Foreign airlines operating in the country are yet to recover their $450m trapped funds from the Central Bank of Nigeria (CBN) and the situation, aviation stakeholders are saying has lowered the confidence of investors.
The funds accrued from ticket sales of foreign airlines. As of March 2022, the total funds were $289m, but three months after, they increased to $450m amid pressure from the airlines.
There have been a series of meetings to address the issue, however, sources close to the matter say that the repatriation of the trapped funds was not in the purview of the Ministry of Aviation but, the Federal Ministry of Finance.
The $450 million reportedly held by the CBN is the largest amount being withheld by any African country, and in May, the amount grew at over 12 percent higher than the figure of the previous month.
This isn’t the first time the Nigerian government is withholding funds, it had previously blocked revenue from foreign airlines but eventually repatriated the funds. But with the current economic crisis which the country is, there are doubts that the funds would be paid in a single shot.
In fact, this situation had compelled foreign airlines flying into Nigeria to begin the sale of their tickets in dollars instead of Naira on April 19. Although, a temporal measure until the issue get resolved.
The International Air Transport Association (IATA), is also expected to have another round of discussions with Nigerian officials to secure the release of the trapped funds.
In a statement, the National Association of Nigeria Travel Agencies (NANTA) said the trapped funds are estimated at over $450 million and that this issue reduces investor confidence in Nigeria.
According to Susan Akporiaye, President, NANTA, the current situation presents a real threat to the industry and the continuity of their business as travel professionals, bearing in mind the potential jobs losses and the attendant national economic losses as the world is gradually coming out of the pandemic era.
She said they are worried that, foreign airlines may resort to taking out lower inventory in the system resulting in the high cost of tickets from the Nigerian market.
Explaining the implication, she stated that, for instance, a six-hour trip to London may attract a fare rate of about $2000 or more and also encourage tickets sold outside the country to flood Nigeria, thus affecting the survival of Nigerian travel agents and consequent loss of taxes and levies from such transactions.
She said if the matter is not handled quickly, a bleak future worse than the pandemic awaits Nigerian travel operators if nothing concrete and effectual is done by the Central Bank of Nigeria.
“As Nigerians, we are patriotic and have presented our country well in the global travel industry and rightly felt disturbed that Nigeria is on the brink of a wrong narrative at the just concluded 78th Annual General Meeting of International Air Transport Association (IATA) in Doha, Qatar on the account of airlines trapped funds.
“We are by this outing once again, appealing to the Central Bank of Nigeria, the Ministry of Aviation, and the office of the Vice President to speedily intervene to bring down the number of trapped funds to help resolve the operations of these airlines,” she said.
Commenting on the situation last week, James Oduadu, Spokesman to the Minister of Aviation, said he is aware that Sen. Hadi Sirika, is at the forefront of encouraging both local and foreign airlines to operate to be their full capacity and person that will do whatever is possible for airlines operating in Nigeria to have access to their funds.
“If it’s true that Nigeria is blocking funds which I doubt very much, probably, there may be issues that are not resolved, and of course, repatriation of funds is not within the purview of the Ministry of Aviation, but that of Finance Ministry.
If there are problems the foreign airlines are facing and they need the assistance of the Ministry of Aviation, the onus is on them to come for intervention even though it’s not within the purview of the Ministry and I can assure all stakeholders, local and foreign that the minister of aviation is committed to doing whatever is humanly possible to ensure that their operation is effective, efficient and profitable,” he said.