September 23, 2023

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Trapped Funds: CBN Pays $265 Million


CEM REPORT, FINANCE | To resolve and quench the threats of foreign airlines flying Nigerian routes, a sum of $265 million had been earmarked for disbursement to settle the backlog of trapped funds of foreign airlines.

The Central Bank of Nigeria (CBN) says it has already disbursed $110 million in spot and the rest 60 days forward.

The CBN Governor, Godwin Emefiele revealed this while addressing Foreign Affairs and Aviation stakeholders at a meeting with the House of Representatives Speaker, Femi Gbajabiamila.

He noted that contrary to IATA’s representative’s position that nothing had been done to reduce the $700 million backlog, a sum of $265 million had been earmarked for disbursement to the foreign airlines through their various banks.

“aside from the prioritisation of FX we have always accorded airlines, on the 31st of August, you spoke to me because I have to give you credit for that. That day, I made a decision to use our discretion to allocate $265 million to foreign airlines.

“We did $110 million in spot and the rest 60 days forward. On that day we allocated to IATA $32 million through UBA, Qatar Airways got $22.8 million through Standard Chartered, Emirates got $19.6 million through Access Bank, BA got $5.5m through GTB;

“Virgin Atlantic got $4.8 million through Zenith and so on.”

Emefiele while frowning at reports of airlines not receiving their payment noted that all hands were on deck to provide FX for foreign airlines m

“How then can they go about and begin to say they have not received their money? This is aside from the so-called 8 or 10 percent you say you are getting Mr Fatokun (referring to the IATA representative).

“This is extra allocation which we use our own discretion to give you and which I have told you personally that we would continue to do so as to make you guys happy so you don’t continue to blackmail this country.

“Out of that $120 million would be due on the 31st of October. The monies would be paid. So what else do you want me to do? I must confess there would be a delay. Gentlemen, even though I have been accused of printing Naira, but I cannot print dollars. We have to earn it or borrow it. All these things we are talking about boil down to reciprocity, and IATA cannot shy away from that.”

He also called on other foreign countries to grant landing permits to Nigerian airlines to fly their routes so as to reduce the burden of accumulated funds going forward.

“IATA has the responsibility to get Nigerian airlines to fly on the basis of reciprocity.

“Everyone is calling on CBN, blocked funds, and I am doing everything I can to provide dollars for you to repatriate your money. How can you come here and begin to tell us that you were not a party to BASA and, for that reason, you are not interested in the concept of reciprocity when you know that would benefit your country and our country,”

The House of Representatives Speaker, Rep Femi Gbajabiamila, who arranged the meeting had earlier told the gathering that the issue of blocked or trapped funds of foreign airlines was giving the House a great course for concern, hence the need for the forum to find lasting solutions bearing in mind the prevailing economic imperatives.

The Speaker, who also said the principle of reciprocity requires that Nigerian carriers be allowed to fly into countries whose airlines have a huge market in Nigeria, appealed to the CBN governor to seek ways of raising forex for the airlines, just as he agreed that allowing Nigerian airlines operate many of the international routes will reduce the incident of trapped funds in the future.


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