In a recent stakeholders’ forum convened by the Minister of Aviation and Aerospace Development, Festus Keyamo, Foreign Airlines Struggle operating in Nigeria disclosed a concerning issue: approximately 90% of their $783 million trapped funds in the country have not been paid. This revelation sheds light on a persistent financial challenge that has been plaguing the aviation industry in Nigeria.
Data from the International Air Transport Association (IATA) as of August 2023 indicates that Nigeria accounts for a substantial portion of airlines’ blocked funds, with the total amount reaching a staggering $783 million. Despite various recent efforts to alleviate the situation, foreign carriers have been struggling to access a significant portion of these funds.
Mr. Chima Kingsley, the Chairman of International Airline Operators, emphasized that while some funds from the Central Bank of Nigeria had been received by international banks, this accounted for less than 10% of the total trapped funds Foreign Airlines Struggle. The majority of the blocked funds are held by Nigerian commercial banks, and they have not been released to the airlines.
This situation has had a substantial impact on both foreign and domestic carriers. President Bola Tinubu recently pledged to clear the estimated $7 billion outstanding foreign exchange obligations of the Federal Government on forex forwards contracts owed to commercial banks. The Central Bank of Nigeria (CBN) has been working to clear the forex backlog to these banks to ease pressure on foreign exchange, but challenges persist in effectively disbursing the funds.
Domestic carriers, represented by the Chairman of United Nigeria Airlines, Obiora Okonkwo, have also expressed their struggles due to trapped funds and limited access to foreign exchange. For instance, aircraft maintenance fees have accumulated because of the inability to source forex for payments.
Dr. Samson Fatokun, the Area Manager of West and Central Africa for IATA, stressed the need to reduce operating costs in the Nigerian aviation sector and advocated for sector-specific support.
Minister Festus Keyamo assured stakeholders that efforts were underway to address the forex challenge. While specific disbursement figures were not disclosed, the government remains committed to resolving the issue in the coming weeks, offering hope to airlines grappling with financial constraints. This ongoing issue with trapped funds in Nigeria highlights the challenges faced by foreign airlines and the urgency of finding a solution to ensure the stability of the aviation industry in the country.
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