The Central Bank of Nigeria (CBN) has released an additional $64.4 million of blocked airline funds as part of its move to clear its foreign currency backlog and reduce liability to operators. However, about $700 million of airline funds remain trapped in the country as of January 2023.
CBN releases additional funds.
The failure of foreign airlines to repatriate funds from Nigeria and other countries has become a serious issue over the last few years. As noted by the International Air Transport Association (IATA), it is among the biggest impediments to the development of aviation in certain markets. However, this year, Nigeria has made some progress in clearing its backlog.
According to the central bank’s Acting Director of Corporate Communications, Hakama Sidi-Ali, the financial institution released $64.44 million of blocked airline funds on January 30, 2024. This brings the total verified amount disbursed to foreign carriers to $136 million. As reported by Reuters, the bank is continuing efforts to clear all verified backlogs.
“The Governor, Olayemi Cardoso, and his team were doubly committed and would stop at nothing to ensure that the verified backlog of payments across all other sectors was cleared, and confidence was restored in the Nigerian foreign exchange market.”
Ali added that all verified claims have been cleared with this latest payment. Earlier this year, the central bank announced that it had released approximately $61.64 million belonging to foreign airlines through various banks. In total, about $2.5 billion of the backlog has been cleared across various sectors like manufacturing, petroleum, and air transport.
About $700 million remains blocked in Nigeria
While it is only a small percentage of the total amount of trapped funds in Nigeria, disbursing an additional $64 million is another step in the right direction. Responding to the central bank’s announcement, IATA welcomed the development but noted that there is still a long way to go before the issue is resolved. IATA said in a statement,
“The International Air Transport Association (IATA) welcomes the Central Bank of Nigeria’s announcement this afternoon that it has released an additional $64.44 million in blocked airline funds. We are consulting with our airline members to verify the release of their revenues.”
The association added that approximately $700 million remains blocked with Nigeria’s commercial banks. The situation in the West African country remains critical due to the devaluation of the Nigerian Naira (₦), which has dropped significantly against the US dollar. As such, foreign operators unfairly suffer due to lower exchange rates.
IATA will continue to work with the government to find solutions and maintain a conducive environment that ensures connectivity to various international markets. Nigeria has already suffered the effects of blocked funds, with Emirates suspending flights in 2022. The new administration has been working hard to have the Dubai-based carrier return to Nigeria and re-establish connections with the UAE.
International airlines serving Nigeria.
Despite challenges with retrieving funds, several international carriers still serve Nigeria. The country’s two main international airports, Lagos Murtala Muhammed (LOS) and Abuja Nnamdi Azikiwe (ABV), are among the busiest in West Africa and the continent. In 2022, while still recovering from the pandemic, Nigerian airports handled over 16 million passengers.
Last year, there were over 26 international carriers with scheduled flights to and from Nigeria. Among the local carriers, Air Peace has the most flights out of Nigeria, connecting the country to 11 international destinations. The top foreign carriers include Africa World Airlines, Ethiopian Airlines, Qatar Airways, British Airways, and Lufthansa. Some carriers like Air France, British Airways, Ethiopian, and Qatar serve both Lagos and Abuja.
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Source: Simple Flying.