Foreign airlines operating in Nigeria have revealed that approximately 90% of their $783 million in trapped funds have yet to be released. The airlines made this disclosure during a recent stakeholders’ forum convened by the Minister of Aviation and Aerospace Development, Festus Keyamo, in Lagos.
As of August 2023, data from the International Air Transport Association (IATA) indicated that Nigeria accounted for a substantial $783 million in blocked funds owned by various international airlines. Despite recent efforts to alleviate the situation, the airlines expressed frustration over their inability to access a significant portion of these funds.
Mr. Chima Kingsley, Chairman of the International Airline Operators, emphasized that while some funds had been received by international banks from the Central Bank of Nigeria, it accounted for only a fraction, which was less than 10% of the total trapped funds. He revealed that the bulk of these funds remained with Nigerian commercial banks, leaving foreign airlines in a precarious financial situation.
This issue gained attention when President Bola Tinubu pledged two weeks ago to clear the estimated $7 billion outstanding foreign exchange obligations of the Federal Government related to forex forwards contracts owed to commercial banks.
The Central Bank of Nigeria (CBN) had initiated steps to clear the forex backlog in an attempt to ease pressure on foreign exchange, but challenges persisted in effectively disbursing the funds. The situation has taken a toll on domestic carriers as well, as highlighted by Obiora Okonkwo, Chairman of United Nigeria Airlines. He pointed out that they faced ongoing struggles with trapped funds and limited access to foreign exchange, resulting in difficulties with payments for aircraft maintenance fees and other essential operational expenses.
Dr. Samson Fatokun, the Area Manager of West and Central Africa for IATA, stressed the necessity of reducing operating costs in the Nigerian aviation sector and called for sector-specific support to address the challenges faced by both domestic and foreign airlines.
Minister Festus Keyamo assured stakeholders that efforts were underway to address the forex challenge. While specific disbursement figures were not disclosed, he reiterated the government’s commitment to resolving the issue in the coming weeks. This offers a glimmer of hope for airlines grappling with financial constraints, who eagerly await the release of their trapped funds.