June 2, (THEWILL)- The International Air Transport Association (IATA) has declared Nigeria free from the list of indebted countries with trapped funds to foreign airlines.
According to IATA, Nigeria has paid 98 percent of the trapped funds to foreign airlines, adding that remaining $19 million is due to the Central Bank’s ongoing verification of outstanding forward claims filed by the commercial banks.
THEWILL reports that prior to the administration of President Bola Tinubu, Nigeria’s blocked funds amounted to $850 million, significantly affecting airline operations and finances in the country.
Carriers faced difficulties in repatriating revenues in US dollars, and the high volume of blocked funds led some airlines to reduce their operations, and Emirates Airlines, to temporarily cease operations in Nigeria, which severely impacted the country’s aviation industry.
Speaking on Monday, in Abuja, Minister of Aviation and Aerospace, Festus Keyamo (SAN), said Nigeria has cleared foreign airlines’ cash trapped in the country.
Confirming the development during a world press conference at the ongoing 80th Annual General Meeting in Dubai, United Arab Emirates, Director General of IATA, Willie Walsh, said, “As of April 2024, 98% 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.
“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 prioritising aviation.”
Walsh said before now, eight countries were responsible for 87% of blocked funds amounting to $1.6 billion, with Nigeria topping the list of the most indebted countries.
However, with Nigeria out of the debtors list, other countries still holding to the trapped funds include Pakistan, Bangladesh, Algeria, XAF Zone, Ethiopia, Lebanon, Eritrea and Zimbabwe.
Speaking on Pakistan and Bangladesh in particular, Walsh, described the situation there as severe with airlines unable to repatriate $731 and $320 million of the foreign carriers respectively.
“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”, Walsh said.
The IATA DG declared that the payment of Nigeria’s debts has subsequently led to a 28% decrease in the amount of airline funds blocked from repatriation by governments.
The total blocked funds at the end of April stood at approximately $1.8 billion, a reduction of $708 million (28%) since December 2023.
IATA reiterated the call on governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities under 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 that operate on thin margins to be able to provide economically critical connectivity. No business can operate long-term without access to rightfully earned revenues. The main driver of the reduction was a significant clearance of funds blocked in Nigeria”, Walsh added.
