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Trapped funds: Venezuela, Nigeria, Sudan, Egypt, Angola top list
Foreign airlines’ blocked funds in Nigeria rises to $591m, says IATA DG
Wole Shadare, Dublin
Foreign airlines’ blocked funds in Nigeria have risen to $591million. This new figure was given today by the International Air Transport Association (IATA) at its on-going 72nd Annual General Meeting (AGM) holding in Dublin, Ireland.
The clearing house for over 250 airlines also listed other countries where airlines are having difficulties repatriating their funds. The countries are Venezuela which tops the list with $3.7b (16 months), Nigeria $591m (7 months); Sudan $360million (4 months); Egypt $291 million (4 months) and Angola $237 million (7 months).
Total airline funds blocked from repatriation in Nigeria are nearing $600 million. Repatriation issues arose in the second half of 2015 when demand for foreign currency in the country outpaced supply and the country’s banks were not able to service currency repatriations.
For Venezuela, airlines’ funds blocked from repatriation in Venezuela total $3.8 billion. Currency controls implemented in 2003 necessitate government approval to repatriate funds.
By 2013, approvals were not keeping pace with the amount of funds requiring repatriation and significant airline revenue accumulated in Venezuela.
The situation became critical in 2015 when only one request to repatriate funds was approved. So far in 2016 only one request to repatriate funds has been granted.
Nigerian authorities are engaged with the airlines and are, together with the industry, seeking possible measures to make the funds available.
Just last week, IATA’s Area Manager, South West Africa, Dr. Samson Fatokun, at a press briefing at a two-day Africa Aviation Day christened, “Driving Through The Power of Aviation,” held in Abuja told reporters that foreign airlines’ funds trapped in Nigeria as at March 2016 stood at $575 million.
The Director-General of IATA, Tony Tyler called on governments to respect international agreements obliging them to ensure airlines are able to repatriate their revenues.
His words, “Air connectivity is vital to all economies. The airline industry is a competitive business operating on thin margins. So the efficient repatriation of revenues is critical for airlines to be able to play their role as a catalyst for economic activity. It is not reasonable to expect airlines to invest and operate in nations where they cannot efficiently collect payment for their services.”
IATA monitors blocked funds globally, the sum of which exceeds $5 billion. The top two countries blocking the repatriation of airline funds are Venezuela and Nigeria.
“Blocked funds are a problem in a diverse group of countries, some of them undergoing significant economic challenges particularly with a fall-off in oil revenues. But one thing all five nations have in common is the urgent need for robust air connectivity that is being hampered by airlines’ difficulty in repatriating funds.”
“Strong connectivity is an economic enabler and generates considerable economic and social benefits–something that struggling economies need more than ever. It is in everybody’s interest to ensure that airlines are paid on-time, at fair exchange rates and in full,” Tyler said.
Airlines have, for months, struggled to repatriate revenue from ticket sales due to delays in both Nigeria and the South American nation’s 12-year-old exchange controls, with trapped cash peaking at around $4.1 billion over the summer.
As a result of the problem, international airlines in Nigeria resorted to selling their tickets in dollars because of their inability to access their monies trapped in the Central Bank of Nigeria (CBN).
International airlines normally sell their tickets in naira and then approach the CBN for the dollar equivalent to take back to their respective countries.
However, the banking watchdog has, in recent times, been reluctant to give the airlines the dollar equivalent of their naira ticket sales at the official rate, as it seeks to conserve its fast dwindling external reserves for only what it considers essential imports or payments by Nigerians.
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