The International Air Transport Association (IATA) has reported that its members have $783 million trapped in Nigeria as of August 2023, down from $814 million in June. This was disclosed by IATA’s Regional Vice-President for Africa and the Middle East, Kamil Al Awadhi.
Al Awadhi commended the recent commitment by Nigeria’s new Minister of Aviation and Aerospace Development, Festus Keyamo, to tackle the issue of foreign airlines’ blocked funds in the country. He also called on the new government for continued and closer consultation with the industry while developing short- and long-term solutions for foreign exchange access to both domestic and foreign carriers.
The issue of airlines’ trapped funds has lingered for long due to Nigeria’s foreign exchange scarcity. Last week, Minister Keyamo said he had directed the Central Bank of Nigeria to hold quarterly reconciliation meetings to resolve the issue.
Extended commentary:
IATA’s report is a positive sign that Nigeria is making progress in addressing the issue of trapped airline funds. However, the fact that there is still a significant amount of money trapped in the country is a concern.
The Nigerian government has taken a number of steps to address the issue, including increasing the amount of foreign exchange available to airlines and holding regular reconciliation meetings. However, more needs to be done to ensure that airlines are able to repatriate their earnings from Nigeria in a timely manner.
The trapped funds issue is a major challenge for the Nigerian aviation industry. It can lead to higher fares for passengers and can make it difficult for airlines to operate in Nigeria. The government needs to continue to work with the industry to find a sustainable solution to the problem.
In addition to the economic challenges posed by the trapped funds issue, it is also a matter of reputational risk for Nigeria. The fact that foreign airlines are unable to repatriate their earnings from the country could discourage other airlines from operating in Nigeria. This could lead to a reduction in air connectivity, which would have a negative impact on the country’s economy and tourism industry.
The Nigerian government needs to take decisive action to resolve the trapped funds issue. This could include increasing the amount of foreign exchange available to airlines, providing financial assistance to airlines, or working with the international community to develop a solution. It is important to note that resolving the trapped funds issue is not just in the interests of the airlines, but also in the interests of Nigeria itself.