Not true, $700m still trapped in Nigeria - international airlines debunk CBN’s claim of FX backlog clearance

Thursday, 01 February 2024 04:52

Not true, $700m still trapped in Nigeria - international airlines debunk CBN’s claim of FX backlog clearance

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International Air Transport Association (IATA), a top global trade association of airlines, has said approximately $700 million still remains blocked with Nigeria’s commercial banks.

IATA spoke in reaction to a statement by the Central Bank of Nigeria (CBN) that it had cleared all verified backlogs to foreign airlines operating in the country.

In a statement published on its website on Monday, IATA acknowledged the CBN’s release of an additional $64.44 million in blocked airline funds.

However, it noted that it is consulting with airline members to verify the release of outstanding revenues.

“While this development is encouraging, it’s crucial to recognise that approximately $700 million remains blocked with Nigeria’s commercial banks. As such there’s a considerable journey ahead in fully addressing the issue,” the statement said.

This, IATA said, is exacerbated by the devaluation of the Nigerian Naira, which has dropped significantly against the United States dollar.

“Airlines should not be unfairly penalised by the lower exchange rate,” IATA said.

“We will continue to monitor the situation closely and work with the government to ensure that the environment remains conducive to ensuring Nigeria’s connectivity to international markets.”

Background

Last November, IATA criticised Nigeria and other African countries for not allowing international airlines to repatriate their profits.

The group said trapped funds in African countries is currently estimated at $1.68 billion, noting that the perennial challenge is impeding the growth and development of air transportation on the continent.

As of August 2022, reports indicated that foreign airlines’ funds trapped in Nigeria stood at $793 million amidst lingering forex scarcity.

Of this figure, $300 million is said to be legacy debt, which the CBN has taken, but yet to be remitted to IATA on behalf of the airlines.

However, on Tuesday, Nigeria’s apex bank said it had completed the payment of all verified claims owed to foreign airlines by injecting an additional $64.44 million into the sector after the initial disbursement of about $61.64 million to the airlines through various banks on 8 January.

The bank said the latest payment brought the total amount disbursed to the aviation sector to $136.7 million.