$1.68bn foreign airlines’ funds trapped in Nigeria, others

The International Air Transport Association revealed that, as of September, $1.68 billion of airlines’ funds are held up in Africa, out of a global total of $2.36 billion.

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

The aviation industry is no stranger to financial complexities, and the funds owed to foreign airlines underscore the systemic challenges faced by carriers operating in Africa. According to IATA, the $1.68 billion held up in the continent represents a substantial share of the global total. This situation raises questions about the financial health of the aviation sector in Africa and the impact on international carriers navigating these challenges.

Nigeria, as Africa’s most populous nation and a key player in the continental economy, stands out in the IATA report. The revelation of owing a significant portion of the $1.68 billion highlights the financial strain faced by foreign airlines operating within Nigerian airspace. The reasons behind these financial obligations could range from unsettled fees, bureaucratic hurdles, or other operational challenges.

The implications of this financial strain are manifold, affecting not only the airlines but also the broader economic landscape. As the aviation sector plays a pivotal role in facilitating trade, tourism, and economic growth, any disruptions in its financial dynamics can have ripple effects on multiple sectors.

Kamil Alawadhi stressed the significant impact of this financial deadlock on connectivity, expressing concerns about the aviation sector’s sustainability. Alawadhi highlighted the association’s dedication to supporting its members in navigating these challenging circumstances.

Among the affected funds, Nigeria holds $783 million, with only around 10% of this amount cleared, further exacerbating the situation.

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 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.