How foreign airlines repatriated N795bn in six months – CBN report
Foreign airlines repatriated N795.48bn from Nigeria in six months, data from the Central Bank of Nigeria have shown.
Data from the apex bank’s Balance of Payment compilation revealed that airlines withdrew (as debits) $1.76bn (converted to naira at N451/$) in the first and second quarters of 2023. Total credit to the Balance of Payment account from airline travel was $19.39m (N8.75bn).
The amount on the debit side of the balance of payments includes how much was spent on tickets by passengers (N779.61bn), cargo ($10.22bn), and others (N5.65bn).
According to an explanatory note on the apex bank’s website titled, Note D, Balance of Payments is “defined as a systematic record of economic and financial transactions for a given period between residents of an economy and non-residents.”
The National Bureau of Statistics would in a document titled ‘International Trade and Balance of Payments Statistics’ added, “In other words, it is a record of all the receipts and payments in respect of merchandise trade, invisible (service) trade, transfer payments, short-term and long-term capital movements and movement of international reserves between the reporting country and other countries.”
Despite this, foreign airlines have complained consistently about their inability to repatriate all their funds. As of November 2023, these airlines disclosed that about 90 per cent of their $783m trapped funds have not been paid.
The Chairman of the Association of Foreign Airlines and Representatives, Mr Kingsley Nweokoma, stated this during a stakeholders’ forum with the Minister of Aviation and Aerospace Development, Festus Keyamo.
He said, “The bulk of the blocked funds are with Nigerian commercial banks. The bulk of the money has not been paid.”
In December 2023, the International Air Transport Association disclosed that $790m ticket revenue is currently trapped in the country. According to the IATA Regional Vice President, Africa & Middle East, Kamil Alawadhi, Nigeria has the highest number of airlines’ blocked funds at $792m followed by Egypt ($348m); Algeria ($199m); AFI zone ($183m) and Ethiopia $128m.
Commenting on the challenges of getting the funds out in The PUNCH report, he said, “The first step for us to solve these blocked funds is for both parties to engage. If parties don’t engage, it is very difficult to move forward. I have not been able to engage with Nigeria’s CBN governor.
“He said he would engage with me when he had a solution. He is not promising but I have engaged with the aviation minister who is very understanding, new to the position, or maybe wowed by the situation he inherited will help to resolve the matter.”
These blocked funds form part of the estimated $7bn outstanding foreign exchange obligations of the Central Bank of Nigeria on forex forwards contracts owed to commercial banks. In January 2024, the apex bank announced that it has paid $2bn to clear part of this backlog. $61.64m of this amount went to foreign airlines.
In a statement, the CBN Acting Director of Corporate Communications, Hakama Sidi Alia, said, “These payments signify the CBN’s ongoing efforts to settle all remaining valid forward transactions, to alleviate the current pressure on the country’s exchange rate.
“It is anticipated that this initiative by the CBN should provide a considerable boost to the Naira hug against other major world currencies and further increase investor confidence in the Nigeria economy.”
Reacting to this, the President of the National Association of Nigerian Travel Agencies, Susan Akporiaye, noted, “The old debts are being settled at the prevailing rate when tickets are sold, with the exchange rate around N400/450 to one dollar. The debt, which was originally over $800m, has been reduced.
“This specific issue led to Emirates discontinuing flights into Nigeria. The government has committed to paying the old outstanding debt at the rates prevalent during the sales period.”
Experts have partly linked these trapped funds to why Nigerian routes are expensive.