JUST IN: Nigeria has cleared 98% of airlines’ trapped funds – IATA

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.

At its peak in June 2023, Nigeria’s blocked funds amounted to $850 million, significantly affecting airline operations and finances in the country.

However, as of April 2024, 98% of these funds have been cleared, IATA confirmed, saying the remaining $19 million is due to the Central Bank’s ongoing verification of outstanding forward claims filed by the commercial banks.

Daily Trust reports that airlines operating to Nigeria had faced difficulties in repatriating revenues in US dollars, forcing them to adjust their operations by stopping the sale of lower 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 spoke just as the organisation representing 330 airlines reported a 28% decrease in the amount of airline funds blocked from repatriation by governments.

The total blocked funds at the end of April globally stood at approximately $1.8 billion, a reduction of $708 million (28%) since December 2023.

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 confirmed that the main driver of the reduction “was a significant clearance of funds blocked in Nigeria,” adding that Egypt also approved the clearance of its significant accumulation of blocked funds.

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

IATA further disclosed that eight countries including Pakistan, Bangladesh, Algeria, XAF Zone, Ethiopia, Lebanon, Eritrea, Zimbabwe, are responsible for 87% of blocked funds with Pakistan and Bangladesh leading.

The situation, it stated, has become severe in Pakistan and Bangladesh with airlines unable to repatriate $731 million ($411 million in Pakistan and $320 million in Bangladesh) of revenues earned in these markets.

“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.