The International Air Transport Association (IATA) has given an update on airline funds trapped in Nigeria, disclosing that 98% of the blocked funds have been cleared.
Nigeria’s blocked funds, which peaked in June 2023 at $850 million, had a major impact on the nation’s airline industry and finances.
IATA did confirm that as of April 2024, 98% of these funds had been cleared, with the remaining $19 million attributed to the Central Bank’s continuous review of outstanding forward claims that the commercial banks had filed.
Airlines that fly to Nigeria have had trouble bringing in US dollars, so they had to change how they operated by no longer offering cheaper tickets.
UAE carrier, Emirates, for instance stopped its flights to Nigeria and is only planning to return by October.
“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 prioritizing aviation,” said IATA Director-General Willie Walsh.
He said this right before 330 airline representatives reported a 28 percent drop in the amount of airline funds that governments were preventing from being repatriated.
By the end of April, the total amount of blocked funds worldwide was estimated to be $1.8 billion, down $708 million (28%) from December 2023.
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IATA, however, 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,” the DG further said.
He affirmed that “a significant clearance of funds blocked in Nigeria” was the primary cause of the decrease, and he added that Egypt had also approved the clearing of its substantial accumulation of blocked funds.
Nonetheless, the depreciation of the Nigerian Naira and the Egyptian Pound had a negative impact on airlines in both instances.
IATA also revealed that 87% of the blocked funds are in eight countries—Pakistan, Bangladesh, Algeria, XAF Zone, Ethiopia, Lebanon, Eritrea, and Zimbabwe—with Pakistan and Bangladesh leading the pack.
Airlines have been unable to repatriate $731 million ($411 million in Pakistan and $320 million in Bangladesh) in revenue earned in these markets, indicating that the situation has gotten worse in both countries.
“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 prioritize 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.
