CBN grabs $450m from the airlines to shore up its own dollar reserves
By Jeph Ajobaju, Chief Copy Editor
Repatriation of $450 million ticket sales revenue of foreign airlines has been blocked by the Central Bank of Nigeria (CBN), an embarrassment of the highest order in the comity of nations and a poor image in the eyes of investors.
International Air Transport Association (IATA) Vice President for Africa and the Middle East, Kamal Al-Awadhi, described it as “very unacceptable” and said it will “damage the image of [Nigeria].”
Three other African countries also owe foreign airlines. But Nigeria owes the most amount worldwide.
The news broke on the heels of reports that presidential aspirants of both the Peoples Democratic Party (PDP) and the All Progressives Congress (APC) mopped up dollars on the foreign exchange (forex) market to bribe primary delegates.
Reports said some aspirants bribed delegates with between $5,000 and $50,000 cash to vote for them in the primaries in late May and early June. One candidate reportedly paid the Governors in his party $2 million each to rig the vote for him.
CBN Governor Godwin Emefiele himself obtained the N100 million nomination form to contest for the presidential ticket of the APC and only later withdrew because President Muhammadu Buhari said political appointees must step down to run.
IATA data as of May 2022 shows the funds of foreign airlines restricted in Nigeria rose 12.5 per cent month on month (MoM).
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Hectic discussion with Nigerian officials
In a report first published by Reuters, IATA claims airlines are owed about $1 billion globally in revenues held by countries and Nigeria alone accounts for 45 per cent of the total.
Other African countries, Algeria, Ethiopia, and Zimbabwe account for a combined $271 million owed to foreign airlines.
IATA said Nigeria restricted the funds to allow for foreign currency to be used for imports of essential goods and services as well as for investors looking to repatriate dividends.
“Awadhi described talks with Nigerian officials to release the funds as a hectic ride.
“We keep chipping away and hoping that it clicks that this is to damage the country down the road,” Reuters reported.
Awadhi explained that CBN officials were “not responsive” to releasing any funds or even paying down some of them.
Some foreign airlines now charge higher fares when tickets are booked from Nigeria compared with being booked from abroad where forex is already paid for.
Aviation key to economic growth
IATA based in Geneva represents more than 200 international carriers.
Al-Alawadhi spoke at a press briefing marking the opening of its 78thn Annual General Meeting and World Air Transport Summit in Doha, Qatar, according to reporting by The PUNCH.
He said the blocked funds of foreign airlines in Nigeria estimated at $208 million in the third quarter ended March 2021 (Q1 2021) rose to $283 million in Q1 2022.
Forex shortage has forced the CBN to give priority to certain sectors of the economy. But Alawadhi insisted aviation is key to Nigeria’s economic growth and the CBN needs to allow foreign airlines repatriate their ticket sales revenue.
He reiterated that the aviation sector has created thousands of jobs in Nigeria and it is wrong for the government to prevent airlines from repatriating their revenue.
Al-Awadhi said he has made effort to come to Nigeria to meet with government officials but is yet to get the government’s commitment on it.
“Nigeria needs to start reducing the backlog. The Central Bank of Nigeria was not forthcoming on the blocked funds. It is sad that Nigeria owes the bulk of the entire blocked funds. This is very unacceptable,” he added.
“We heard that there is a shortage of dollars. It has been a hectic ride. We met with the Vice President [Yemi Osinbajo]. We will keep checking.
“This is going to damage the image of the country. We are hoping that it will go down well. The figure is huge.”