Market News

Foreign Airlines Applaud CBN Over Clearance Of Trapped Funds -

JANUARY 31, 2024

Written by Yusuf Babalola

Foreign Airlines have applauded the Central Bank of Nigeria (CBN) for clearing the backlog of Forex owed to airlines operating in the country.

The airlines, speaking under the aegis of the Association of Foreign Airlines and Representatives in Nigeria (AFARN), said the clearance is a sigh of relief for operators.

According to the President, Kingsley Nwokoma, he urged the CBN to adopt a quarterly payment plan for the over $700 million trapped funds remaining with the apex regulatory bank.

“We thank the government for listening and doing it little by little, but we hope they can do more or have an arrangement with the airline for quarterly payment; that would be perfect.

“A systematic type of payment every quarter will help defray the backlog, and we can also get it behind us once and for all,” he stated.

Also speaking, the Head of Financial Institutions Ratings at Agusto & Co, Ayokunle Olubunmi, said the clearance of trapped funds and FX forwards would improve the value of the Naira.

“To be fair to the current CBN management, they have been trying their best, and they have been trying to clear the backlog of FX demand and matured FX forward and have been trying to get them paid,” he stated.

Olubunmi further stated that the payment would boost investors’ confidence as they can easily repatriate their funds.

“If you are owing someone and you need additional money, no one will give you because you have defaulted in the first one, so we need to clear that, and that will give a good signal to foreign investors to bring in their funds into the economy.

Therefore, the government should carry out an aggressive campaign that investors can now easily repatriate their money, especially now that the CBN is fundamentally clearing the backlogs,” he stated.

It could be recalled that the CBN had fulfilled its pledge to clear the backlog of foreign exchange owed foreign airlines in the country, as it concluded the payment of all verified claims by airlines with an additional $64.44 million to the concerned airlines.

Acting director of corporate communications at the CBN, Mrs. Hakama Ali, said the latest amount paid to the airlines brought the total verified amount paid to the sector to $136.73 million.

In a statement issued on Tuesday, she said all the verified airline claims had now been cleared.

According to her, CBN 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.

Furthermore, she assured that the CBN was working with stakeholders to ensure liquidity improves within the forex market, thereby reducing pressure on the Naira.

While expressing optimism that the market would respond positively to the latest injection of over $64 million, she admonished actors in the foreign exchange market to guard against speculation as such actions could hurt the Naira.

Sidi Ali, therefore, urged the public to support the reforms in the foreign exchange market, adding that the CBN would continue to promote orderliness and professional conduct by all participants in the Nigerian Foreign Exchange Market to ensure market forces determine exchange rates.


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