The International Air Transport Association (IATA), which is the global representative body for the airline industry, has welcomed the announcement by the Central Bank of Nigeria (CBN) that it has released another $64.44-million in blocked airline funds. The association was, however, consulting with its member airlines to confirm that the funds had indeed been released.
Further, IATA pointed out that some $700-million in airline funds, held in Nigerian commercial banks, remained blocked. “As such there’s a considerable journey ahead in fully addressing the issue,” warned the association. The blocked funds were generated by ticket sales by airlines based in other countries. Moreover, Nigeria’s currency, the Naira, has devalued “significantly” against the dollar. “Airlines should not be unfairly penalised by the lower exchange rate,” affirmed IATA.
The association affirmed that it would continue to closely monitor the situation. It would also work with the Nigerian government to make certain that the environment for international airlines in the country remained favourable for the country’s air connectivity to international markets.
The issue of blocked funds, and its importance, was highlighted by IATA regional VP Africa and the Middle East Kamil Alawadhi, in his address to the fifty-fifth annual general meeting of the African Airlines Association (AFRAA), in Entebbe, Uganda, in November. While Nigeria was the worst offender, it was not the only one. Several other States, in Africa and beyond, also blocked funds. But most of the blocked funds were held in Africa. In September, the global total figure for blocked airline funds was $2.36-billion; of that total, African countries were responsible for $1.68-billion.
“Aviation is capital intensive,” he pointed out. “Cash flow is key for airlines’ business sustainability – when airlines are not able to repatriate their funds, it severely impacts their operations and impacts their decisions on where to fly. But the risk of blocked funds is not just limited to airlines; the negative impact extends to the countries blocking the funds. It impacts the country’s economy and its connectivity, and it hurts investor confidence and reputation. Aviation is not only an economic enabler, it is a pillar of modern economies. Governments must prioritise aviation and find sustainable solutions in the clearing of blocked funds, and we continue to offer our support in any way we can.”
Working together, IATA and AFRAA have succeeded in persuading a number of African governments to unblock at least some airline funds, he had reported. Since 2018 a “significant amount” of such funds had been released by Angola, Ethiopia, Ghana, Nigeria and Zimbabwe. The two associations were also advising governments on the best practices to clear the backlogs of blocked funds.