Despite the Federal Government’s recent release of $265 million of foreign airlines’ trapped funds in the country, there is an indication that Nigeria and other African countries are still withholding over $550 million that is yet to be repatriated by these airlines.
While more than $200m, which is part of the foreign airlines’ funds, is still blocked in Nigeria, $100 million is still blocked in Zimbabwe, $96 million in Algeria, Eritrea and Ethiopia are withholding $79 million and $75 million, respectively.
The International Air Transport Association (IATA), which released the figures, recently commended Nigeria for the decision to release the airlines’ funds that it was withholding.
In his reaction, Kamil Alawadhi, IATA’s Regional Vice President, Africa and Middle-East, said IATA had welcomed the Nigerian Government’s release of $265m blocked funds.
He said that the body would continue to engage Nigeria on expediting the release of the remaining funds, so that airlines can continue providing the connectivity that the country requires without disrupting and harming its economy and jobs.
He admonished other countries in Africa blocking the repatriation of foreign airlines’ funds, to follow Nigeria’s example and release the money in their possession.
“Without it, airlines cannot afford to serve those countries. This will be detrimental to the people and businesses that depend on the market connectivity that those airlines provide,” Alawadhi said.
Nonetheless, IATA strongly believes that the release of blocked funds, with assurances and safeguards to prevent a recurrence, will persuade affected carriers to continue serving Nigeria.
Commenting on the trapped funds, the Director-General of the Nigerian Civil Aviation Authority (NCAA), Capt Musa Nuhu, has said that airlines are businesses like any other business that investors make money, stressing that the Bilateral Air Service Agreement (BASA) arrangement empower the airlines to repatriate their funds without hindrance.
Due to the forex challenges facing Nigeria, Nuhu noted that the funds accumulated and became very high.
On the release of $265 million by the Central Bank of Nigeria (CBN), the NCAA boss said, “It is a welcome development that CBN had released a significant amount of these funds and going forward, I know the Hon. Minister of Aviation, Sen. Hadi Sirika, the Minister of Finance and the CBN Governor are still working to ensure that the balance of the funds are released to the airlines and a mechanism is developed to avoid the repeat of this.
“If you remember, when this government first came into power in 2015 and early 2016, there was the same case of about $600 million, which through the efforts of the minister ensured that the funds were released to the airlines. Unfortunately, about six or seven years later, we found ourselves in the same conundrum. But I know all efforts are being made at the high level to settle this,” Nuhu said.
He pointed out that the NCAA could not possibly force any airline to operate in Nigeria, adding that they can always encourage them.
“We can talk to them, but it is up to the airlines to decide the number of frequencies and where they operate. If the passenger load is not there, you cannot force them to operate. If they believe they have other difficulties and challenges that affect their operations in certain airports, it is their decision. We cannot force or manipulate any airline to operate in Nigeria. We can only encourage them.”
Speaking on the possibility of releasing the remaining trapped funds, the DG explained, “I don’t have the slighted idea. My prayer is that it should be released like yesterday. Nigeria currently has some challenges with the issue of foreign exchange, but we hope it is released as soon as possible so that normal services can resume and not be interrupted. Nigerians travel a lot and air transport is critical for the economy of our country. So, we hope these funds are paid as soon as possible”.
Industry experts are, however, not pleased with the appalling handling of the accumulated foreign airline funds trapped in Nigerian banks due to the non-allocation of forex to these airlines.
In all Bilateral Air Services Agreements, an Article in the agreement, tagged transfer of earnings, clearly states, “Each designated airline shall have the right to convert and remit to its country on demand, local revenues in excess of sums locally disbursed. Conversion and remittance shall be permitted without delay in accordance with the prevailing foreign exchange regulations”.
These experts, acting under the aegis of the Aviation Round Table, therefore opined that international trade is bound by agreements, which are sacrosanct and respected, insisting that Nigeria cannot do otherwise if they crave the attention of investors in the aviation sector.
Part of what triggered the blocked funds, according to them, was the lack of capacity to compete, which would have reduced the remittance volume.
“It is important to state that foreign airlines sold these tickets at the official IATA rate and cannot be expected to go to the parallel market to source, convert and remit as opined in some quarters,” one of them said.
Meanwhile, as a result of the release of the recent $265 million, which is part sum of the total trapped funds, Emirates Airlines had already announced its decision to reinstate operations of its flights, which include inbound flights (EK783) from Dubai to Lagos and outbound flights (EK784) from Lagos to Dubai.
The flight reinstatement is, however, expected to commence with the airline’s Boeing 777, effective from Sunday, September 11, 2022.
Emirates Airlines had in August 13, 2022 announced its decision to suspend all flights from Nigeria, effective from September 1, 2022, citing their inability to repatriate their money accruing from tickets in Nigeria.
Anthony Awunor, is a business correspondent who holds a Bachelor of Arts Degree in Linguistics (UNILAG). He is also an alumnus of the Nigerian College of Aviation Technology (NCAT), Zaria Kaduna State. He lives in Lagos.
