IATA Calls Out Nigeria, Ghana, Others Over Foreign Airlines' $1.68bn Trapped Fund
- IATA has raised a red flag on $1.68 billion in unreleased airline funds across Africa
- The association has condemned the reluctance to permit international airlines to repatriate their profits
- It added that the challenges will contribute to increased air travel costs and reduced African accessibility
The International Air Transport Association (IATA), the primary global trade association for airlines, has once more voiced disapproval toward Nigeria and other African nations for their reluctance to permit international airlines to repatriate their profits.
The organisation highlighted that the accumulated funds currently trapped in African countries amount to an estimated $1.68 billion.
Source: UGC
These concerns were expressed during discussions at the 55th annual general assembly of the African Airlines Association (AFRAA) held in Entebbe, Uganda.
Amid foreign airlines' appeals to repatriate their stranded funds, at least four domestic airlines have funds exceeding $54 million held with the Central Bank of Nigeria.
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Unreleased funds hinder the growth of air transportation
Emphasising the persistent nature of this challenge, IATA pointed out that it impedes the development and advancement of air transportation across the continent.
IATA also called upon Nigeria and other African nations to refrain from imposing elevated fees, levies, and carbon taxes or introducing new taxes on air transport, trade, or tourism, especially given the ongoing challenges they face in repatriating their funds.
It stated:
$1.68 billion in airline funds remain blocked across the continent. This is despite repatriation from Angola, Ethiopia, Ghana, Nigeria, and Zimbabwe through IATA’s working with the respective governments.
According to a previous report by Legit.ng, IATA cited Nigeria as the top country with the most trapped airline funds in the world
As of August, reports indicated that the funds of foreign airlines trapped in Nigeria amounted to $793 million, a situation exacerbated by foreign exchange scarcity.
Amongst this total, $300 million is identified as legacy debt, currently held by the Central Bank of Nigeria (CBN), although it has not been remitted to IATA on behalf of the airlines.
Notably, in August of the previous year, IATA expressed concern over the surge in trapped funds, which rose to $464 million (equivalent to N199.2 billion) in July 2022.
Trapped funds contribute to increased airfares
Kamil Alawadhi, IATA's Regional Vice-President for Africa and the Middle East informed AFRAA delegates that as of September 2023, a substantial $1.68 billion of airline funds were inaccessible across Africa, accounting for a significant portion of the global total of $2.36 billion.
Alawadhi emphasised that the inability to repatriate these funds severely affects airline operations, influencing decisions on route selections.
He said:
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.
He underscored that these challenges will likely contribute to increased air travel costs and reduced African accessibility.
This is particularly concerning in a region where the average airfare is already 30% higher than the industry norm, and jet fuel costs are 10 to 20% higher than the global average.
Emirates, other foreign airlines speak on $700m trapped in Nigeria
In related news, Legit.ng reported that foreign airlines have reported that approximately 90% of their $783 million stranded funds in Nigeria remain outstanding.
This disclosure came during a recently organised stakeholders' forum by the Minister of Aviation and Aerospace Development, Festus Keyamo, in Lagos.
The airlines emphasised that a substantial portion of the funds remain inaccessible.
Chima Kingsley, the Chairman of International Airline Operators, noted that although international banks received some funds from the CBN, it only represented a small fraction, less than 10% of the total trapped funds.
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Source: Legit.ng
