In a countermove against the Central Bank of Nigeria’s (CBN) recent claim of concluding payments for all verified claims of foreign airlines, industry sources reveal that approximately $700 million remains blocked with Nigeria’s commercial banks. Despite the CBN’s announcement of clearing $64.44 million in forex backlogs to airlines, foreign carriers operating in Nigeria dispute the government’s declaration.
The CBN asserted on Tuesday that it had successfully settled all verified claims by foreign airlines, bringing the total verified amount paid to the air transport sector to $136.73 million. However, foreign airlines, including members of the International Air Transport Association (IATA), contest this claim, emphasizing the substantial amount still entangled in Nigeria’s financial system.
IATA acknowledged the CBN’s release of an additional $64.44 million but underscored that the blocked funds with commercial banks amount to around $700 million. The association stated, “There’s a considerable journey ahead in fully addressing the issue. This is exacerbated by the devaluation of the Nigerian Naira, which has dropped significantly against the dollar. Airlines should not be unfairly penalized by the lower exchange rate.”
The ongoing devaluation of the naira has been a cause for concern, impacting various sectors of the economy. Despite the CBN’s efforts to clear over $2.5 billion in overdue foreign exchange debts in the last three months, the naira continues to experience a downward trend.
On Monday, the Nigerian currency closed at N1,348 per $1 at the official window, marking a 51.1% depreciation by Monday. The parallel market followed suit, experiencing a 2.76% depreciation to close at N1,450/$1. On Tuesday, the naira extended its loss to reach N1,490/$ in the official market.
In the midst of these challenges, IATA has warned that the issues surrounding trapped ticket revenues in Nigeria and other countries could lead to foreign airlines exiting the country if not promptly resolved. Kamil Alawadhi, IATA’s regional vice president for Africa and the Middle East, highlighted the potential consequences of the situation in a recent interview.
As the CBN’s efforts to stabilize the naira face ongoing scrutiny, the unresolved matter of blocked funds and the devaluation of the currency pose significant challenges for the international airline industry operating in Nigeria. The unfolding situation emphasizes the need for comprehensive and effective measures to address currency-related issues and foster a conducive environment for foreign carriers.