Airlines’ trapped cash falls to $30m

Foreign airlines that had over $600 million funds trapped in Nigeria since two years ago can heave a sigh of relief as only $30 million is left to be offset by the Central Bank of Nigeria (CBN).

Last August, the country’s apex bank released $425 million out of $600 million trapped funds, leaving $175 million in the coffers of CBN.

And between August 2017 and January 2018, the government released another $145 million, reducing the trapped fund to $30 million.

Area Manager (South West Africa) International Air Transport Association (IATA), Dr. Samson Fatokun, made these disclosures when Woleshadare.net inquired from him statues of the $600 million to be repatriated to foreign carriers.

He commended the Federal Government for keeping to its words in helping foreign airlines, which operate to the country to get their trapped funds, stressing that the apex bank did what it could to assist the carriers, whose operations to the country were threatened as a result of the situation.

International airlines primarily made the decision to leave Nigeria in 2016 because some African governments withheld ticket revenues to boost foreign currency reserves after the oil and commodity price collapsed.

The reason for the scaling back or pulling out of the market was because of the impact of the depreciation of local currencies and the drop in oil and commodity prices in those countries.

So, in Nigeria, for example, they were forced to sell in the local currency, but, unfortunately, foreign currency was not readily available then for them to exchange and take it out of the country.

In a statement made available to this newspaper, Director-General of IATA, Alexandre de Juniac, lamented that in nine African countries; international carriers are unable to repatriate their foreign currency earnings, while locally-based airlines experience difficulties making on-time foreign currency payments to their suppliers and business partners.

His words, “Angola and other countries blocking funds are undergoing significant economic challenges. But blocking airlines’ funds is not the answer. It is in everybody’s interest to ensure that airlines are paid on-time, at fair exchange rates and in full”.

The clearing house for over 280 global airlines stated that it is working closely with the governments of Angola and other countries on ways to make these withheld funds available.

Juniac added that it welcomes the commitment by Angola’s National Bank to work with IATA to find a practical solution to release blocked funds.

This is coming as the association forecasts a trebling in the size of Angola’s air transport market to 7.1 million passengers a year by 2036 at the present forecast annual growth rate of 6.7 per cent.

However, even faster growth with greater socio-economic benefits for Angola could be achieved if the country opens up its market and prioritizes its participation in the continent-wide connectivity efforts, unblocks funds, consults with industry to improve infrastructure and maintains world class safety standards.

“Aviation is vitally important to Africa. It currently supports 6.8 million jobs and contributes $73 billion in GDP across the continent. It connects people and businesses, enables trade and tourism, reunites families and friends, which carries products to markets and vital medicines and aid to communities where they are needed.

“Angola needs to work with industry to ensure that it is prepared to reap the future benefits of increased air connectivity,” said de Juniac at IATA’s Aviation Day in Luanda, Angola.

De Juniac identified four pressing concerns in Angola and Africa, which governments and industry stakeholders must address for a healthy and strong aviation system.

He listed the concerns as connectivity, efficient Infrastructure expansion, and safety.

The second priority is improving connectivity, adding enhanced connectivity will stimulate demand and competition, making air travel more affordable and in doing so, enable higher volumes of trade, tourism and commerce between Angola, her sister nations and the rest of the world.

The IATA chief disclosed that IATA’s recent study found that if 12 key African markets, including Angola, were opened up, extra 155,000 jobs and $1.3 billion in annual Gross Domestic Product (GDP) would be created in those countries. In Angola, the benefit would be an extra 531,000 passengers taking to the skies, the creation of 15,300 new jobs and the generation of $137 million in additional GDP.

IATA welcomes the imminent launch of the Single Africa Air Transport Market (SAATM) by the African Union later this month.