CEM REPORT, AVIATION | Africa jointly owes about 29 per cent of trapped airlines funds amounting to $1.68 billion of the $2.36 billion trapped funds globally as of September.
The International Air Transport Association (IATA) has revealed that the trapped funds raise concerns about the sustainability of the aviation sector,
Speaking at the African Airlines Association’s 55th Annual General Assembly in Uganda, Kamil Alawadhi, the Regional Vice-President for Africa and the Middle East said the blocked funds in African countries are deemed devastating for connectivity.
He noted that although some funds have been repatriated $1.68 billion remained withheld across the continent.
He stressed the importance of liberating blocked airline funds by advising governments on best practices to clear backlogs.
“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.”
Alawadhi said the repercussions of blocked funds extend beyond the airlines, adversely affecting the economies of the countries involved.
Despite recent efforts by the Nigerian government, foreign airlines are still struggling to repatriate a significant portion of their revenues from the country.
As of August 2023, Nigeria held onto a staggering $783 million of airlines’ blocked funds, according to the International Air Transport Association (IATA). This represents a major financial burden for international carriers, which rely on these funds to cover operating costs and maintain their global networks.
While there have been some positive developments in recent months, with the Central Bank of Nigeria (CBN) releasing some of the trapped funds, airlines remain frustrated by the slow pace of progress. Chima Kingsley, the Chairman of International Airline Operators (IAO), emphasized that only about 10 per cent of the blocked funds have been repatriated, with the majority still stuck in Nigerian commercial banks.
This situation is having a ripple effect throughout the aviation industry, as airlines are forced to make difficult decisions about their operations in Nigeria. Some carriers have reduced their flight frequencies, while others have considered suspending services altogether.
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The Nigerian government has acknowledged the issue of blocked funds and has pledged to take steps to address it. However, airlines are calling for more concrete action to be taken, as the current situation is unsustainable.
The repatriation of blocked funds is essential for the long-term health of the Nigerian aviation industry. Without access to their revenues, foreign airlines will be unable to maintain their operations in the country, which will ultimately harm the Nigerian economy and limit travel options for Nigerian citizens.
