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The Central Bank of Nigeria (CBN) has officially approved the release of $831 million in funds trapped by foreign airlines from June of last year until now, the International Air Transport Association (IATA) has confirmed.
This development brings the total amount of trapped funds for international airlines globally to approximately $1.8 billion.
IATA reported that the amount of foreign airlines' funds trapped in Nigeria peaked at around $850 million last year June, with only $19 million remaining outstanding.
The association, which represents international airlines, stated that the remaining $19 million is awaiting verification by the CBN through commercial banks.
In a statement on Sunday, the Director-General of IATA, Willie Walsh, announced that the Nigerian government was commended for their efforts in successfully repatriating funds from international airlines.
He acknowledged that at its peak in June 2023, Nigeria's blocked funds totalled $850 million, which significantly impacted airline operations and finances in the country, stating that the difficulties in repatriating revenues in US dollars led to reduced operations for some airlines and the temporary cessation of operations for one carrier, severely affecting Nigeria's aviation industry.
However, he said that as of April 2024, 98 per cent of the funds had been cleared, with the remaining $19 million pending verification by the Central Bank for outstanding forward claims filed by commercial banks.
“We commend the new Nigerian government and the Central Bank of Nigeria for their efforts to resolve this issue. Individual Nigerians and the economy will all benefit from reliable air connectivity for which access to revenues is critical. We are on the right path and urge the government to clear the residual $19 million and continue prioritizing aviation,” he said.
IATA also reported a significant decrease in the amount of airline funds held back from being repatriated by governments.
Walsh explained that the main reason for the reduction was the clearance of funds previously held in Nigeria, saying that Egypt also gave approval for the release of its substantial accumulation of blocked funds.
However, both airlines were negatively impacted by the devaluation of the Egyptian Pound and the Nigerian Naira, according to IATA.
The situation was even more critical in Pakistan and Bangladesh, where $731m was continuously being withheld; specifically, Pakistan was holding back $411m and Bangladesh was holding back $320m.
The statement emphasized the urgency for Pakistan and Bangladesh to release the $731m in blocked funds immediately to ensure that airlines can continue to provide essential air connectivity.
In Bangladesh, the responsibility lies with the Central Bank, which must prioritize aviation's access to foreign exchange in accordance with international treaty obligations.
In Pakistan, the solution involves finding efficient alternatives to the system of audit and tax exemption certificates, which currently cause significant processing delays.
