IATA: Nigeria Has Paid 98% of Foreign Airlines’ Trapped Funds

The International Air Transport Association (IATA) has reported that Nigeria has paid 98 per cent of airlines trapped funds in the country and called for the final clearance of the remaining 2 per cent.

This was disclosed by the Director General of IATA, Willie Walsh who said there is overall 28 per cent decrease in the amount of airline funds blocked from repatriation by governments.

He put the total blocked funds at the end of April, 2024 at approximately $1.8 billion, a reduction of $708 million (28 per cent) since December 2023.

Walsh acknowledged the tremendous progress in Nigeria, recalling that at its peak in June 2023, Nigeria’s blocked funds amounted to $850 million, significantly affecting airline operations and finances in the country, but most of the funds had been repatriated by the airlines from Nigeria.

According to him, carriers faced difficulties in repatriating revenues in US dollars, and the high volume of blocked funds led some airlines to reduce their operations and one carrier to temporarily cease operations to Nigeria, which severely impacted the country’s aviation industry.

However, as of April 2024, 98 per cent of these funds had been cleared. The remaining $19 million was 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 (CBN) 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,” said Walsh.

However, IATA has reiterated the call 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, 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,” Walsh added.

He said the main driver of the reduction was a significant clearance of funds blocked in Nigeria. Egypt also approved the clearance of its significant accumulation of blocked funds, he stressed.

 However, in both cases, airlines were adversely affected by the devaluation of the Egyptian Pound and the Nigerian Naira, he lamented.

IATA said eight countries accounted 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, he noted.

“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,” said Walsh.

 Chinedu Eze

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