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$1.5b foreign carriers trapped funds: Nigeria, IATA, others weigh options - THE NATION
Foreign carriers operating flights into African countries, including Nigeria and the trade body of global airlines, are weighing options to mitigate the effects of blocked funds amounting to over $1.5billon funds trapped on the continent from unremitted revenue from ticket sales.
The development has not only stopped some foreign carriers, including Emirates Airlines from flying into Nigeria and other destinations, but has triggered cuts in flight frequencies to some African destinations.
Investigations by The Nation showed that while financial regulatory bodies, including the Central Bank of Nigeria (CBN), and Ministries of Finance as well as Aviation and Aerospace Development, are working out interventions to stave off further diplomatic/bilateral damage, the trapped funds have occasioned, discussions are underway to end the matter.
To drive the agenda, IATA is reaching out to the governments of some African countries to consider measures that will liberate foreign carriers blocked funds, which started since 2018, with a significant amount held back in Angola, Ethiopia, Ghana, Nigeria and Zimbabwe.
Part of the intervention is how agencies will advise the government on the best practices to clear the backlog, which has built up to $1.5 billion in Africa.
As of January, this year, airlines’ blocked funds in Nigeria increased to $743,731, 027 from $662 million in January 2023 and $549 million last December.
As of June 4, 2023 blocked funds of foreign airlines operating in Nigeria have risen to $812.2 million.
IATA warned that rapidly rising levels of blocked funds constitute a threat to airline connectivity in the affected markets.
According to IATA, the industry’s blocked funds have increased by 47 per cent from $1.55 billion in April, last year to $2.27 billion in April, this year.
IATA declared: “Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets.
“Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation.”
The association urged governments to abide by international agreements and treaty obligations to enable airlines to repatriate the funds arising from the sale of tickets, cargo space, and other activities.
The backlog of international airlines’ blocked funds in Nigeria, experts said, would send a strong message against Foreign Direct Investment (FDI) in Nigeria.
Experts said potential investors were reacting from the plight of the airlines that they would not be able to repatriate their funds from Nigeria when the government is expecting investments in the concession of some of its prominent airports.
Investigations by The Nation also showed that IATA and the African Airlines Association (AFRAA) were joining the Focus Africa initiative, aimed at maximising the contributions of aviation to development across the continent by better serving passengers and shippers.
Under Focus Africa, private and public stakeholders are committed to delivering measurable improvements in six critical areas of safety, infrastructure, connectivity, finance and distribution, sustainability, and skills development.
IATA’s Regional Vice President for Africa and the Middle East, Kamil Al Awadhi, said: “AFRAA will strengthen the Focus Africa coalition as we work to increase aviation’s role in Africa’s development. This has enormous promise. The continent is home to the world’s most rapidly growing population but accounts for just two per cent of air passenger and cargo transport activity. The road to realising aviation’s potential will be long. But with the strong partnerships committed to Focus Africa, we can, and we will realise the needed change.”
For the AFRAA Secretary General, Abderahmane Berthé: “AFRAA and IATA share a common vision, the development of a safe, secure and sustainable aviation industry in Africa that facilitates business, trade, and tourism and contributes positively to Africa’s economic growth and development. AFRAA fully supports and encourages collaboration in tackling the challenges and threats to the sustainability of Africa’s air transport sector.
“By joining IATA and the other Focus Africa partners we can help propel this initiative which will deliver widespread social and economic benefits.”
IATA and AFRAA are also enhancing their collaboration by renewing a joint work program which includes: promoting regional air connectivity by working together with governments to support the implementation of the Single African Air Transport Market (SAATM).