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Nigeria, others owe foreign airlines $1.68bn – IATA - PUNCH

NOVEMBER 25, 2023

By Justice Okamgba

The International Air Transport Association on Thursday disclosed that as of September, $1.68bn of airlines’ funds are locked across Africa out of a global total of $2.36bn.

The Regional Vice-President for Africa and the Middle East, Kamil Alawadhi disclosed this during the African Airlines Association 55th Annual General Assembly in Uganda.

The impact of this financial entanglement is deemed devastating for connectivity and raises concerns about the sustainability of the aviation sector, he said.

Alawadhi emphasized the association’s efforts to deliver value to its members in navigating the challenging landscape.

Nigeria accounts for $783m of airlines’ blocked funds with only about 10 per cent cleared.

Despite recent efforts, the airlines said a significant portion of those funds remained inaccessible to them.

However, the CBN had started clearing the forex backlog to commercial banks to ease pressure on the foreign exchange, The PUNCH reported.

The CBN had initiated steps to clear the forex backlog to ease pressure on foreign exchange, but challenges persisted in disbursing the funds effectively.

Alawadhi noted, “Since 2018, a significant amount of blocked funds have been repatriated from Angola, Ethiopia, Ghana, Nigeria, and Zimbabwe through working with the respective governments. Currently, $1.68bn in airline funds remain blocked across the continent.

“As of September, $1.68bn of airline funds are blocked across Africa out of $2.36bn globally. The numbers are alarming and the impact of this on connectivity is devastating.”

He stressed the importance of liberating blocked airline funds by advising governments on best practices to clear backlogs.

He said the repercussions of blocked funds extend beyond the airlines, adversely affecting the economies of the countries involved.

According to Alawadhi, the negative impact includes reduced connectivity, diminished investor confidence, and damage to the country’s reputation.

Recognising aviation as a pivotal economic enabler, he urged the governments to prioritise sustainable solutions for clearing blocked funds.

As Africa’s aviation industry strives to recover from pandemic-induced losses, IATA advocates against imposing additional financial burdens.

Measures such as higher fees, levies, carbon taxes, or new taxes on air transport, trade, or tourism could exacerbate the existing challenges.

“Africa’s aviation industry is still recovering from significant losses due to the pandemic. To make up for this shortfall, governments should avoid imposing higher fees, levies, carbon taxes, or new taxes on air transport, trade, or tourism.

“These measures would only make air travel more expensive and less accessible in Africa, where the average airfare is already 30 per cent higher than the industry average and the jet fuel cost is 10-20 per cent higher than the global average,” he added.


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