The International Air Transport Association (IATA) has issued a stark warning to Nigeria: international airlines may be forced to stop flying to the country if the government continues to block their ability to repatriate profits.
In a recent statement, Kamil Alawadhi, IATA’s Regional Vice President for Africa and the Middle East, expressed his deep concern about the growing issue of trapped airline funds in Nigeria. He also revealed that the total amount of airline money currently frozen by the Central Bank of Nigeria (CBN) has reached a staggering $812 million.
Alawadhi stressed that this situation is unsustainable and poses a serious threat to Nigeria’s aviation sector. He stated:
“Airlines cannot be expected to operate in an environment where they are unable to access their own money. If this issue is not resolved soon, we will see a significant reduction in air connectivity to and from Nigeria. Which will have a negative impact on the country’s economy.”
The consequences of airlines pulling out of Nigeria could be severe:
- Reduced air connectivity: Nigerians would have fewer options for traveling abroad, making it more expensive and time-consuming.
- Damage to investment climate: The trapped funds issue creates a negative perception of Nigeria’s investment climate, also discouraging foreign investors from entering the market.
- Job losses: Reduced air connectivity would lead to job losses in the aviation sector and related industries.
To avert this crisis, IATA urges the Nigerian government and the CBN to take immediate action:
- Make foreign exchange readily available for airlines: The CBN needs to prioritize the allocation of foreign exchange to airlines to ensure they can repatriate their profits.
- Streamline the repatriation process: The government should simplify the process of repatriating funds to make it less time-consuming and bureaucratic.
- Adopt a unified exchange rate: Moving to a single exchange rate system would eliminate confusion and also uncertainty for businesses.
Alawadhi’s warning is a wake-up call for the Nigerian authorities. Addressing the issue of trapped funds is crucial for ensuring the long-term sustainability of the country’s aviation sector. Failure to do so could have serious consequences for Nigeria’s economy. And its reputation as a key player in the African aviation market.
This issue has garnered significant attention from the international community:
- The African Airlines Association (AFRAA) has echoed IATA’s concerns. And also called for African governments to address the issue of trapped funds.
- The International Monetary Fund (IMF) has also urged Nigeria to take steps to resolve this problem. Arguing that it hinders the country’s economic growth.
The international Air Transport Association (IATA) also shows that US $1.9billion Airline’s Funds are blocked in Africa with Nigeria Leading the pack.
Egypt $348m, Algeria $199m, XAF Zone $183m and also Ethiopia $128m complete the list of top 5 countries where airline are struggling to Restore their Funds.
The Nigerian government and the CBN are under immense pressure to find a solution to this critical issue. Will they take the necessary steps to ensure the continued operation of international airlines in Nigeria. Or will their inaction lead to a significant decline in air connectivity and economic instability?
