled funds, $19m still outstanding
By Jeph Ajobaju, Chief Copy Editor
Nigeria paid up 98 per cent of foreign airlines’ trapped funds by April, the International Air Transport Association (IATA) has confirmed, but has appealed for the payment of the balance 2 per cent which amounts to $19 million.
IATA Director General Willie Walsh, who made the disclosure, explained there is an overall 28 per cent decrease in the amount of airlines’ funds blocked from repatriation by governments in different countries.
He said the total blocked funds at the end of April 2024 was about $1.8 billion, a reduction of $708 million (28 per cent) since December 2023.
Walsh acknowledged the progress Nigeria has made in payments, recounting that at its peak of the debt in June 2023, its blocked funds amounted to $850 million, affecting airlines’ operations and finances in the country, but most of the funds have since been repatriated.
Carriers faced difficulties in repatriating revenues in United States dollars, he reiterated, and the high volume of blocked funds forced some airlines to reduce their operations and one airline to temporarily cease operations to Nigeria, which severely impacted the aviation industry in the country.
Walsh added the payment of 98 per cent of the trapped funds was facilitated by the verification embarked upon by the Central Bank of Nigeria (CBN) of outstanding forward claims filed by commercial banks.
“We commend the new Nigerian government and the Central Bank of Nigeria (CBN) for their efforts to resolve this issue,” he said.
“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 prioritising aviation.”
Walsh also reiterated the call by the IATA 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 [worldwide], 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.”
8 countries account for 87% of trapped funds
Walsh said the main driver of the reduction was the clearance of huge funds blocked in Nigeria, with Egypt also clearing another significant amount.
Airlines are adversely affected by the devaluation of the Egyptian Pound and the Nigerian Naira, he lamented.
Eight countries account for 87 per cent of the total blocked funds, amounting to $1.6 billion.
“The situation has become severe in Pakistan and Bangladesh with airlines unable to repatriate $731 million, that is, $411 million in Pakistan and $320 million in Bangladesh, of revenues earned in these markets,” Walsh disclosed.
“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 prioritise 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.”
__________________________________________________________________
Related articles:
Japan Airlines’ former flight attendant becomes its first female President
Computer error misleads airline to treat woman aged 101 as an infant
FAAN shuts airport KFC for discriminating against Gbenga Daniel’s son, a PWD
Suspended DANA Air “processing refunds for affected flights over the next one month”
Restricted operations cost local airlines N4b yearly
__________________________________________________________________
 has confirmed, but has appealed){kind=link}